Most disability Claims Manuals state the following: “An Advance Pay and Close is a claims management tool designed to help an insured return to work when there is a reasonable and expected return to work date/plan. By offering an alternative payment method, we are providing an option that may assist some claimants in their return to work efforts.”
Ah, but there’s more to the story……….let’s take a look.
Simply, an Advance Pay and Close (AP&C) is when a disability insurer pays you 6-12 months of benefits in anticipation of being able to go back to work. The claims examiner approves the payment for up to 6 months of benefits and closes your claim on the date you are paid. This gives the disability insurer the advantage of being able to shut down the financial reserve six months sooner than would normally be reasonable, assuming, of course, you really were intending to going back to work.
There are usually very specific criteria which must exist before an Advance Pay and Close is done. All parties must agree to it. An Advance Pay and Close is an alternative payment option, and the insured MUST AGREE TO IT. Written documentation from the employer must be in the claim file indicating a “specific return to work date.” Finally, the claims examiner must have a written medical release from your physician, releasing you to return to work as of a specific date. An AP&C is voluntary and all of the above must exist before the claims handler can even offer you the advance payment option.
The problem with this is that once closed, your claim may STAY CLOSED. Technically, most group LTD polices have what is called a “recurrent” provision. This means if you attempt to return to work on a full time basis and cannot within a 6 month period, you will be allowed to come back on claim without having to meet another elimination period. However, the disability insurer doesn’t tell you this in their AP&C confirmation letters. So, let’s say you agree to receive 6 months of advance benefits, attempt a full time return to work and find you just can’t do it.
Now, the disability insurer will want you to submit all medical records and information from your doctor as to WHY you couldn’t return to work anyway. Managers and Directors have to “approve” or “sign off” on all re-opens (because the insurance reserve is adversely affected) and they now require what I call a “preponderance of medical evidence” in order to re-open your claim. Chances are your claim will be denied outright when you inform them you can’t go back to work after all.
Claims examiners use the AP&C to “throw you a bone”, too. The conversation might go something like this: “Mrs. Jones, we think you should be able to go back to work in June. So, in support of that, we’ll send you 3 months of benefits in anticipation of you being able to return to work. Is that ok?” Notice there is no employer agreement, no physician release, just the insurance company telling you, the company thinks you can go back to work in 3 months. A RN probably told that to the claims handler, so now an AP&C is offered. The insurance company will shut down the insurance reserve immediately, show an immediate contribution to profit, and chances are, you won’t have a claim in three months because your disability insurer won’t re-open it, no matter what you do.
When you accept an AP&C, the insurance company will NOT give you a written explanation of your ERISA appeal rights because technically an AP&C is not a claim denial or even a settlement. But, it can be a final denial, and most of the time it is. It is very difficult to convince the disability insurer you couldn’t return to work after all, and they should re-open your claim. Once an insurance company closes your claim on its pay system they are reluctant to reopen at any costs.
Here’s another passage generally included in the insurance claim manual:
What if a claimant’s disability continues beyond the AP&C date?
“When the claimant contacts us that he/she is unable to return to work after all, they have put us on notice of a continued claim for benefits. At this point, we have not formally denied the claim nor have we provided the appeal procedures. Since the claimant has notified us that he/she is still disabled, we have to consider the file as a pended claim file. This does not mean that we have to do the footwork to obtain medical information for the claimant. We should inform the claimant of the need to provide proof of continued disability before payments can resume. Explain that if we do not receive the information within 30 days, we will consider the file closed. Do not open the claim on the system. The claim should have a follow-up scheduled for 30 days. If nothing further is received, additional benefits should be denied. A formal denial letter should be sent that includes the Appeal paragraph.”
A word of caution: There is no such thing as a “transitional benefit.” Your policy does not contain a provision which allows either an AP&C, or what some claims specialist call a “transitional benefit.” The term, “transitional benefit” has a positive connotation; it leads you to believe being paid in advance in anticipation of returning to work is a good thing and the insurance company is a “good guy.” If your physician has released you to full time work, and you have a definite return to work date, this practice IS a good thing. However, the AP&C practice can also manipulate you to return to work sooner than you can, or should.
We are now only two weeks or so before the end of the year. Insurance companies may be looking to close close claims using some form of what I’ve described above. Be very careful to not make claims decisions based on money for Christmas. It could be a disaster!
