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Disability Insurance & Coronavirus (COVID-19) – Are You Covered?

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The COVID-19 pandemic has upended daily life in ways scarcely imaginable to most of those living today.

The alarming scale of death and serious illness attributable to the new coronavirus disease is only one aspect of the crisis. The fiscal catastrophe that unfolded as national governments shut down vast swathes of their economies will reverberate for years to come, threatening billions of already tenuous livelihoods and encouraging government stimulus efforts that could spark runaway inflation. No one quite knows how the world will recover from the tragedy.

Uncertainty pervades our personal lives as well. Among the many sources of trepidation for working Americans these days: whether certain financial protections we expect to come through for us in times of hardship actually will for those of us personally affected by COVID-19.

One such form of financial protection is disability insurance, a vital source of economic security for people unable to work productively (or at all) due to illness or injury.

There are two types of disability insurance: short-term disability (STD) and long-term disability (LTD). The former typically kicks in after the policy’s elimination period, which is anywhere from one week to 90 days. It provides coverage for up to six months. The latter has a longer elimination period, anywhere from one month to two years, but provides coverage for much longer — often until age 65.

Many workers are eligible for group disability insurance benefits through their employers. Workers not eligible for employer-sponsored coverage can purchase disability insurance on the private market at any time. If you’re not yet covered, it’s not too late to shop for coverage through an online broker like PolicyGenius and get the ball rolling on your application.

If you are covered or are awaiting approval, you’re not alone in wondering how COVID-19 affects your policy.

When Your Disability Insurance Policy Won’t Cover Coronavirus-Related Claims

Whether you already have a disability insurance policy or you’re in the process of applying for one, note that there are some cases in which your policy doesn’t cover COVID-related loss of work.

You’re Quarantining Due to COVID-19 Exposure

The standard medical quarantine lasts for 14 days from exposure but can be extended at the discretion of the quarantined party’s medical provider.

Disability insurance does not cover time off work for medical quarantine due to probable COVID-19 exposure. Medical quarantine is distinct from voluntary social distancing or state-enforced sheltering in place because it occurs under a medical provider’s guidance rather than social norms or state law. Neither social distancing nor state-enforced sheltering in place is grounds for disability insurance claims, either.

Those who are ineligible for disability coverage could still be eligible for up to two weeks’ paid sick leave at their regular pay rate under the Families First Coronavirus Response Act’s expansion of Family and Medical Leave Act (FMLA) coverage. This benefit applies mainly to employees of organizations with 50 to 500 workers.

You’re Caring for a Relative or Dependent With COVID-19

While selfless, caring for a relative or dependent with probable or confirmed COVID-19 is not disabling and therefore isn’t grounds to file a disability insurance claim. However, workers obligated to care for relatives or dependents who’ve been diagnosed with COVID-19, ordered into medical quarantine, or compelled to remain home due to school or child care facility closures may qualify for up to two weeks’ paid sick leave at two-thirds their regular pay rate under the FMLA expansion. Eligibility requirements are the same as for sick pay under medical quarantine.

Your Illness Abates Before Your Policy’s Elimination Period Ends

If your illness abates before your disability policy’s elimination period ends, you no longer qualify for benefits and should not bother filing a claim.

The precise definition of “abates” depends on your occupation. If you can perform your job duties remotely and recover from your illness to the point that you’re able to work normally, you may not be considered disabled even if you remain infected. If you can’t work remotely and must therefore meet the official guidelines to cease isolation established by the Centers for Disease Control and Prevention (CDC) in addition to any policies imposed by your employer before returning to work, you may have a longer window to file your claim.

In either case, short-term disability is more likely to help during a mild or moderate COVID-19 illness lasting a few weeks. However, long-term disability could prove indispensable if your infection precipitates a chronic health condition or is severe enough that your recovery takes months. It’s not too late to apply for short-term disability, but you definitely want long-term disability too in case you develop a chronic condition.

You Can’t Get a COVID-19 Test or Doctor’s Note

Depending on your insurer’s policies, a positive COVID-19 test might not be a required accessory to your disability insurance claim. Documenting your futile attempts to get tested increases your insurer’s likelihood of accepting the results of a telemedicine-enabled diagnosis of probable COVID-19.

But it doesn’t guarantee it. And if you can’t find a medical provider willing to affirm in the absence of a laboratory test that you have probable COVID-19 based on your self-reported symptoms, your insurer probably won’t buy your claim.

You’re Able to Work Through Your Illness

The mere fact that you have confirmed or probable COVID-19 does not entitle you to disability payments. If you’re able to perform your job duties remotely or earn money at home by other means during a mild illness, your insurer could deny your claim. Only if you subsequently developed serious illness or complications would you become eligible for benefits.

Your Policy Lapses Before You File a Claim

Disability insurance providers aren’t obligated to pay benefits on lapsed policies. That’s why it’s essential to pay premiums on time and promptly redress any past-due balances. Once your policy officially lapses, which typically occurs after a grace period lasting 30 to 45 days, you must reapply for coverage and undergo updated underwriting, wasting valuable time. But your insurer is unlikely to issue a new policy if you’re already sick when you apply.

Doctor Stethoscope Nurse Medical Icons Check Up

When Your Disability Insurance Policy Might Cover Coronavirus-Related Claims

Every disability insurance provider is different, which means you should never assume your disability insurance policy covers a specific condition without consulting your policy documents or a company representative.

That said, your disability insurance policy is likely to cover a coronavirus-related claim under several circumstances, all of which require you to have a confirmed or probable case of COVID-19 that outlasts your policy’s elimination period.

You’re Unable to Work at All During Your Illness

Even if your illness doesn’t land you in the hospital, a medical provider could still deem you unable to work due to confirmed or probable COVID-19 illness — because you’re confined to your bed at best or sedated on a ventilator in the hospital intensive care unit at worst. After clearing your policy’s elimination period, you should remain eligible for disability benefits until you recover from the illness and receive medical clearance to resume your job duties.

You’re Unable to Perform Your Specific Job Duties During Your Illness

If your disability insurance policy has an “own occupation” clause that entitles you to benefits when you’re unable to perform your specific job duties (as opposed to any productive work at all), then you could have grounds to file a claim even when your illness remains mild. For example, you might be too weak to perform a physically demanding job or too contagious to attend a workplace where human contact is unavoidable.

You Develop a Disabling Condition Due to COVID-19

Though much remains unknown about COVID-19 and the virus responsible for it, all indications are that some proportion of the disease’s survivors experience long-term and perhaps permanent health consequences that curtail life expectancy and negatively affect their quality of life.

These consequences include (but aren’t limited to) complications from stroke and damage to vital organs like the heart, kidneys, liver, and lungs. Depending on their duration and impact on sufferers’ productive capacity, such complications could meet insurers’ standards for long-term disability.

Final Word

The aftermath of the COVID-19 pandemic could last far longer than the outbreak itself, as millions of families worldwide mourn loved ones lost too soon, countless more survivors contend with chronic health conditions, and a severely wounded economy struggles back to its feet.

Some of us will be affected more than others. If you were unfortunate enough to experience a severe, drawn-out illness or can trace a chronic health condition to your infection, your disability insurance policy could provide sorely needed financial support until you’re once again able to work productively. If you’ve put off applying for coverage until now, it’s not too late — but it will be if and when you get sick.

Are you worried your disability insurance policy won’t cover complications of COVID-19?

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.