DI Claims in the Coronavirus Environment
California Broker, September 2020
By Art Fries
The coronavirus has not only presented a problem for claimants but also for insurance company claim departments. There are some “gray” areas that are creating issues that will create further need for claimants to get proper advice as it relates to a disability claim. This article will discuss these issues, some of which have not been answerable as of the current date, and some tips provided on what a claimant can do to enable them to present themselves in a better fashion to the insurance company claim department.
Partial (residual) claims are computed by comparing pre-disability earnings to post-disability earnings. Some companies go back 12 months, some the same and consider two out of the prior three consecutive tax years and some two consecutive out of the prior five tax years. Usually when a professional such as a dentist reduces their hours or eliminates one or more duties, the gross collected fees are reduced and earnings are reduced. And, you must have medical issues that affect your ability to practice. With the coronavirus, dental offices have been closed for routine patient work and only available for emergencies. So these offices are running in the “red” and not making money. When you apply the “residual” formula, you will typically see a loss of earnings of more than 75% or 80%, which should enable the claimant to collect 100% of the monthly benefit. But the reduction in earnings was not related to the medical issues but to a state mandate that says you can only service emergency patients. So that poses a dilemma for both the insurance company and the claimant. What is fair? Should the insurance company pay an “average each month” as to what they think the claim is worth? Should they pay 100%? Should they pay nothing? There was a period of time when I had not seen the answer to these issues and I felt you would probably find different thinking from the different claim departments. I’m now starting to see some answers and it seems like some claim departments are using an average monthly figure for now and looking at some recent monthly figures prior to offices “closing.”
Timing: When should a total disability begin?
If a claim is submitted during this coronavirus period, might the claim department say the claim is related to the dental office not making any earned income? Why didn’t the claimant claim total disability before the virus? These and other questions are being faced by claim departments and currently there are no clear-cut answers. More recently, I’m seeing some claim handlers trying to blame the entire claim on the coronavirus with the purpose of getting out of paying a legitimate claim. MY OPINION: (Here’s the freebie). In this particular scenario involving a dentist, it is best to wait until they are able to get the office running again whereby they can build up their accounts receivables and get their patient load up. Also they will have been home a lot whereby their medical issues may have reduced as a result of them not working or working in minimal fashion. Once they go back to work…whereby they were previously planning to go on total disability, they will see how they are feeling and if going back to their normal “grind” has activated the medical issues, they will “really get it.” Whereas before they may have been in denial, the limited hours that resulted from not working a full load will be a cleaner indication that the medical issues were real and they can now accept this as reality. This certainly will look better from a claim standpoint and not have the insurance company claim department question acutely the reason they are claiming total disability.
Insurance companies will be looking more closely at all claims coming in during and after the coronavirus has peaked, since some individuals (even professionals) will have had some further insight into their new lifestyle where they were able to spend more time with their family and feel less stressed. They may come to appreciate a way of life that was not even in their thought process prior to the virus. So those professionals who might have previously thought they need to be a basket case in terms of medical issues to go on disability may have a different outlook now. They may decide they will no longer work in pain and they may stop working earlier than they had anticipated. Presenting the claim to the insurance company will require a great deal of expertise and clarity on the part of the claimant.
These are very trying times for potential claimants as well as insurance company claim departments. Many claim department individuals are working from home and it is taking longer for them to respond to claimants. Also what was considered routine in the way of field visits to claimants as well as examination of claimants (I.M.E.) or “testing” of claimants (where permitted) in the way of an F.C.E. (Functional Capacity Evaluation) have been put on hold because of the virus and just those areas alone are causing a delay in claim departments approving or denying claims. I am seeing some companies paying 50% of the benefits on a total claim which initially they believe is supportable but are not making a final decision until they can secure more objective evidence.
Indeed, the “system” is being stressed on both ends. Eventually, however, this will come to pass. In the meantime, if one is thinking about going on either a partial or total disability claim advice should be sought from those who specialize in this area. It is difficult enough to handle a disability claim by oneself but now with the added issue of the coronavirus…advice becomes paramount to the success or failure of a disability claim.
Art Fries is a disability claim consultant providing advice on a national basis in the U.S. He is located in Nipomo, California. He can be reached at 800-567-1911 or firstname.lastname@example.org. The web address is www.afries.com.