DEALING WITH DISIBALITY CLAIMS
What exactly happens if an employee becomes seriously ill or disabled whilst in employment? This is a very common question asked by both employers and members. To answer that question, and to ensure the process goes smoothly for all parties, we have set out the following guide to explain the disability claim process:
THE APPLICATION DOCUMENTS
The member, with the help of the employer, should apply for disability benefits. Disability benefit applications can take a long time to process (three to five months and sometimes longer), and must, therefore, be done as soon as possible after the member becomes disabled. To apply for disability benefits, the following forms will need to be completed and submitted, via the employer, to the insurer:
● Member Declaration
● Employer Declaration
● Medical Report
The insurer will review the application to make sure the member meets the basic requirements for receiving disability benefits. They will evaluate current work activities and the severity of the disability using the medical evidence supplied by doctors, hospitals, clinics or institutions where treatment has been carried out. The following information is most commonly required by the insurer from the treatment facility:
● What the member's medical condition is
● When the medical condition began
● How the medical condition limits activities
● What the medical tests have shown
● What treatment has been prescribed
The doctor is not asked to decide if a member is disabled; the insurer will make this decision.
THE PROCEDURE AFTER APPROVAL
If your application is approved, your first disability benefit payment will be made after the last full month of the waiting period, the waiting period being calculated from the date your disability. The employer will still pay the member's salary during the waiting period and the insurer will pay the benefit amount from the month immediately after the waiting period expires. For instance: The insurer decides a disability began in January and the policy says the waiting period is 6 months. Then the date of disability is January (regardless of the date on which the application forms were completed) and the first disability benefit will be paid for the month of July. Disability benefits are paid monthly in arrears, just like a salary, so the payment would be made at the end of July, and will replace the member's monthly salary.
If the approval of a claim takes longer than six months to process, the insurer will refund the employer for any salary payments that the employer made to the member after the end of the waiting period. In other words if the claim is approved in September, but the disabled member should have received a disability benefit from July, the insurer will backdate the payments to July and the employer will be refunded the August and September payments.
In the event the claim is not approved (repudiated by the insurer) the employer will continue to pay the member's full salary. In this instance, the member may retire early on the grounds of ill-health and will receive his fund credit under the fund, less the tax payable on a retirement benefit.
All the provisions governing the disability benefit will be set out in the policy document issued by the insurer. The following information will be in the policy document:
● How the disability benefit is calculated (normally 75% of monthly salary up to a maximum of a specific Rand value, but can calculated using any percentage or formula)
● The waiting period (normally 3 or 6 months)
● What constitutes a disability (if a member can't do their specific job or if a member can't do any job for which he can be trained)
● The waiver (the amount that will be paid to your retirement fund each month)
● The escalation rate and date (when is the disability benefit increased and by what amount)
The insurer will pay the benefit to the employer, who will make the usual deductions such as UIF, medical aid, tax etc, and will then pay the balance to the disabled member as a monthly salary. The reason the benefit is paid this way is to ensure the member remains on the fund and that the necessary deductions are made.
The disability benefit will be paid until one of the following occurs:
● The member reaches normal retirement age (then retirement benefits become payable)
● The member dies (then death benefits become payable)
● The member recovers and can go back to work
If the employment contract is terminated by the employer, the member's membership of the fund will terminate. This means the member will be paid out his fund credit and the member will no longer be covered for death benefits. Generally, the insurer will deduct any tax payable on the member's fund credit and will pay the benefit directly to the member.
All other benefits the member enjoyed, such as medical aid, will cease in the event the employment contract is terminated.
THE EFFECT OF DISABILITY ON RETIREMENT FUND MEMBERSHIP
As long as a disabled member stays in the employment of the employer, he will remain a member of the retirement fund. The disability claimant will continue to contribute towards retirement and will remain covered for death benefits. Such member's retirement fund contributions will be calculated based on the salary the member was receiving at date of disability and not on the disability benefit he receives while disabled. The death benefit cover will also be based on the salary the member was receiving at date of disability.
If you require further information regarding the disability claim process or if you would like a summary of the disability policy provisions, please contact your fund through your payroll or HR office.
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