Once the insurance company has granted you long-term disability benefits, you need to ensure that you keep receiving them. Insurance companies are always looking for an excuse to take your benefits away, so they do not have to write a check to you anymore. They are watching what you do and whether you can go back to work.
Any part-time work when you are receiving long-term disability benefits can place your benefits at risk, although it is not necessarily forbidden. Part-time work is treated differently by long-term disability insurance companies than by the federal government.
When you receive SSDI, the government wants you to improve your financial status. When you receive long-term disability benefits, the insurance company wants to better its financial lot, most often at your expense. Therefore, their policies contain strict rules about working part-time.
Working Part-Time May Risk Some or All of Your Benefits
Many people who receive disability benefits want to do something to earn some extra money, even if they cannot work like they were before. There may be some work that they can do to supplement their disability insurance payments. When you qualify for benefits, your income is a percentage of what it was before your illness or injury. Therefore, disability benefits, while they are helpful, are not the end of your financial issues.
Some long-term disability policies will allow you to return to work in some fashion, depending on the policy’s language. It is possible to an extent when you are receiving partial disability benefits. Part-time work can allow you to bring your income to what it was before the injury or illness. However, you will take on some risks, and you cannot earn more than 100 percent of your pre-disability income.
Whether you can return to work depends partly on the definitions in your own specific long-term disability policy. Some plans will provide you with benefits if you cannot work again in your own occupation. For example, if you were a construction worker before an injury, you may return to work in other occupations. Other policies will only pay you if you cannot do any work.
Insurance Companies Are Not Necessarily Opposed to You Working
Returning to work part-time introduces many issues when receiving long-term disability benefits. Many insurance companies want you to return to work for a good reason. Your working again can save them money. Many insurance companies will encourage you to obtain vocational training while on long-term disability benefits. Some even go so far as to raise your check to give you a financial incentive to work again.
What is in it for the insurance company is the potential that they may reduce or eliminate your benefits when you work part-time. Disability plans have an income formula that determines whether you can work part-time and continue receiving benefits. Many plans allow you to do some work. For instance, if you earn less than 20 percent of your pre-disability income, you can continue to keep your benefits in full.
The Numbers Matter When You Are Working While Receiving Benefits
If your goal is to keep receiving benefits at the same level, you must be careful not to earn more than 20 percent of your income. If you do, the insurance company will be allowed to reduce your benefits proportionately based on your earnings. They will reduce your benefits by the percentage of your pre-disability income that you are earning.
For many insurance companies, 80 percent of your pre-disability income is the number they will use to cut off your benefits. There is another part of working part-time that can work against you. Insurance companies often try to terminate benefits when they believe that a recipient is no longer eligible to receive long-term disability payments because they can return to a full-time job. This argument is a common tactic that many of them use, finding any justification necessary to try to cut off benefits and force you to fight. Therefore, you should weigh the risks and rewards of possibly doing some part-time work when receiving disability insurance payments.
Speak to Your Doctor Before You Try to Return to Work
If you want to return to work, you should do so only in consultation with your doctor. However, what your doctor says can be used against you if the insurance company tries to terminate your benefits. The insurance company can take the doctor’s opinion out of context and use it as a pretext to stop paying you.
Your doctor may clear you to return to work with conditions and limitations based on your health or medical condition. If anything, you might use these as evidence in your favor when the insurance company begins threatening to end your benefits.
Insurance Companies Try to Take Away Your Benefits
Take care, because some long-term disability policies will change the game’s rules after several years of you receiving benefits. Initially, your policy may be an “own occupation” one, paying you if you cannot return to work in your own field.
However, some policies may shift from an “own occupation” to “any occupation” after a certain period. In other words, the insurance company will only pay you benefits if you cannot do any work at all, as opposed to being unable to work in your own field.
You must review the exact language of your policy before you consider returning to work in any capacity. If your policy shifts from “own occupation” to an “any occupation” after a certain period, you should consider whether it is worth it to return to work in any capacity. Doing so will essentially be inviting the insurance company to terminate benefits since there is evidence that you can work in some capacity.
Passive Income Can Present Separate Issues
Earning passive income can be an attractive opportunity for people who have the assets or ability to do so. When it comes to earnings when you are on long-term disability, the dividing line is whether you actively or passively earn them. Actively working to make money may be interpreted as a sign that you can return to work. Passive income may present a different story.
Passive income can include:
- Investment income
Passive income is money that you do not have to work to earn. You do not need to expend physical effort to receive a check. The insurance company cannot cut off your benefits without the physical effort.
Make Sure That Passive Is Really Passive
Presumably, passive income should not count against you when receiving long-term disability benefits. However, your insurer will not consider everything truly passive. For instance, if you spend any amount of time or effort in producing passive income, the insurance company may try to use it as evidence that you can engage in substantial and gainful employment.
Do not do anything to earn the money. For example, if you purchase rental properties, the insurance company may argue that your ability to scout and negotiate business deals proves you can work in some capacity.
Passive income may also impact you when applying for a long-term disability policy. You may need to pay more for a policy because the insurance company will count that as part of your income covered by the policy.
Insurance Companies Do Whatever They Can to Strip You of Benefits
Insurance companies do not need much of an excuse to terminate your benefits. They routinely attempt to cut off people who have received long-term disability benefits for the flimsiest of reasons. They change the rules of the game in the middle to try to save themselves some money.
Insurance companies will often hire people to conduct surveillance on you. So long as they do not try to enter or peer into your home, it is legal for them to have eyes on you as soon as you leave the door of your home. They may see you leaving your home and follow you to where you work. Insurance companies have ways of finding out information that they may take out of context to try to cut off your check.
You Can Fight the Insurance Company When They Cut Off Your Benefits
You always have the legal right to challenge the insurance company when they make a decision that hurts you. If they unreasonably reduce your benefits based on part-time work, or if they terminate your benefits entirely, the law gives you the right to fight back.
You will first need to appeal the insurance company’s actions directly to them. ERISA requires that you first go to the same company that terminated your benefits to convince them that they were wrong. In some rare cases, claimants actually succeed at this phase, but it does not happen often.
Your real chance of winning back your benefits happens when you take the insurance company to the federal district court to have a judge decide the matter. Nonetheless, you must go through the insurance company before reaching federal court.
Here are some questions that we are often asked about long-term disability benefits.
Can the long-term disability insurance company just take my benefits away from me?
Perhaps. If your question is, does the insurance company try to take away benefits, the answer is way too often. Even if they try to take your benefits, it does not mean that they can do it. One of the favorite tricks that insurance companies use is to change the definition of disability in the middle of your benefits. After a certain period, insurance companies require you to prove that you cannot work at any job instead of the one you held before your illness or injury.
Can I afford a long-term disability attorney?
If the insurance company denies your benefits, a long-term disability insurance attorney will usually receive a portion of the money that you recover. They will work on a contingency basis, not charging you a retainer or hourly fees for their time. They will receive payment only if you do.
How does the insurance company know what I am doing?
Insurance companies will often conduct surveillance on claimants when they apply for benefits or receive them. You can expect that, at some point, the insurance company has sent someone to follow you. It is entirely legal for them to do so. They may also look over your social media posts if they are public to see if your life is not consistent with that of a person who is physically unable to work.
If an insurer claims an investigation revealed too much income and work, make your very first call to an attorney who handles long-term disability claims.
You likely have other questions regarding your specific situation, and your first step should be to consult with a long-term disability lawyer. Setting up a consultation can help address your concerns and ensure that your disability insurance provider is not shortchanging your benefits for an unjustified reason.
Whether you need to file an initial claim, appeal a claim denial, or challenge the reduction of your current LTD benefits, legal help can put you in a stronger position to stand up to your insurance company.
Contact an Experienced Long-Term Disability Lawyer
If you have a long-term illness or disability, the stakes for your claim are incredibly high. Whether your claim is approved will make a long-term difference in your life and that of your family. Take as few chances as possible.
You can improve your chances of success by hiring an experienced attorney. Some law firms focus on helping claimants navigate the complex maze of the long-term disability system, and you should never hesitate to reach out for their legal help.
Following graduation from Loyola Law School in New Orleans in 1990, Price McNamara served as a Federal Judicial Law Clerk to the Honorable John M Shaw, Chief Judge, United States District Court Western District of Louisiana.
Mr. McNamara founded J. Price McNamara ERISA Insurance Claim Attorney, and began putting his past experience to work for the injured and disabled clients he now represents against the insurance companies in personal injury and long term disability and other insurance disputes in both federal and state courts