The main difference between group and individual disability insurance is who controls the policy and what laws govern it.
An employer typically owns group plans, which fall under a restrictive federal law called ERISA. Individual policies are usually owned by you and often protected by more favorable state laws.
Understanding the difference between group and individual disability policies is critical when an insurer denies a claim, as the path to challenging that denial changes dramatically depending on your policy type.
A disability insurance denials lawyer from Sandstone Law Group can explain these differences and how they affect your rights during a free case evaluation. We understand the tactics insurers use for both group disability claim denials and individual disability claim denials. We leverage the specific laws governing your policy, whether it's ERISA or state laws in places like Arizona or California, to build the strongest possible case.
Long-Term Disability Claim Denied?
The process you must follow and your appeal rights after a denial depend on the type of policy you have.
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With group disability insurance, you typically have to complete the ERISA appeal process before you’re allowed to file a lawsuit. This step is mandatory and time-sensitive.
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With individual disability insurance (IDI), you may have the option to skip the internal appeal and move directly into a private disability insurance claim in court.
Sandstone Law Group handles both types of denials and understands the different rules, deadlines, and strategies required to protect your rights.
What Is Group Disability Insurance?
Group disability insurance is the type of coverage most people have through their job. It is a benefit offered by an employer, and while it seems convenient, it comes with a major catch: a federal law called the Employee Retirement Income Security Act of 1974, or ERISA. Legal challenges for claimants often include:
- Mandatory internal appeals: You must first appeal the denial directly to the same insurance company that denied you. You are asking the fox to reconsider its decision to raid the henhouse.
- Limited legal remedies: If your appeal is denied and you file a lawsuit, your case will be decided by a judge, not a jury. You typically cannot introduce new evidence, and the judge often must give deference to the insurer's original decision.
- No punitive damages: Under ERISA disability limitations, you cannot sue the insurance company for bad faith, emotional distress, or punitive damages. The most you can typically recover is the back payment of the benefits you were owed in the first place.
Insurers know these rules inside and out. They use the restrictive nature of ERISA disability insurance to their advantage, making it difficult for individuals to win a group disability claim denial appeal without a fight.
What Is Individual Disability Insurance (IDI)
An individual disability insurance policy is one you purchase yourself, usually directly from an agent or broker. Because it is a private contract between you and the insurer, it is typically considered a form of state-regulated disability insurance:
- You may be able to sue for bad faith: Wrongfully denied policyholders may be able to file a lawsuit for bad faith disability insurance claims if an insurer in a state like Arizona or California acted unreasonably or dishonestly in the process.
- Right to a jury trial: You have the right to have your case heard by a jury of your peers, who may be more sympathetic to an individual's struggle than a federal judge who must follow ERISA's strict rules.
- No mandatory appeal: While it can be strategic to submit a written appeal, you may not be required to do so before filing a lawsuit. This gives you more control over the timeline and legal strategy in an employer disability plan vs private disability plan dispute.
Insurers know they face greater financial risk if they wrongfully deny an individual disability claim, which can lead to fairer outcomes when partnering with experienced legal professionals at Sandstone Law Group.
How A Lawyer Can Help With Group and Individual Disability Insurance Claim Denials
For group disability insurance, the process often involves navigating the complexities of ERISA. This means:
- Building a comprehensive administrative record during the internal appeals process, as this may be the only evidence a judge will consider in court.
- Understanding the limitations of ERISA, which can restrict your ability to present new evidence or seek damages beyond the benefits owed.
For individual disability insurance, the legal approach may focus on leveraging the broader protections offered by state law. This can include:
- Using the threat of a private disability insurance lawsuit or a bad faith claim to pressure the insurer into a fair resolution.
- Taking advantage of the ability to present new evidence and have your case heard by a jury, depending on the circumstances and state-specific rules.
Mistaking one type of plan for the other can lead to costly errors.
At Sandstone Law Group, we understand the nuances of group and individual disability claim denials.
Whether your case involves ERISA or state-specific rules (in places like Arizona, California, New York, New Jersey, Massachusetts, Florida, Texas, Illinois, and Washington), we know how to help counter insurer tactics and fight for the benefits you may be entitled to under the law.
Group vs Individual Disability Insurance Plans FAQ
How can I tell if my disability policy is a group or individual plan?
If premiums are deducted from your paycheck as part of your employer's benefits package, it's likely a group disability insurance plan that may fall under ERISA. If you pay the premiums directly to the insurance company for a policy you purchased on your own, it's likely an individual disability insurance policy.
What States Have State-Specific LTD Rules?
States with notable LTD-relevant insurance laws or consumer protections:
These do not create separate LTD systems, but they do have state laws that matter in individual LTD claims:
- California – strongest case law and consumer protections
- New York – many individual-policy regulations + strict unfair claims practices rules
- New Jersey – specific rules on policy form approvals and insurer conduct
- Massachusetts – detailed insurance regulations that affect individual LTD
- Florida – extensive bad-faith and unfair claims practices laws
- Texas – strong bad-faith remedies, particularly for individual policies
- Illinois – state-based rules on policy language and coverage interpretation
- Washington – strong consumer-protection statutes
Important:
These matter only for individual LTD policies.
ERISA group LTD plans are governed federally and the state rules are mostly preempted.
Is it possible to have both a group and an individual disability policy?
Many professionals, particularly those in high-income fields, choose to have both. A group plan through an employer provides a baseline level of coverage, while a private individual disability income policy (IDI) offers additional protection and stronger legal rights. This combination can create a more comprehensive safety net.
What if my employer is a government or church entity?
Group disability plans offered by government employers or church-affiliated organizations are often exempt from ERISA. These plans may instead fall under state law, providing policyholders with rights similar to individual policies, including the ability to pursue bad faith claims in certain situations.
Sandstone Law Group Can Help you Understand Your Rights Under Group vs Individual Disability Insurance Plans
Was your disability claim denied? The first step in fighting back is understanding the rules of the game. Insurers count on you not knowing the difference between group and individual disability insurance, and they use the complexities of ERISA to wear you down.
At Sandstone Law Group, we know their playbook. We understand how to navigate the restrictive appeals process for ERISA disability insurance and how to leverage the power of state law for private disability insurance coverage. We use our knowledge to challenge unfair denials that threaten your financial future.
You paid your premiums with the promise of protection. It is our mission to help you force insurers to honor their promises. We are committed to exposing insurer tactics and building a powerful case designed to pursue the full benefits you paid for.
Are you ready to challenge an insurer who is hiding behind the rules? Contact Sandstone Law Group. Call (602) 615-0050 or schedule your free case evaluation online to learn how we can help protect your rights.
Unsure how your policy type affects the next legal steps after a denial? Contact Sandstone Law Group for a free, confidential consultation.