Long Term Disability (LTD) insurance can provide critical income protection if you or one of your employees are unable to work due to a serious illness or injury. But many group LTD policies come with a pre-existing condition exclusion that can limit your access to benefits, especially during the first year of coverage. If you’re concerned about how this might affect you or your employees, you’re not alone. Here’s what you need to know.
What is a pre-existing condition exclusion in a group Long Term Disability policy?
A pre-existing condition exclusion is a clause in your group LTD policy that limits coverage for disabilities caused by medical conditions you were being treated for before your coverage began.
This exclusion is designed to prevent individuals from enrolling in the plan specifically because they anticipate a disability based on a known condition. While this helps insurers manage risk and keep premiums lower for everyone, it can pose challenges if you have a chronic illness or recent medical history.
When is a condition considered “pre-existing”?
Each policy defines this slightly differently, but a common definition involves what’s called a “look-back period.” Here’s how it generally works:
- A condition is considered pre-existing if you received medical treatment, consultation, care, or services, or took prescribed medications for it within a certain period of time (usually 3 to 6 months) before your LTD coverage started.
- If you become disabled within the first 12 months (sometimes 24 months) after your coverage starts, the insurer may deny your claim if the disability is due to that pre-existing condition.
Example:
Suppose you were treated for severe migraines in February, and your LTD coverage began on April 1. If you become disabled in July due to migraines, the insurer may consider them a pre-existing condition and deny the claim—because you received treatment within the look-back period and became disabled within the first year of coverage.
What are my options if I have a pre-existing condition?
Having a pre-existing condition doesn’t mean you’re without protection or options. Consider the following:
- Wait Out the Exclusion Period
If your condition is stable and you don’t expect to become disabled right away, the most straightforward approach is to maintain coverage and wait out the exclusion period (usually 12 months). After that, the policy will typically cover the condition like any other.
- Appeal if Denied
If your claim is denied due to a pre-existing condition exclusion, don’t assume the denial is final. Insurers can make mistakes in interpreting medical records or policy language. Work with your doctor and consider consulting an attorney who specializes in disability claims.
- Supplement with Individual Disability Insurance
You may be able to purchase individual disability insurance outside of your employer plan. These policies often require medical underwriting, but they may offer more flexibility in covering pre-existing conditions, especially if you’ve been stable or well-managed.
Bottom Line
Understanding the pre-existing condition exclusion in your group Long Term Disability policy is crucial, especially if you have employees with ongoing health issues. While the exclusion can limit coverage early on, it’s often temporary. Planning ahead and knowing your options can make a huge difference in ensuring that your employees have the income protection they need.
If you’re unsure how your specific policy handles pre-existing conditions, it’s best to review the Summary Plan Description (SPD). Please bring all of your LTD pre-ex questions to us at Silberman Group. We would love to help you.
