Coronavirus Implications to Short- and Long-Term Disability Plans

For a majority of employer-sponsored group disability plans, coverage for a disability linked to COVID-19 is likely to depend on each individual plan’s definition of “disability.” Although definitions may differ from plan to plan, most plans typically state that an employee is considered disabled if he or she is unable to perform the duties of his or her occupation. Employees that test positive for COVID-19 but only experience minor symptoms will probably not qualify as disabled under their employer’s group plan; however, those who are severely affected by coronavirus may be eligible for benefits.

Long-Term Disability Plans

Most long-term disability plans include an elimination period, which is a certain period of time (usually 90-180 days) an employee must be unable to perform his or her job duties before benefits are available. For employees that seek long-term disability benefits due to COVID-19, it will be necessary for them to definitively link their COVID-19 diagnosis with long-term health issues that prevent them from fulfilling their job duties. 

Even if they are approved for benefits, those benefits may only be available for a defined period of time if the employee’s plan requires a test change to maintain his or her disability status. Many plans include a change in the definition of “disability” after a specified time period – generally 24 months – to “any reasonable occupation” rather than “own occupation.” If an employee is able to perform the duties of any reasonable occupation consistent with his or her education, training, and experience, benefits may cease.

Short-Term Disability Plans

In general, plans that mandate a clear medical reason for disability coverage will not provide benefits for employees who are unable to work because of a state’s mandatory quarantine order. However, some plans may have a broader definition of disability that includes coverage for employees under a state order to stay home. In addition, companies that have opted for a self-funded, short-term disability plan, which can be a payroll practice and therefore exempt from ERISA, will have greater discretion regarding the award of short-term disability benefits to employees affected by COVID-19.

Another way that employees who contract COVID-19 through their job may receive benefits is through their state’s workers’ compensation program. The Occupational Safety and Health Administration (OSHA) has said that COVID-19 qualifies as an “occupational disease” for workers’ compensation claim benefits when an employee is infected as a result of performing work-related duties. It is the employer’s responsibility to determine whether a COVID-19-related illness is work-related, which generally means that it:

  • Occurs in the course and scope of employment;
  • Has resulted from workplace exposure; and
  • Is “peculiar” to the employee’s work, meaning that the infection is found exclusively among or presents greater risk for certain employees

Some short-term disability plans are structured to offset any benefits payable with state workers’ compensation short-time leave benefits, while others may totally exclude events covered by state workers’ compensation. 

There is little doubt that as the COVID-19 pandemic continues to plague American workers and businesses, disability benefit claims will likely increase. Employers are well advised to consult with experienced benefits counsel to determine their options and obligations to employees under current law.

HBL’s experienced, responsive team of ERISA attorneys helps plan administrators understands what regulations and rulings are relevant and how best to apply these rulings in practice. Learn more about our team by calling 678-439-6236 today.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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