How to understand and navigate declined disability claims

From growing market demands to our high-performance culture, it can be challenging for Canadian employers to balance the health of their business against the health of their workforce.

Disability absences can affect a company’s bottom line with drug costs, benefit plan costs, productivity costs and replacement costs of absent employees.[1]

Navigating the costly impact of a disability absence is made even more complicated when an insurer or third-party provider declines a disability claim. Has your business has been faced with a declined disability claim, or are you worried that your claim may be denied?

Read on to learn more about the basics of a disability claim and how to move forward from a denial from the benefits experts at People Corporation.

What is a disability?

By design, disability benefits protect employees should they encounter an illness or injury severe enough to prohibit them from performing the essential duties of their occupation. These benefits provide employees with a level of income based on a percentage of their pre-disability earnings.

Given that an employee’s absence from work begins with an illness or injury, there is often an expectation that disabilities will be outwardly obvious and physical in nature[2]. Many people falsely believe that disability benefits are only payable in the presence of a diagnosable medical condition. While a diagnosable medical condition may be the reason someone is classified as having a disability, this is not the sole basis for a disability classification under most disability benefit plans. Rather, an analysis will be conducted utilizing many factors, including the essential duties of the occupation and the functional impairments of the individual.

Essential vs. nonessential job duties

When filing for a disability claim, employers will likely be tasked with separating the various functions performed in the employee’s role as essential versus nonessential.

The Ontario Human Rights Commission notes that when assessing a particular task or duty as essential, consideration must be given to the frequency with which the duty is performed, the time spent on a given duty, whether the job function would change if the duty were removed, and how the duty fits with other duties performed in the job.[3]

How an insurance company determines whether an employee has a disability

Many factors are considered by an insurance company during a disability adjudication. Insurers often look to third-party databases for information related to the variables associated with the individual’s disability.

For instance, when considering occupational demands and what an insurer would deem essential versus nonessential duties, many Canadian insurers and providers refer to databases such as the National Occupational Classification (NOC) system for the essential duties of a given occupational category.

In the NOC database, for example, a bank teller would have the same core occupational functions regardless of which bank they work for. The tasks or duties that are specific to their employer would not be considered part of the essential duties of that occupation.

Issues in receiving a positive disability adjudication

One of the most common issues that arises during a disability adjudication involves occupational requirements. When an occupational activity is unique to a specific employer and not seen in the same role at other similar businesses, determining what is an “occupational requirement” becomes more difficult.

Even if an individual is unable to perform the duties or demands unique to their company’s job description, disability benefits may be declined if those duties are not considered “core functions” of their occupation.

Companies should pay particular attention to this point when creating job descriptions.

Does what you’re asking your employees to do differ substantially from the job descriptions of similar roles at other companies?

If so, your organization can put itself in a better position for assessing and accommodating absences of all varieties, medical or otherwise.

National accommodation requirements

Employers must accommodate employees who have a disability, provided the accommodation does not result in undue hardship for the employer. It is important that employers have a progressive workplace and adhere to accessibility practices that support the needs of their employees.

Strategies and best practices for accommodating employees with disabilities

The Canadian Human Rights Commission has provided a guide for employers managing the return to work of employees following a prolonged absence. The guide provides a framework for facilitating the return of employees who may need workplace accommodations, as well as a step-by-step approach for how to manage accommodation requests. Among other things, the guide suggests:

  • creating a case record
  • contacting the employee
  • determining accommodation options
  • implementing and monitoring accommodations
  • and engaging necessary stakeholders [4]

What to do if your employee’s disability claim has been denied

While most employers understand and appreciate the duty to accommodate, the challenge becomes how to do so if the employee’s disability claim has been declined by the insurer or third-party provider.

Employers should not just assume that an employee is no longer disabled. Rather, it is critical for employers to understand the rationale for the decision to determine how best to support the employee.

Consider, for example, whether the decision the result of insufficient medical information, a contractual decline, or some other reason. The reason for the decline may not necessarily disprove the existence of a disability or functional impairment.

Employers should immediately begin assessing and implementing workplace accommodations from the onset of an absence.

Can you leverage existing solutions to maximize the return-to-work potential of a disabled employee?

If so, you can create a culture of awareness and a more sustainable workforce.

Disability benefits are complicated. People Corporation makes them simple.

At People Corporation, our disability benefits experts have what it takes to make your individual and group benefit plans come together seamlessly. We focus on combining traditional group disability coverage with individual disability plans. This strategy effectively safeguards against dramatic long-term disability premium increases, and also ensures that high-income earners are adequately covered. These plans are especially attractive to employers and employees alike as coverage can be offered without providing medical evidence.

Not sure where to start when it comes to disability benefits? Let us help you. Click here to start the conversation.

Originally written by Jessica Gobran, Director of Disability, at People Corporation.

Adapted from the article of same name in the Fourth Quarter 2020 issue of BENEFITS QUARTERLY, published by the International Society of Certified Employee Benefit Specialists.

[1] Mood Disorders Society of Canada (2009). Quick Facts on Mental Illness and Addictions in Canada, third edition. See: /quick-facts.
[2] See: -model-disability.
[3] Human Rights at Work 2008. Third edition. “IV. Human Rights Issues at all Stages in Employment. (2. Setting job requirements.)”
[4] Canadian Human Rights Commission, Minister of Public Works and Government Services. A Guide for Managing the Return to Work. 2007.