Unique Issues Affecting Executives & Business Owners

Stacy Monahan Tucker was introduced to the world of disability insurance claims when working at one of the largest law firms in the world. Insurance companies would hire her to defend the most complex and expensive cases brought against them. Stacy received a crash course in how to manage the complexity of executive and business owner compensation issues and their effect on disability insurance benefits. Monahan Tucker Law has extensive experience in addressing these complicated problems.

Common Executive Compensation Issues

Most disability insurance policies pay a percentage of the insured’s compensation earned immediately before the insured filed a disability claim. For most people, determining that amount is simple – look at their monthly salary and calculate the correct percentage. But for an executive or business owner, it can be much more complicated. Business owners, white-collar professionals, and executives may be entitled to far more in benefit payments than simply their salary.

The first step in determining the total benefits owed to the insured is a careful review of the insurance policy. Does the policy address bonuses? Commissions? Deferred compensation? Car or housing allowances? Stock awards or vesting options? Matching contributions to 401(k) plans? Depending on the compensation agreement with the employer, any of these could be an issue that is overlooked by the insurer. Any disability insurance claimant should look at their last W-2 form to see all compensation reported on it by the employer. There will be more than simply the salary. Depending on how the policy is worded, those additional compensation areas should be included in the insured’s benefit calculation.

Factors in Determining Compensation for Business Owners

For business owners, it becomes even more complicated. How does the policy define the compensation to be included? Policies for business owners often look at the business profits over a three-year period as stated on tax returns. That can result in an artificially low compensation amount depending on the amount of expenses the owner ran through the business. What is and is not part of that calculation of profitability? If you have employees, and they continue to work while you are unable to do so, how does that affect your benefits? Have you hired a replacement for your role? These are all questions to be addressed as part of the claim review.

Also, executives and business owners are often extremely invested in their careers and businesses and very motivated to find accommodations that allow them to work, usually with a less demanding schedule. This raises the question of partial disability and how that benefit will be structured based on prior year compensation and the amount of income lost.

Monahan Tucker Law Handles Tough Disability Compensation Issues

For some professionals, having your disability benefits approved is only half the battle, as unique compensation issues force you to fight for the full benefit amount you deserve. At Monahan Tucker Law, we have extensive experience helping executives and business owners resolve complex compensation issues related to disability claims. If you are dealing with a disability compensation dispute, call us today to learn how we may be able to help.