Does Your Private Disability Policy Eliminate Your Employers' Group Disability plan?
This week we had a call with an attorney who had a client going through the claims process from a disabling event. This attorney had some questions on his client's disability policy and the current employer group plan, which paid him 60% of his pay; not to exceed $15,000 per month of benefit. This is a common group disability provision.
The client also had bought the AMA disability plan for $15,000 per month, so if he had an accident or illness there was going to be $30,000 rolling in per month. He would be all set, or so he thought.
When he went to file the claim, the group policy told him that he was not eligible for any benefits from their plan because he had another group plan. Although the employer policy clearly states in the income benefit offsets section of the contract, that it will reduce dollar-for-dollar any benefit received from another group plan. But is the AMA private disability plan a "group" plan?
When the attorney called me to consult on this situation, there was a good bit of confusion on this because the client had conveyed to his attorney that he had bought the AMA plan and that it was his individually underwritten plan so this wasn't considered 'income' to offset and he didn't think this was a group plan. View a quick tutorial on group plans here.
I had to inform the attorney that where all of that seems accurate, the AMA, the same as ACS, AAFP, ACOG, and many more along with state medical association that sell this type of group insurance, was that this was indeed a group plan and the insured was issued a certificate not a policy. These issues come up all the time because few ever read their policies as they unfortunately see something and buy it without ever really taking the time to understand what the claim time experience is going to be like.
There are no loopholes here as the group plans are very clear in how they would pay. So then the question is: Should the AMA have said something about their policy maybe reducing or eliminating an insured's group policy at claim time?
Maybe they should, maybe they don't know, and/or maybe the folks helping over the 800-number just don't have the experience to the provide this type of advice to those who call in or purchase the policies online. Another point of confusion comes from their Own Occupation definition, which differs from the traditional definition, defined in this video. We often get calls about how AMA's definition differs from Ameritas, Guardian, MassMutual, OhioNational, Principal and The Standards' specialty language.
My point is simple, find an independent insurance expert that can help you review what you have or to help you shop for a portable, private, individual disability insurance plan. Don't leave it up to chance, nobody likes surprises except for birthdays and holidays. A disability claim is not the time for a surprise! 🥳