This is a common question. Whether or not working will affect your eligibility to receive long-term disability (LTD) benefits will hinge on the details of your policy.
Working & LTD Benefits: ‘Own Occupation’ versus ‘Any Occupation’ Policies
One of the main factors impacting the question of eligibility for LTD while working is how a given policy defines Disability. Individually purchased policies typically have better definitions than group policies provided by employers.
- Own occupation – “Own occ” policies usually define disability as an inability to carry out the material duties of a specific job (i.e., the policyholder’s chosen/former occupation) due to some health impairment. This can end up meaning that policyholders may have the option to change occupations – taking up a new job with different types of duties – and still qualify to receive full LTD benefits.
- Example: An electrician who severely and permanently injures his hands would be prevented from performing the detailed work required of his particular (“own”) occupation. . Under the terms of his own occupation LTD policy, he might be able to work in another occupation requiring very little physical activity and use of the hands yet continue to collect his disability replacement income under the policy.
- Any occupation – Under these terms, disability is generally defined as being unable to carry out any occupation that an individual would reasonably be able to perform, based on his or her experience, skill set and education Consequently, “any occupation” terms tend to be far more limiting than “own occupation” terms.
- Example: Using the above example, let’s say the electrician’s LTD policy contained definitional terms based on “any occupation,” rather than “own occupation.” In this situation, if the man returned to work as an administrator and his earnings exceeded a specific amount (defined in his policy), his benefits would likely be reduced (by some corresponding amount) or, more likely, even terminated if he earns more than he earned in his previous occupation.
Working & LTD Benefits: Additional Factors to Consider
- Terms that transition from own to any occupation – The “own” versus “any occupation” distinction in LTD policies is not necessarily a fixed matter. In fact, most all group policies and some individual policies will convert the own occupation definition to any occupation after a certain period of time (usually 24 months).
- What really happens when you work – An insurer could very well determine that working in another position, even on a limited basis, suggests that you have the ability to actually work full time. Or at least that might be its conclusion. And your LTD benefits could be terminated.
- Reduction for work earnings – It’s not uncommon for these provisions to also provide for benefit offsets (in the event that beneficiaries earn more than a certain amount from the new job).
- Residual disability – Many policies contain a provision allowing a disabled person to return to work part-time. Such a provision is designed to allow a person to return to work without their benefit being terminated. One can even return to their prior occupation and be entitled to benefits so long as the policy-required reduction in income level is satisfied. Most often, the earnings from part-time work will reduce the amount the insurer is required to pay, often on a dollar-for-dollar basis if your earnings are between 20% and 80% of your prior income. The LTD insurer will request proof of your earnings and hours worked on a monthly basis in order to calculate how much is owed under the LTD policy.
- Social Security Disability Income – Earning above a set amount per month could lead to the loss of SSDI benefits.
- Before returning to work – It’s essential you consult with an experienced LTD Attorney – like Shawn E. McDermott – so you fully understand how working could affect your eligibility for long-term disability benefits. Making an informed decision before going back to work may save you a lot of time, money and stress in the future.
Need Answers about Your LTD Policy & Benefits? Contact Denver Disability Lawyer Shawn E. McDermott Law
If you are currently receiving long-term disability benefits and considering returning to work, it is crucial that you read and understand your LTD policy. You need to know how working will impact your monthly disability benefit moving forward.
From our offices in Denver, McDermott Law, LLC provides the highest quality legal services to disabled people throughout the state of Colorado, the surrounding states and even nationwide.