Defining “Disability”: STD and LTD
One thing that many people fail to realize is that private and employer short-term (STD) and long-term (LTD) disability benefits are separate from Social Security. The policies have their own definition of “disability.” Often, the definition of “disability” varies slightly from insurance company to insurance company. Everyone should have STD and LTD policies in their financial planning toolbox, whether a private policy or through work. You can find out more about STD and LTD policy options here.
Finding the Definition
Every insurance policy has a “definitions” section where they clearly outline the meaning of all the terms and phrases in the policy. This section is always at the beginning of your policy documents. It is the very first thing you should look at when you start considering if it is time to apply for your disability benefits.
Short-Term Disability
Short-term policies have the simplest definition of disability. The policy assumes you will return to your regular job duties once the disability period has passed. Generally, this is no more than a few months. Short-term policies generally define disability as: being unable to perform the substantial duties of your present job because of illness or injury. The key words in this definition are substantial duties – meaning your primary job tasks – and present job – meaning your current, specific job title. To be found disabled, you only have to show you could not preform your job for a limited period. Overall, this is a relatively low burden.
Long-Term Disability
Meanwhile, it is extra important to pay attention to a policy’s definition of long-term disability. There are three options: Partial Disability, Occupational Disability, or Permanent Disability.
Partial disability policies are the least common. They allow an individual to work in a reduced capacity, fewer hours or job tasks, and get paid at their original salaried level. You would have to show you are unable to perform your full job due to an injury or illness that will last 12 months or longer. For example, a college professor reducing the classes they teach a semester due to a health condition without a reduction in pay. The policy would specify how long the individual can work in this reduced capacity.
Occupation disability policies will pay a benefit if you lose the ability to perform your current or regular occupation. You would need to show that you could not perform your job as an engineer, lawyer, teacher, doctor, nurse, etc. These policies leave the door open to find other, lower-level, lower-skilled work, if that is something you want to pursue. Furthermore, the policy may state what other kind of work you could perform. It is essential that you read your entire benefit policy. You do not want to risk losing your benefits by not following the rules.
Permanent disability policies are the most common. They specify that you must be unable to perform any occupation or job for at least 12 months. Most of these policies state they will stop paying benefits if you return to work.
Medical Evidence
The one commonality across all disability policies is that they require medical documentation. Your physician will have to complete paperwork for your claim. Additionally, you will need to submit medical records documenting your injury or health condition. It is always beneficial to let your clinical care team know that you are starting the disability process. This will allow them to provide the appropriate support.
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