Definition of Disabled

[Guest theothermark]

Our document defines "Total and Permanent Disability" to mean "a physical or mental condition of a Participant resulting from bodily injury, disease, or mental disorder which renders such Participant incapable of continuing any gainful occupation and which condition constitutes total disability under the federal Social Security Acts."

In my opinion, this definition does not specify who must make the determination as to whether or not the participants condition constitutes total disability under the SSA (unless this is specified explicitly in the Act, which I haven't found). Should the Plan Administrator rely solely on the approval letter from SSA or would a letter from a licensed physician that states a participant's condition constitutes total disability under the SSA also be acceptable.

I would be liberal in the interpretation of this definition and not rely only on the SSA letter but am curious as to how others interpret the definition.

[jevd]

Code section 72(m)(7) applies

[Guest theothermark]

If I recall correctly, 72(m)(7) states that the disabled person must be able to furnish the IRS with proof that their disability would satisfy the IRS definition of a disabled person under said section. I would hope that all qualified plans have a definition of a disabled person that is in line with this.

My question was more along the lines of who can make the determination as to whether a participant is in a condition which constitutes a disability under the SSA.

In your opinion, would a physicians letter certifying total disability fly in the eyes of the IRS? Does the definition referenced prohibit the administrator from accepting disability certification from persons outside the SSA?

[jevd]

Would that not be the participants issue with the IRS? Does the plan administrator require a certification of disibility from the plan participant? I don't think SSA disability would necessarily comply with 72(m)(7). I'm no expert in this area but I think if the PA took reasonable steps to have disability certified that they would be off the hook.

Any other opinions or experience out there??

[david rigby]

"... and which condition constitutes total disability under the federal Social Security Acts."

IMHO, the intent of this wording implicitly includes the condition that the SSA will actually make this determination.

[QDROphile]

I disagree with pax. I am notorius for being overly critical of plan documents, but if actual SSA determination is required, the plan should say so and I have seen plenty that do. The issue is whether the fiduciary determines disability or if the fiduciary simply looks to a third party's determination. Among other things, the difference affects claims procedures as well as the outcome of the claim.

As a general rule the fiduciary has primary duty for all determinations under the plan. I think the fiduciary is responsible for determining disability because the plan does not say someone else does. The plan defines disability by incorporating the SSA standard by reference. The fiduciary has to apply SSA standards in its determination. Perhaps the fiduciary could rely on the SSA determination disability if the SSA has actually determined disabilty -- who is better to know and apply the SSA standard than the SSA? I don't think absence of SSA determination lets the fiduciary off the hook.

Here is the best part. The fiduciary first has to interpret what the plan says about who determines disability and how. Fiduciaries have discretion in interpretation and it may be OK for the fiduciary to interpret according to pax. But I don't think fiduciaries get points for punting.