Each disability insurance policy
has a different formula for calculating prior income and loss of
income. Some policies look to the year or 24 months immediately prior to
date the disability claim was filed, other policies use averages over a
several year period, and some policies give dentists the option to pick
between the two.
Once your prior income
is determined, it is typically averaged out on a monthly basis and
compared to your actual monthly income to determine the loss of income,
expressed as a percentage. If you meet a certain percentage loss,
usually 15% or 20%, you are eligible for benefits.
If your disability policy averages out prior income over a period of
several years, the impact on prior income will likely not be that
significant if the drop in income dips for a few months and then
recovers. However, if the policy looks to the period immediately prior
to filing the claim, a series of a few months with little to no income
could have a more drastic impact on how prior income is calculated. And
if your prior income remains low when you ultimately file a partial disability claim, it becomes much harder to meet the threshold loss of income to qualify for partial disability benefits.
See also Can I File a Disability Claim if My Office Has Already Closed?
Action Step: If you are considering
filing a partial disability claim, review your policy’s partial
disability provision and become familiar with how “prior income” and
“loss of income” are calculated under your policy. If you had a drop in
income related a disabling condition prior to the loss of income from
the coronavirus, and you are able to back that up with documentation,
evaluate whether it would be appropriate under your policy to file
partial disability claim based upon that loss of income.
Each dentist’s claim for disability benefits involves different
facts, disabling conditions, policy requirements, insurance companies,
etc. While our attorneys are making an effort to share general knowledge
with the dental community and answer dentists’ questions about the
impact of the coronavirus, this not a substitute for individualized
advice from an experienced disability insurance lawyer. If you would
like to speak with our attorneys and have them take an in-depth look at
your particular situation, please feel free to contact us directly.