Understanding disability rights is critical for workers whose jobs may be on the line – whether you are aware of the end of your employment or are blindsided by a company announcement.
The months leading up to the 2022 holiday season were certainly not the most wonderful time of the year for many white-collar professionals. Startups and tech-oriented companies received the most attention from the media due to high-profile personalities and public outrage.
According to LayoffsTracker.com, 121 companies laid off more than 23,000 workers in the U.S. in October 2022. By November 21st, another 108 companies had given pink slips to 51,123 workers, making the prior month seem like glory days. November saw reports and approximations of layoffs including:
Meta – 11,000 employees (13% of its workforce)
Amazon – 10,000 employees (3% of its workforce)
Cisco – 4,165 employees (5% of its workforce)
Twitter – 3,700 employees (50% of its workforce)
Carvana – 1,500 employees (8% of its workforce)
Roku – 200 employees (7% of workforce)
With so many workers losing their jobs, it is natural for them to worry about losing their short and long-term disability insurance benefits. Understanding layoff and post-employment insurance opportunities will help these professionals keep their minds at ease while updating their resumes and determining how to continue providing for themselves and their families.
Disability Insurance Benefits
Basic disability insurance monthly benefits are the same under most individual or group long-term disability plans—that is, you should receive income-replacement payments if you are sick or injured and are either totally or partially disabled.
Short-Term Disability. If you suffer a disabling injury or illness that requires treatment and appropriate medical care for a short period of time (typically 12 months or less), short-term disability (STD) insurance benefits can provide monthly income replacement. STD income insurance replacement benefits are based on your monthly income, along with a predetermined percentage of this income that your plan or individual policy will pay out each month in the event of a covered, short-term disability after a waiting period is exhausted.
Long-Term Disability. The typical waiting, or elimination, period for long-term disability (LTD) insurance benefits is between 30 and 180 days. LTD benefits kick in when an insured, as a result of an injury or illness, cannot perform the important duties of his or her regular occupation or in some cases is unable to do any occupation by which they are trained, educated, or suited.
Most STD and LTD insurance plans cover critical conditions such as heart attacks, and mental and physical injuries sustained in and outside of work.
The same holds true if you develop a disabling illness or are diagnosed with a life-threatening condition, like cancer or a neurological disorder. Certain non-life-threatening conditions, like maternity leave, may also qualify for STD and LTD.
Benefits and Layoffs
Depending on protections offered by various state employment laws, workers already receiving STD benefits generally can be laid off as part of a large reduction in force. However, an employee will not lose LTD eligibility as long as the disability began before their last day of work.
DarrasLaw has represented countless clients who were terminated while receiving short-term disability benefits. This is often a calculated move made by the employer and often comes at the end 12 weeks of leave due to time taken via the Family Medical Leave Act (FMLA), but before the end of 26 weeks (or 180 days) of STD, so the LTD has not yet begun.
One misconception about LTD is the emphasis placed on the date the insurance benefits start, which can be 30 to 180 days after the disability starts. The date of the injury or disability sickness itself – and not the date the benefits kick in – is the most important date for a worker. Any subsequent termination or lay-off is generally irrelevant as long as the disability began while they were still actively at work and employed. In practical terms, that means prior to the last day of work a physician evaluated the sickness or accident and found it totally or partially disabling for the employee.
What If You’re Next?
Federal law requires employers with more than 100 employees to provide at least 60 days of notice before mass layoffs. In the case of Amazon’s approach to workforce reduction, the e-commerce giant prepared their employees with approximately two months of advance notice.
These workers face enhanced risks if they file any disability claim, even a valid one, after the notice of layoff. Insurance companies will undoubtedly be suspicious of such claims – regardless of the severity of the sickness or injury. For example, if you were informed of mass layoffs at the end of a day and suddenly begin testing for a sickness you had long worked with, the insurance company will investigate the sickness or injury and the validity of the claim with intense scrutiny because you were aware you were being laid off.
The insurance industry’s cynicism about such claims is rooted in reality – when waves of layoffs begin, so do disability filings. The National Bureau of Economic Research (NBER) refers to the housing crisis beginning in December 2007 and ending in June 2009 as “The Great Recession.” This led to 1.4 million former workers applying for disability insurance benefits between 2008 and 2012.
As NBER reported in 2019:
Among this group, nearly 1 million were induced to apply by the recession and otherwise would not have applied, while the remainder would have applied at a later date but accelerated the timing of their claim due to the recession. The 1 million induced applicants represented nearly 12 percent of all claims filed during this period.
This influx of disability claims put a tremendous strain on Social Security and private insurance carriers, entities which will now go to great lengths to avoid a repeat of recent history.
The Bureau of Labor Statistics classifies most tech firms in the categories of “information” and “professional and business services,” and one consolation in losing these sorts of jobs is that STD and LTD benefits typically do not stop on the day of your termination. In fact, if you have filed your claim timely, comprehensively and with good treating doctor support, the insurance benefits might last for weeks or months after your employment has ended.
Employees in any industry should contact an experienced long-term disability insurance lawyer before filing a short- or long-term disability claim, to help protect their benefits in the event of loss of employment. Proper documentation and reliable and objective testing can make all the difference in the world. Remember, just because you got a notice of layoff doesn’t mean your disabling sickness or injury isn’t compensable.