If you're receiving long-term disability (LTD) benefits, keep in mind that your insurance company can terminate your monthly payments for any number of reasons. It's important to be familiar with the most common reasons that LTD benefits are cut off so that you can try to continue to receive benefits for as long as you're disabled. The most common reason to have your benefits terminated is that you are no longer disabled, or the insurance company finds this to be true.
Every LTD plan is different, so it's likely that not everything that follows will apply in your case. For information about your particular plan, check your policy's summary plan description or, even better, the policy itself.
Time Limitation on Mental and Chronic Conditions
Many policies contain a 24-month limitation on disabilities arising from mental, nervous, and psychological impairments. If you're receiving LTD payments due to depression, anxiety, post-traumatic stress disorder, chronic fatigue syndrome, or a similar impairment, you may be limited to receiving 24 months of benefits. There are often, but not always, exceptions for organic mental disorders like dementia and organic brain disease, as well as illnesses such as schizophrenia and bipolar disorder. The rationale behind this limitation, from the insurance company's perspective, is that most of these impairments can be exaggerated or outright faked. While this policy does keep premiums lower than they otherwise would be, this comes as cold comfort to the vast majority of LTD recipients with bona fide mental illnesses whose benefits are terminated after only two years.
Some policies also apply the 24-limitation to arthritis, carpal tunnel syndrome, back pain, and other chronic pain conditions.
In addition, disabilities based on alcohol or drug abuse will almost always be subject to the same limitation. If you're confined to an inpatient treatment facility when your 24 months expire, most insurance companies will continue to pay benefits until you're no longer confined, subject to a cap.
Failure to Apply for Social Security Disability Benefits
If you've been approved for LTD benefits, your policy likely requires you to apply for Social Security disability insurance (SSDI) benefits. Because insurance companies are allowed to "offset" SSDI payments against LTD benefits (not pay you the amount you get from Social Security), they naturally have an interest in seeing you approved for Social Security disability. Failure to file a claim with the Social Security Administration could result in your LTD benefits being terminated.
Failure to Continue Treatment
LTD policies generally require you to submit periodic proof of your continuing disability. This can consist of an annual re-certification by your doctor that you're still disabled or a requirement that you attend regular medical examinations. One of the most common reasons LTD benefits are terminated is that the person has failed to receive regular medical treatment. Even if your doctor has told you there's "nothing else that can be done for you," if you stop seeing a doctor, your insurance company may interpret your lack of treatment as proof that your condition has improved. (And of course, even if you've continued to receive regular treatment, your LTD benefits can be cut off if your records indicate that your condition has improved.)
Discovery of Activities by Surveillance
It is possible that your LTD insurer will arrange a surveillance team to track you for several days. This can include following you on your daily errands and to doctor's appointments, parking outside your house, and recording you. This can be a disconcerting experience, and LTD recipients should exercise caution when interacting with anyone they suspect to be an investigator. If you're observed engaging in activities that are inconsistent with your impairments, the insurance company may determine that your condition has improved and your benefits could be discontinued.
Shifting Definition of Disability After 24 Months
Many LTD policies contain a provision that changes the meaning of "disability" after 24 months. Initially, disability can be defined as "the inability to perform your own occupation" due to a physical or psychological impairment. When 24 months have elapsed, the definition of disability can narrow to "the inability to perform any occupation." That means that if you're medically capable of performing virtually any job that exists in the economy, your LTD benefits may be terminated. This determination usually doesn't take into account whether such jobs are available, only that they exist.
Aging Out of Coverage
Your LTD benefits will usually end when you reach your Social Security normal retirement age (66 or 67) or upon your death. If you're over 60 when you're approved for LTD, your benefits may continue past your normal Social Security retirement age, but generally only for a few years. Check out the Maximum Benefit Period chart in your LTD policy to see when your benefits expire.
Working while receiving LTD benefits can also cause your payments to cease, though sometimes this applies only if you're earning a substantial portion of your pre-disability wages. Consult your policy for its rules on working to learn how working might affect your case.