Stopping Long Term Disability During Maternity Leave: - 12.11.2012

"I've got an expectant mom who wants to cancel her LTD coverage while she's on maternity leave. What should I tell her?"

It is understandable as to why this question surfaces. A plan member who is an expectant mother may feel that she can save money during a time when funds might be a bit short. I offer that during a maternity leave isn't a good time to stop a plan member's LTD coverage. No one can predict the future and unforeseen events could result in negative consequences that have a long term negative impact for the plan member. It is about managing risk and protecting yourself when you might need the coverage most.

Here are key tips to consider when a plan member asks if she should stop her coverage during a maternity leave:

  • Stopping coverage during a maternity leave really is considered a break in coverage. What if the plan member needs to be treated for a condition that becomes an illness after she returns to work? Based on contractual considerations, LTD coverage could be denied by the provider due to the *pre-existing condition clause.
  • Keeping LTD coverage offers a greater level of income replacement. Should the plan member suffer an injury or illness while on maternity leave, Employment Insurance coverage offers a base level of coverage at 50 or 55% for a maximum of 15 weeks and then it stops.
  • If the expectant mother stops LTD coverage while on maternity leave, she only has the government sponsored benefit program to fall back on and for a short window of time. If she keeps the coverage, she may satisfy some or all of the qualifying period during her maternity leave. If the plan member keeps LTD coverage while on maternity leave, she may be eligible for LTD benefits when she normally would have been scheduled to return to work.
  • Even when a plan sponsor shares this information with a plan member, she may still decide to stop her LTD coverage. Should this be the case, it is important to record the choice in writing and with her signature to acknowledge the decision. This way, there is documentation that the plan member has been told of the potential risks of stopping her coverage during a maternity leave. Even if the plan member has individual disability coverage, it remains advisable to get the acknowledgement from the plan member in writing that she was informed of the risks of stopping her group LTD coverage. 
There is so much for an expectant mother to consider when she prepares to have a baby. Worrying about disability coverage and the repercussions of cancelling it shouldn't be one of them.
*pre-existing condition definition "a medical condition that occurred before a program of health benefits went into effect."