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LTD Break in Coverage

Guest Maple1

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An employee was covered under the voluntary long tem disability plan in 2000, elected coverage again in 2001, but was somehow (by employer) dropped from coverage. Employer is not sure how it happened.

It is clear from the enrollment forms that the employee elected coverage in 2001 and the employer and or insurer dropped the ball.

Employee elected coverage for 2002 and due to "break in coverage" insurer requires either medical underwriting (blood etc) or payment of back premiums for 2001 - when employee was apparently not covered under the LTD plan.


1. Is employee entitled to coverage in 2002 without paying either 2001 premiums or going through medical underwriting?

2. What happens if employee becomes disabled before medical underwriting is complete?

3. What happens if after going through medical underwriting, the insurer denies coverage? Can employee then pay 2001 premiums and still be covered?


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If the employee was covered in 2000 and from the election form for your open enrollment for 2001 it is clear that he or she wanted to continue coverage you should address this with your carrier. If you are not getting the response you are looking for, get your broker involved.

If the carrier agrees that the employee should have been covered for 2001, the employee will be responsible for paying all of 2001's premiums. You could have a degree of difficulty with the carrier because the carrier may point out that the employee should have realized that premiums were not being deducted from his or her paycheck for a whole year.

If the employee is in good health and wants to save all of 2001's premium, he or she can just go ahead and have the medical underwriting done. Obviously he or she did not need the LTD coverage in 2001.

If the employee becomes disabled while going through medical underwriting, he or she is probably going to be SOL. With voluntary LTD, coverage will not usually begin until the employee is AAW. Therefore, even if the employee was not disabled when submitting the evidence of insurability, but then becomes disabled while waiting for approval, he or she will not be AAW when the decision is made. Therefore, coverage will not begin until he or she comes back to work. If the employee is not disabled, then coverage will commence once the carrier approves the request.

As far as the last point goes, I don't think the employee would want to be covered if he or she didn't use the coverage. It's your call as the company. Since the carrier isn't looking for the cash, I would say let it be.

As always, review your contract thoroughly. The above comments were made to what is standard in the industry.

If you would like to discuss further, do not hesitate to email me.

Take Care,


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