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“COVID-Proof” Your Clients’ Group Disability Insurance

By Keith Mangrum 2:02 pm MDT 12/1/2020

As the calendar turns toward the winter months, and as cases of COVID-19 remain stubbornly high, here are a few reminders to help your healthcare professional group clients “COVID-proof” their group short-term disability (STD) and long-term disability (LTD) insurance coverages.

COVID-19 has been especially troublesome for healthcare workers, many of whom are on the front lines doing battle with this potentially life-threatening disease. It is important for these professionals to be protected against a loss of income in the event they are infected, affected, and possibly disabled. Here are a few considerations for these key coverages:

“Pre-Disability Earnings” (PDE) Definition

Most STD and LTD policies define PDE by using the prior year’s taxable income. However, many medical practices have experienced significantly reduced patient traffic in 2020 and are just now recovering. If a doctor becomes disabled in 2021, and the claim is based on income from 2020, the PDE used to pay this claim may be significantly lower than in a normal year. To help remedy this shortfall, consider requesting that the carrier change the definition of PDE to the average of the past two years’ taxable income.

Short-Term Disability (STD)

Most COVID-related cases will result in, at most, a short time out of work. However, a healthcare care worker may also test positive for COVID-19 and be quarantined for up to 14 days – even though they are asymptomatic and otherwise able to do their job. Many STD policies do not address the quarantine issue and consider an infected worker to be disabled ONLY if they have symptoms that physically prevent them from doing their job. Thankfully, some STD carriers have decided to include workers who test positive for COVID-19 and cannot work due to being quarantined – whether symptomatic or not. Be sure to check with your STD carriers for adjustments they have made on the issue of quarantine.

  • NOTE: If your clients are front-line healthcare workers who are infected by the coronavirus while at work, and are subsequently disabled, they may be eligible for workers compensation (WC) benefits. Check with their WC carrier for more details.

Infectious & Contagious Disease (I&D) Riders

Your clients may think they’re covered for COVID-19 because they have an I&D benefit rider. Unfortunately, in most cases, the I&D rider will NOT provide protection for healthcare workers infected by COVID-19. Here’s why:

  • The I&D rider is traditionally sold on LTD policies only, so the virus would have to still be present for at least 90 days while also causing a loss of income. This is not a likely scenario.
  • The I&D rider is designed to protect a healthcare worker from loss of income that’s solely from testing positive for a life-threatening infectious and contagious disease. If the virus physically disables a worker, then the claim would be handled under normal policy wording –there would be no need for an I&D rider in this scenario.
  • Many I&D riders specifically name HIV and Hepatitis C as the diseases the rider applies to. Check your clients’ policies to see if the definition allows for any life-threatening infectious and contagious disease, as categorized by the Centers for Disease Control and Prevention.


Healthcare workers are experiencing unprecedented levels of stress and anxiety due to COVID-19. How do your clients’ LTD policies deal with stress-related disabilities? While virtually all LTD policies limit the duration of mental/nervous claims, many policies limit these claims to a maximum of 24 months in a claimant’s lifetime (there may be some continuation if the claimant is hospitalized after 24 months). A more “COVID-proof” LTD policy would allow for 24 months of benefits, and if the claimant returns to full duties for 6 months or longer, then suffers a relapse, it would provide another 24-month benefit duration. Check your clients’ policies to see what would happen if stress becomes a disabling condition.

Severe Disability Benefit

While most COVID-19 patients have shown to be asymptomatic or suffer for just a few weeks, there are some victims who have become quite ill, spend weeks or months in the hospital, and suffer longer-term or lingering effects. While these victims will undoubtedly qualify for normal group LTD benefits after 90 or 180 days, they may also suffer significant medical expenses.

Some LTD policies offer additional benefits for severely disabled claimants like these. Check your clients’ policies to see if such a benefit is included. One type of “severe” or “catastrophic” benefit on the LTD market is called the Retro Disability Benefit (RDB). A claimant can qualify for this additional benefit if: the claimant is hospitalized in the first 48 hours of disability, the claimant remains in the hospital for 14 or more consecutive days, and the claimant is totally disabled (i.e., not working) during the policy’s 90- or 180-day Elimination Period (EP, or benefit waiting period).

  • NOTE: If all three conditions are met, then the carrier will pay an additional benefit that’s equal to the number of months of the EP (either 3 or 6 months) times the claimant’s gross monthly LTD benefit. For example, a claimant with a $10,000 monthly benefit and a 90-day EP policy would receive 3 X $10,000 = $30,000 in additional benefits.

Learn about a group LTD policy that supplements your clients’ individual disability insurance (IDI).

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