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What Happens if My Employer Fails to Pay My Long-Term Disability Premiums?

Disability Conversion Insurance Attorney

For many people, employer-provided long-term disability insurance offers a sense of peace of mind and financial security. What happens when you rely on an employer to provide group long-term disability benefits and your employer stops paying your group long-term disability insurance premium? Typically, if you miss an insurance premium payment, you’re charged a late fee and given a little extra time to pay. The same is likely true if your employer accidentally misses a disability premium payment.

What if your employer goes bankrupt or simply can’t make further disability premium payments? Do you lose long-term group disability benefits immediately? Will you have group benefits until the end of the month or policy term? What if you’re receiving long-term group disability benefits already and your employer goes under?

These are questions we can answer for you at DarrasLaw. As America’s top-rated long-term individual disability lawyers and nationally pre-eminent group ERISA attorneys, we know your legal rights. Call us today at 800-898-7299 or contact us online to schedule your free disability policy analysis and free claim consultation.

Long-Term Disability Conversion Insurance

While some states, such as New York, New Jersey, Hawaii, Rhode Island, and California, mandate that employers provide limited short-term disability insurance or paid family leave, they are exceptions. Federal law and most other state laws do not require employers to provide long-term disability insurance. Employers may offer group disability insurance as part of an employee benefits package, and they may also terminate it.

You may forgo having long-term disability insurance and instead rely on Social Security Disability Insurance (SSDI). SSDI benefits are limited, and you may find qualifying for them difficult.

You may also purchase individual long-term disability benefits from an agent or broker if your employer doesn’t sponsor a group plan. This may constitute as the best option if you’re healthy and your insurer has warned you that it is going to terminate your group long-term disability plan. If you pay the premiums, the benefits flow tax-free, and individual long-term disability insurance offers many legal rights and consumer protections that do not come with group long-term disability policies. A nationally prominent individual disability lawyer at DarrasLaw will review your policy with you for free and help you understand its terms and legal provisions.

Many states have legislation related to your legal right to maintain private long-term group disability benefits after an employer’s default. This is typically called your right to convert.

You may purchase conversion insurance without having to prove you’re insurable if your long-term disability insurance policy ends for any reason other than:

  • Your employer’s decision not to renew the plan
  • Your failure to pay disability contributions
  • Your retirement

You must generally meet certain qualifications:

  • You must have been covered for at least one year before the policy ended
  • You must not be disabled and/or currently receiving long-term disability benefits
  • You must be less than a specified age
  • You must be a legal resident of the United States or Canada.

Termination for Payment Default Before Disability Onset

If your employer failed to make your disability insurance payments and didn’t tell you, are you covered?

Group long-term disability insurance policies are typically purchased and sponsored by your employer. However, many employees contribute to their disability premiums. You have legal rights under your group long-term disability insurance policy even if your employer is making the group premium payments directly. You’re the insured and a covered employee.

Federal and certain state laws typically prevent insurers from terminating individual or group long-term disability insurance benefits without warning. Your insurer will typically give you a few months’ notice that an employer is in default on premium payments and that your long-term disability coverage will terminate on a specific date. This should give you time to apply for conversion coverage or purchase individual long-term disability insurance from an agent or broker.

Some private insurance companies may offer you separate options. For example, they may give you a discount on an individual disability insurance plan through the company or offer additional incentives to retain coverage. These private incentives are typically not required by law.

Termination for Default After Your Disability Onset Date

As long as the onset date of your injury or illness (the date you were injured or became sick) occurred while your policy was in effect, you can generally claim group long-term disability benefits under your policy. Losing your job after your injury or illness won’t always prevent you from claiming group long-term disability insurance benefits as long as you meet the policy’s proof of loss requirements.

The same principle generally applies if your employer stops paying disability premiums while you’re disabled. If your policy was in effect at the time of your illness or injury and you claimed long-term group disability benefits in a timely manner, your employer’s cancellation of the policy does not discontinue your benefits. Your long-term group disability benefits depend on the date of your injury or illness, but this can go both ways.

For example, if you sustain an injury on June 30, the long-term disability policy in effect on that date will provide your long-term group disability benefits. This typically means about 60 percent of your income minus any offsets.

It’s also possible that the terms and limitations of your long-term group disability policy will bar you from claiming benefits for an injury or illness that occurred after the June 30th example stated above. Read your long-term policy closely if your insurer has notified you about a missed payment by your employer.

Contact the Experienced Long-Term Individual Disability Attorneys and Skilled Group ERISA Lawyers at DarrasLaw for a Free Consultation

The laws regarding long-term disability insurance are different in every state, and some states have specific disability termination laws that others don’t. Remember that disability insurance is a business, and a private insurance company drafts the provisions and limitations of your group long-term disability policy. It has the right to set its own rules for default as long as they comply with federal and state laws. The answer to the question of what happens when your employer fails to pay your insurance premiums is, “It depends.”

Fortunately, the nationally respected long-term individual disability insurance attorneys and award-winning group ERISA lawyers at DarrasLaw have more than 100 years of combined litigation and claim experience fighting for individual and group long-term disability benefits on behalf of the injured and sick—and we win. We can analyze the terms and conditions of your group long-term disability insurance policy to ensure it complies with state and federal laws. We can also advise you of your options and help you fight a wrongful delay, denial, or termination of your individual or group long-term disability benefits. Schedule your free policy analysis and free claim consultation with DarrasLaw today by calling 800-898-7299 or contacting us online.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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