The New York State Insurance Department has issued a batch of guidance that could affect the way group disability insurers handle timing of benefits payments.
Group disability insurers operating in New York may have to take extra steps to justify use of group disability policy elimination periods that are longer than 180 days, according to Louis Felice, deputy chief of the department’s health bureau.
To get state approval for a group disability elimination period longer than 180 days; a group disability insurer must explain why the longer period is necessary, Felice writes in Supplement Number 1 to Circular Letter Number 14 (2007).
“For example, a longer elimination period may be appropriate where the insurer has issued both short and long-term disability policies together, and the elimination period is designed to prevent payment of both long and short-term disability benefits at the same time,” Felice writes.
The 2007 circular letter dealt with a New York Court of Appeals decision on a case involving a unit of MetLife Inc., New York.
After the circular letter came out, many insurers asked about how they should handle potential conflicts between the state’s statutory pre-existing condition waiting period and any elimination periods included in group disability policies, Felice writes.
Conflicts could arise in cases in which “an insured who has no credit for prior disability coverages … is healthy enough to be hired but has a pre-existing condition that leads to her total disability during the policy’s pre-existing condition waiting period, and where the policy also includes an ‘elimination period,’” Felice writes.