Long-Term Disability and Eligibility

[Guest NPWA]

Would it be permissible for a group health plan to have a provision that excludes employees who are receiving benefits under the sponsor's long-term disability plan?

I'm concerned this could be a health-status related factor. I thought that it might be a permissible distinction based on similarly situated individuals, but I'm not sure that's ok when the factor that makes the individuals similarly situated is disability.

Under the terms of the LTD plan, an individual on LTD remains an employee of the company for two years. After two years of LTD, the individual's employment is terminated, although LTD benefits may continue.

Any thoughts or insights would be greatly appreciated.

[GBurns]

Since most group health plans (I assume this to be medical insurance) are guaranteed issue, how would you exclude this employee?

Also what would be the point of the employer excluding the employee if the insurance company does not require it and gives no reduction in premium etc for the exclusion?

What empowers any employer to exclude any employee based on a physical impairment, disability or illness?

What empowers any employer from excluding an employee for medical reasons especially when the insurer does not?

[oriecat]

Don't most insurance companies have actively at work clauses? It seems like these LTD employees wouldn't be eligible anyway, once the maximum leave is used (it's three months on my plan) and they don't return to active work, at which time they should be able to take COBRA coverage.

The LTD plan might say that the ees remain employees for two years, but I doubt an insurance plan would say that, in my (albeit limited) experience.

[GBurns]

HIPAA removed and eliminated actively at work requirements.

[KIP KRAUS]

You say that under the terms of the LTD plan an employee remains an employee of the company for two years. Is this the LTD insurer’s standard contract language so that they can continue to receive premium payments for these employees for two years or is it something that your employer decided to do? In any event, I don’t believe that the definition of an employee for purposes of the medical plan needs to be determined on the definitions in a separate LTD contract.

The employer should be the one who determines when an employee on LTD should be terminated from employment as to benefits under a medical plan. You of course have to make coverage available during the FMLA period and offer COBRA continuation coverage after FMLA coverage ends assuming you are subject to these provisions.

As to actually terminating their employment, I have in the past been cautioned by labor attorneys that setting a specific time limit for considering a person terminated from employment because of a long-term disability could cause ADA problems. Obviously at some point it could reasonably be determined that a person may never return to employment based on their medical prognosis for recovery.