Your Money Lost: Group Long Term Disability Insurance Policies

Did you know your tax dollars are used to subsidize private health insurance companies?

If you are unfamiliar with Social Security Disability Insurance, here is an excellent primer put out by AARP. SSDI provides protection specifically to qualified U.S. citizens who become disabled and lose their ability to earn an income. We all pay for this through our Social Security taxes. It’s one of the many benefits of being a United States citizen.

When my husband was employed at Fidelity Investments he had a group disability insurance policy with CIGNA. He even purchased extra coverage–to protect our family with 80% of Paul’s income just in case something happened.

But that money was ill-spent as CIGNA did everything in their power to deny coverage to a man with Progressive-Relapsing Multiple Sclerosis. This is not unusual behavior for any private insurance company. In fact, it’s exactly what they do.

But first, you must apply for Social Security Disability Insurance.

When Paul was mid-way through with short term disability and it appeared he was getting progressively worse and not better, CIGNA telephoned us to inform us that they were getting his file ready for long term disability. Great, we thought, they are helping us! Isn’t that what they collect a premium each month for? The answer to that is, no. They collect a premium each month to make money. Keeping that money and not paying it out in claims helps their bottom line.

From the Group Life Market Survey 2009 outlining the sales in disability insurance, you can see group sales disability totaled $1.3 billion at mid-year, with 27 private insurance companies covering 95% of the total market.

After CIGNA denied Paul’s benefits, they telephoned us again. “You must apply for Social Security benefits and send us proof of your application or your long term application with us will be invalid.”

Why does a private insurance corporation demand that you apply for government benefits?

Money, that’s why. If you qualify and receive Social Security Disability Insurance then your insurance company will off-set the amount of money they contractually owe you by the amount of money you will receive from the government. For example, if Paul’s CIGNA policy was to have paid him $5,000 a month and SSDI would give him $2,000 a month, then CIGNA would subtract that amount and only give Paul $3,000 a month. Your tax dollars are used to subsidize private corporations.

Your money is used to fatten the bottom lines of Aetna, AIG Benefit Solutions (that’s how much now in government money for AIG?) CIGNA, Guardian Life, Hartford Life, Mutual of Omaha, Northwest Mutual, Prudential, Sun Life, UnitedHealthcare, Unum and Wellpoint, to name but a few.

Why pay a premium at all?

An entire industry has been set-up surrounding group disability plans to help private insurers NOT pay the claim.

For example, every year the American Conference Institute (one among many) has a yearly event titled, “Litigating Disability Insurance Claims.” Please click the link and read the brochure–it is so very eye-opening. From the brochure, here is what the insurance companies, their general counsels, federal judges (they are the very same federal judges who will decide your disability case!) and doctors will discuss at the above-mentioned conference, emphasis in blue is mine:

    • Whether the medical record is reliable: Whether the treating physician is biased and favors the patient
    • Providing the credentials of the IME’s (Independent Medical Examiner–hired by insurance company): Identifying what is relevant; Highlighting the appropriate credentials; Ways to appropriately critique the credentials of the IME: what to look for and ways to address the inadequacies; Whether specialized medical knowledge is a necessary component of the IME’s credentials (in the case of Multiple Sclerosis, patients are seen and treated by neurologists, the IME who looked at Paul’s written medical records was not a neurologist and first letter of denial was written by an RN and not a doctor)
    • Rotating vendors to avoid the appearance of bias and to ensure an independent review of the claim
    • The denial factor: How many claims were reviewed and denied?; Whether repetitive denial leads to an appearance of bias; Ways to utilize claim denial information
    • Whether the claimant is constrained by financial pressures and returns to work disabled

The last one is of particular interest to me because that is exactly what happened to this family. This family, faced with zero income as Paul had been the sole bread winner for most of our married lives, had to return to work at Fidelity Investments, disabled. This is something the insurance company counts on to help bolster their claim that you are not disabled.

Medical evidence that you are disabled will not prevail.

This conference, and others like it, focus on how to prevent paying a claim, and it does not matter if the claim is legitimate, what matters is the corporate bottom line. The American Conference Institute also has another conference dedicated to defending ERISA claims attended by more federal judges–the very same ones who will hear your ERISA disability case.

Your premium dollars, the ones you work so very hard to pay each month to your private insurance carrier, are not spent on paying a claim should you wake up one day with cancer, MS or become injured in an accident. No. Those hard earned dollars are spent on figuring out how not to pay you. And then, they use your tax dollars to reduce the amount they owe you.

United States taxpayers, it’s time to say enough. Group long-term disability policies are bogus products. They should either be highly regulated or not allowed to be sold at all, as the poorly written policies and the attendant machines put in place by the insurance companies to deny all claims, make the products fraudulent and worthless.

Links:

CIGNA written brochure for brokers about their long term disability product.

Dell and Schaefer, a law firm, discussing CIGNA including the LINA settlement in California.

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