COVID-19 illness or stress as a result of the pandemic may render employees unable to work. Disability insurance is an important benefit that should not be overlooked in these circumstances.
Currently, many employees, who have not been outright terminated, may be temporarily laid off or be subject to various reduced hours plans. Some workplaces provide employees with Short-Term Disability (STD) and Long-Term Disability (LTD) benefits that allow the employee to be absent from work for illness reasons. These benefits replace income lost due to the employee’s inability to work due to an illness. If the employee’s illness will be lengthy, the employee may qualify for STD benefits and, ultimately, LTD benefits if they are unable to return to any remunerative work.
What is short-term and long-term disability?
Short-term disability benefits (STD): STD is an income replacement while the employee is away from work for a brief, defined period and unable to perform their own job due to a disability. Most or all of the employee’s income is usually replaced during the STD period.
Long-term disability (LTD): LTD is income replacement over a long term, potentially the rest of the employee’s life until retirement age (generally age 65), where the employee is disabled from performing their own job or any other even with reasonable retraining. They come into effect after an “elimination period”, a period of time away from work due to disability (typically covered by STD benefits). A significant portion of the employee’s income (e.g., 2/3) is usually replaced during the LTD period.
Disability: Stress, Anxiety and Depression
A good working definition for disability is:
“The test of total disability is satisfied when the circumstances are such that a reasonable man would recognize that he should not engage in certain activity even though he is not physically unable to do so… There is total disability if the insured’s injuries are such that common care and prudence require him to desist from his business or occupation in order to effectuate a cure.” (quoted by the Supreme Court in Paul Revere Life Insurance Co. v. Sucharov)
The coverage for stress, anxiety and depression is the same as for any other disabling condition under STD or LTD plans.
This means that if someone is unable to work because they are excessively stressed about world situations (such as the Covid19 pandemic) they may be able to get STD or LTD from their employer. This is often a preferable option to quitting their job or being unemployed.
For some employees who are too stressed to work might be eligible for STD or LTD while they are temporarily laid off. Those employees might get insurance payments during their layoff, which would be particularly helpful during these times of economic uncertainty.
Applying for short-term and long-term disability
Both Short-Term and Long-Term disability may be covered by the employee’s insurance company. Some employees have STD coverage but not LTD or the other way around. To apply for disability benefits, an employee must be able to prove that they are unable to continue to work because of a medical condition. The disability can be physical, psychological, cognitive or emotional.
STD and LTD information should be outlined in the employee’s benefits package provided by the employer. The disability application is generally provided by the insurance provider or by the employer’s human resources department.
The application has three parts: the employee portion, the employer portion and the physician portion. All three sections must be submitted to the insurance company along with all supporting medical documentation.
Upon the receipt of the application, the insurance company will render a decision as to whether the employee is approved or denied for disability benefits. If the employee has been denied, they can appeal their decision up to three (3) times, each one within ninety (90) days of the decision.
Coverage for employees who have been laid off during COVID-19
Many workers believe that because they are laid off, they are not eligible to apply for STD or LTD benefits. This is not entirely correct. Generally, the most important criteria for an STD or LTD policy is whether the employee is totally disabled from working, it often does not matter if they are laid off at the time of the disabling event.
If a worker had STD and LTD benefits while they were working, they will still have those benefits throughout their layoff. It is important to note that every benefit policy is different. The majority of policies will pay benefits if an employee can show that they have a disability that prevents them from working.
This is similar to buying glasses through your insurance policy. If you buy glasses and then submit the receipt for reimbursement to the insurance provider a few weeks later after being terminated (or quitting) you are still covered because you were covered at the time you made the purchase.
Generally, during the first two years of LTD (depending on the policy), an employee must be able to prove that they are unable to do their occupation. After that time period, the employee must then prove that they are unable to do any occupation.
Coverage for employees who have been terminated
If an employee has been terminated in Ontario, the Employment Standards Act (“ESA”) requires an employer to continue a worker’s wages and all benefit contributions until the end of the notice period. If an employer fails to continue all benefits a worker would have received had they continued working during said notice period. If an employer fails to do so, it would constitute a breach of the Employment Standards Act, 2000 (ESA).
If an employee has been terminated and needs LTD benefits, they should apply for these benefits even though they are no longer working. The employee’s benefits should be continued throughout the notice period.
What if the employee is denied STD or LTD benefits?
An employee may be denied disability coverage for many reasons, some of which may include that they do not believe they are “fully disabled” in accordance to the policy. Even if the employee has ample documentation to support their claim including medical records and doctor notes, it may be deemed insufficient. A worker who has been denied for benefits has two options. The first is to appeal the decision. A worker can do this up to three (3) times, and each one must be done within 90 days of the decision. It is important to note that unless a worker’s physician can provide significantly different documentation to support their claim, it is not the best choice to appeal the decision.
The second option a worker has is to commence an action against their insurance company for wrongful denial of disability benefits. To achieve the best outcome, it is preferable to retain legal representation. This will take the stress off the employee and allow them to focus on recovering. Monkhouse Law would be happy to assist in a wrongful denial of benefits claim. For a free consultation, please call 416-907-9249.
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