employer didn't pay full premium on disability insurance

[Guest martha bronson]

I have an approved disability claim. Coverage paid by employer. Plan book says I am entitled to 60% of my income. Employer reported income that is $40,000.00 short of what my income was and paid a premium based on the wrong income that is $40k lowere than actual. Carrier says its employers problem and employer says I have to deal with carrier. The monthly benefit difference is substantial. Question: As a group plan, isn't the "plan" responsible to pay in accordance to the "Plan" regardless of administrative error in reporting less income than I really had?

[KIP KRAUS]

Martha:

I have had this kind of problem before as a benefits manager. The simple fact is , if you are covered under a typical group LTD plan, the employer is obligated to pay premiums in accordance with the policy provisions and plan rates. Mistakes in reporting the wrong premiums, should be rectified by your employer. In fact, the insurer should insist on it. Most group contracts I've seen allow for the insurer to conduct an audit to see if premiums are being reoported correctly. However, in 20 years I've never had one do that.

Most Group Contracts also contain provisions that do not invalidate a person's coverage do to employer error recordkeeping or premium reporting.

It sounds like your employer is not willing to back you up on this, which surprises me, because it is a simple solution for them to pay the correct premiums retroactive to the date they first made the error. Also, the insurer should be bound by contract to pay you in accordance with the contract regardless of your employer's error unless you are covered under some contract provisions I've never heard of.

If you are working for a small employer, your LTD coverage may not be a true group coverage and thus may have different contract provisions than the ones I've referred to above. In any event, I would look to your employer to correct the error.

Without additional information I can't provide any further guidance, and what guidance I have provided may not applicable to your employer's plan.

Good Luck.