How Are Disability Benefits Calculated?

In Florida, and throughout the country, whether you receive disability benefits — and the benefits amount that you are awarded by your insurer — depends largely on the disabling condition at-issue and the provisions of insurance policy.  As policies can vary quite substantially, you and your attorney will have to closely evaluate the language of your insurance agreement in order to determine the benefits to which you’re entitled.

Generally speaking, the disability benefits calculation begins with the insurer’s determination of your condition.  Some policies have stricter, more restrictive definitions of “disability,” which require that the policyholder demonstrate that they cannot work any job (not just their current job).  In any case, if you qualify as “disabled” under the plan, then you may receive disability benefits.

Benefits are very likely to differ based on the structure of your disability insurance plan, however.  Let’s take a look.

Percentage-Based Income Replacement

In the private disability insurance context, the benefits you receive are often a critical issue in negotiations when initially signing onto an insurance plan.  Percentage-based benefits are desirable for knowledge workers and other white-collar workers with high monthly wages.  For example, if you are a medical professional earning $20,000 per month, then 50 percent of your monthly wages in benefits will be $10,000 — though it represents a substantial drop in total income, it is likely to be sufficient to cover your immediate financial needs.

Benefits Capped Out

Bear in mind that in many policies where the benefits are paid out based on a percentage of total monthly wages, these benefits are very often “capped.”

Let’s return to our previous example.  Suppose that you are signed onto a policy with a 50 percent benefits payout, and your monthly earnings are $20,000 per month.  Ostensibly, you should receive $10,000 per month.  After careful evaluation, however, you discover that the policy caps your benefits at $5,000 per month.  This is a substantial difference that could seriously affect your ability to take care of yourself and your family — as such, it’s important that you work with an experienced disability insurance attorney who can challenge the provision and its application to your particular case.

Flat Benefits Structure

In some disability insurance policies, the benefits are specified — they are not tied to income at all.  Flat benefits are a great choice for those who have varying monthly income (i.e., workers with significant commission income), or for those with low monthly income but who would like to keep their risk profile relatively smooth.

For example, you might have signed onto a disability insurance plan that will pay out $4,000 in monthly benefits regardless of your income.  This also minimizes the need to prove your income with documentary evidence (pay stubs, etc.).

Residual Benefits

It’s worth noting that some disability insurance policies do not require you to accept an absolute win-or-lose scenario in the event that you are only rendered partially disabled as opposed to totally disabled — those policies may give you residual, or “partial” benefits if your disability does not necessarily prevent you from working, but simply reduces your ability to perform all your job responsibilities.  The difference in income will thus be covered by the residual benefits.

For example, if you are forced to work part-time due to your condition, and your income drops from $5,000 a month to $2,500 per month, then residual benefits may be paid out to cover the difference in income ($2,500 per month).

Speak to an Experienced Team of Miami Disability Insurance Lawyers Today

If you have had a legitimate disability benefits claim wrongfully denied by your insurer, or otherwise mishandled (i.e., delayed, undervalued, etc.), then you may be entitled to challenge the adverse decision of your insurer and obtain your rightful benefits.  In some cases, you may even have the right to sue the insurer for bad faith.

Here at Ver Ploeg & Marino, P.A., our Miami-based attorneys have over two decades of experience litigating a range of insurance disputes on behalf of our clients, including those that involve problematic disability benefit determinations.  We understand that policyholders are exposed to significant hardship in the wake of a disability, and that an insurer’s adverse actions can further exacerbate such issues.  As such, we are committed to providing personalized and comprehensive representation to clients — your concerns are prioritized throughout the engagement process.

Call (305) 577-3996 today to schedule a consultation with one of our experienced Miami disability insurance lawyers.  We look forward to assisting you with your dispute.

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