My disability claim has been denied, but why am I losing my health insurance?

The old saying “when it rains, it pours” frequently comes to mind when dealing with a denial of disability benefits.  When an individual’s disability claim has been denied by the insurance company, this usually results in a trickledown effect resulting in the loss of other benefits the person was previously receiving.  These lost benefits may include health insurance, dental and vision insurance, a previous life waiver of premium benefit, years of service credit for retirement plans, loss of monthly car or loan forgiveness payments, and other benefits.  One of the most popular benefits that is typically affected is an individual’s health insurance.

Frequently, when an individual is unable to work because of a disabling condition, the individual’s employer will continue to retain him or her for a period of time as an employee.  This period of time may be anywhere from a couple of weeks to several years.  Sometimes the individual may be designated by the employer as an “inactive employee” and indefinitely continue to receive employment-related benefits, such as health insurance coverage.  However, once the insurance company denies or terminates the disability claim, which in effect generates a false signal to the employer that the person is no longer disabled; the employer will commonly require the individual to return to work or face being terminated.  Unfortunately, most people are unable to return to work in this scenario, and are terminated by the employer, resulting in the loss of health insurance coverage.  If the individual is not entitled to COBRA, or cannot afford COBRA premiums, this situation creates a huge financial burden on the individual, as they no longer have valid health coverage.  This is compounded even more when the person is ineligible for Medicare or Medicaid.

Individuals should be aware of the direct and indirect financial ramifications that a denial of disability benefits may have on them, underscoring the need to seek competent legal help upon a denial of disability benefits.