Notifying the Insurer of a Change in Circumstances
In Illinois — and elsewhere — private disability insurance beneficiaries may find themselves in a somewhat confusing situation as they make significant progress over the course of their rehabilitation and recovery process. The source of this confusion is in the push-pull relationship between two fundamental issues in the disability context. Disability benefits recipients are entitled to benefits only if their condition is suitably disabling such that they are incapable of working, but they also have a duty to mitigate their losses.
In other words: those who receive disability benefits must strive to recover from their disabling condition. They must consistently work towards “losing” their benefits. Of course, it’s often the case that the disabling condition is so severe that it cannot be resolved — under such circumstances, benefits will generally be paid out through the length of coverage.
What happens if you have actually made substantial strides in recovering from your disabling condition? Let’s take a look.
Duty to Report a Change in Circumstances
If your eligibility to receive benefits could be affected by a change in your circumstances, then you are required to report that change to your insurer so that they can re-evaluate your eligibility for benefits.
In the private disability insurance context, there is usually a required reporting schedule that benefits recipients must adhere to — typically on an annual basis, but sometimes every six months — but there may also be an additional voluntary reporting requirement. If your circumstances have changed materially during the interim period, then you’ll likely have to notify your insurer.
Once the insurer has been notified of a change in circumstances, they will likely have you evaluated by a medical professional to determine whether you are still “disabled” as per the plan definition. This process can be something of a hassle, which is why so many disability insurance claimants choose to negotiate an insurance buyout (when their claims are being disputed).
What Qualifies as a Material Change in Circumstances?
Whether you are required to report a change of circumstances — and whether the insurer is entitled to terminate or otherwise alter your benefits — depends on the “materiality” of the change.
A change in circumstances is “material” if it will influence your eligibility to receive disability benefits, or the amount of benefits that you might receive. For example, if you are currently receiving benefits for a “total disability,” but you underwent a surgical intervention that improved your condition such that you are now only eligible to receive “residual benefits,” then you would have to notify your insurer.
Not all material changes are linked to the disabling condition itself. The basis of disability insurance benefits is that you are incapable of working — either in your own occupation, or in any other occupation (depending on the plan). Thus, if your former employer offers to change the duties of the job to better suit your new limitations (and offers you the position), then you will likely have to notify your insurer of this change.
Consult Our Experienced Chicago Private Disability Insurance Lawyers for Guidance
Bryant Legal Group, P.C. is a Chicago-based boutique insurance litigation firm whose attorneys have decades of experience litigating various insurance-related disputes on behalf of policyholders — including disability insurance disputes — helping them secure their rightful benefits in particularly difficult or contentious situations.
We are committed to the provision of client-oriented legal representation. Unlike many other insurance litigation firms, we work with staff-consulting physicians and other experts to help us properly evaluate the disability at-issue, and provide statements and testimony, among other things. This approach offers deep insight into your disability issues and enables us to present a more effective argument for benefits — using this approach, we have obtained significant case results over the years.
If you’d like to speak further about your disability claims, we encourage you to get in touch with one of our experienced Chicago private disability insurance lawyers. Call (312) 561-3010 today to request an appointment.