If your employer provides long-term disability (LTD) insurance and you're unable to work, your ERISA LTD benefits can replace some of your lost income—learn about your rights under ERISA.
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If you have an employer-provided long-term disability (LTD) insurance plan and you can’t work due to a medical condition, you may be eligible for benefits to replace some of your lost income. A federal law called the Employee Retirement Income Security Act (ERISA) governs how these LTD plans are managed and establishes minimum standards to protect employees’ benefits. As a result, group LTD policies are often referred to as “ERISA insurance.”
ERISA insurance plans can provide much needed financial assistance to employees during times when they’re off work attending to medical issues. In order to ensure that you can get your LTD benefits if you need them, it’s important to know what protections you have under ERISA, including what to be on the look out for when you file a long-term disability claim.
What is ERISA?
ERISA is a federal law intended to protect employees who participate in employer-provided long-term disability plans. ERISA regulations require your employer to provide you with your LTD policy’s terms as well as detailed explanations of the following:
- what the policy covers and what it doesn’t cover
- when you become “vested” (meaning you’ve been enrolled in the ERISA disability plan long enough to file a claim)
- how to file a claim, and
- how to appeal if your long-term disability claim is denied.
Keep in mind that ERISA disability insurance regulations don’t apply to LTD plans provided by churches or government entities for their employees. (29 U.S.C. §§ 1003(b) (2026).) And ERISA doesn’t apply to a LTD plan that you purchase as an individual (which is often the case for people who are self-employed).
What You Need to Know About ERISA Long-Term Disability Insurance
Here are ten important things to remember when you’re considering filing an ERISA claim for long-term disability benefits.
1. How Your LTD Policy Defines "Disability" Will Affect Your Claim
Some ERISA long-term disability policies define the term so narrowly that you’ll only be considered disabled if you can’t perform the duties of any occupation. Other policies define disability as the inability to substantially perform your own occupation.
After you've been receiving benefits for a while (usually for 24 months), your policy's definition of disability could switch from the "own occupation" standard to the more strict "any occupation" standard. This change can result in your LTD benefits being terminated after two years.
Before applying for long-term disability benefits, check your ERISA disability policy's summary plan description for your insurer's definition of disability and other LTD requirements.
2. There's a Waiting Period Before Your ERISA Disability Plan Pays Benefits
Most ERISA disability plans provide for an "elimination period" of 90 or 180 days when you're not yet eligible to receive benefits, even though you're disabled. This waiting period is often the same length of time that your short-term disability (STD) policy will pay benefits. You generally must use up all your sick time and STD benefits before you can file for LTD benefits.
3. ERISA Disability Benefits Are Taxable
Most group long-term disability policies, such as those provided by an employer, are paid for with pre-tax dollars, so you must pay taxes on the LTD benefits you receive. Expect federal, state, and local taxes to be withheld from your monthly payments.
By contrast, if you've purchased an individual LTD plan directly from an insurance company with your own after-tax dollars, your benefits will be tax-free.
4. Insurance Investigators Can Conduct Undercover Surveillance After You Apply for ERISA Disability
Video surveillance is especially likely if you file an ERISA disability claim based on conditions like fibromyalgia, which aren't diagnosed using MRIs or x-rays. Undercover surveillance can consist of investigators doing any of the following:
- staking out your house
- following you on errands or to doctor's appointments, and
- filming you outside your home.
Insurance investigators use undercover surveillance to find reasons for the insurance company to deny your claim. Be cautious in any interactions you have with anyone you think might be an investigator.
Most importantly, follow your doctor's orders regarding your physical limitations. For example, if your doctor tells you to avoid lifting more than ten pounds, don’t carry heavy bags of groceries from your car to your house. You could injure yourself, and if you're under surveillance, you could hurt your disability claim too.
5. Your ERISA Plan Will Require You to File for Social Security Disability
If you're getting long-term disability benefits and you’re also approved for Social Security Disability Insurance (SSDI), your long-term disability insurance company saves money. That's because if you get SSDI benefits, the LTD insurer can withhold some of your monthly ERISA disability benefits to offset your monthly SSDI payment.
The offset gives your long-term disability insurer a big incentive to see you approved for Social Security benefits, which is why you’re required to apply for SSDI. Some LTD companies will even arrange for a disability attorney to represent you in getting Social Security benefits.
6. The LTD Insurance Claims Process Is Structured to Deny Your Claim
Your insurance company or LTD plan administrator decides whether you’re approved or denied for benefits. Not surprisingly, this framework frequently results in the denial of claims that deserve to be approved.
But just because your long-term disability claim has been denied doesn’t mean your case is over. Every ERISA disability plan provides a method (and a deadline) for you to file an internal appeal of your denial.
If you exhaust your insurance company's internal appeals process without winning LTD benefits, you can file suit in federal court. But you won’t be able to introduce any new evidence, because federal court judges decide ERISA disability cases on the "administrative record,” meaning the records that are already in your LTD file.
7. LTD Pays a Percentage of Your Former Salary, But Not the Entire Amount
How much you'll get in monthly long-term disability benefits depends on the specifics of your ERISA disability plan, but it’s usually around 60% of your former salary. By contrast, short-term disability benefits often pay 80% or more of your earnings. Check your policy's summary plan description to learn how much your long-term disability insurance pays.
8. Not All ERISA Disability Plans Pay Benefits for the Same Length of Time
Some long-term disability policies provide for benefits until retirement age, while others pay for a fixed number of years (usually five or ten). You’ll need to check the summary plan description of your LTD policy to see how long you can receive long-term disability benefits.
9. Most LTD Policies Limit Payments for Certain Disabilities
How long you can get ERISA disability benefits could depend on the type of impairment you have. Many LTD plans limit benefits if your claim is based on a mental or nervous condition, such as depression, anxiety, or chronic fatigue syndrome. It’s not uncommon for LTD benefits based on mental conditions to be limited to 24 months.
10. Doctor's Opinions and Medical Records Are Critical to Your LTD claim
Be sure to tell your doctor if you’re considering filing a disability claim. Your insurance company will get copies of your recent medical records and send your doctor a packet of forms to complete. Your doctor’s statement is crucial to the success of your long-term disability claim, just as it is for your SSDI application.
Double-check that your file contains all the relevant medical evidence in your case. It’s nearly impossible to add new medical evidence to the administrative record if you need to appeal your claim to federal court.
Getting an ERISA Attorney to Help You Through the Claims Process
ERISA disability plans are a valuable part of your employer’s benefits package. Having a long-term disability policy means your income is protected if you can't work for many months due to a disability.
But LTD claims can be challenging to navigate without an experienced attorney, especially if your insurance company acts in bad faith to deny you benefits. A long-term disability lawyer knows how to level the playing field when you’re up against a large insurance company. (And you’ll definitely want to consult an ERISA attorney if you’re planning on filing an appeal in federal court.)
Learn more in our articles on hiring a long-term disability attorney and how much long-term disability lawyers cost.
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