Earning income while receiving long-term disability benefits

Earning an income while collecting long-term disability benefits may be good for your mental and physical health, but it could cause issues with your coverage without the proper legal advice.  

Injured workers are often anxious to dip their toes back into the working world after a long period off, even if they are unable to return to their original employment. And in general, long-term disability (LTD) claimants can work a moderate amount, as long as they continue to meet the definition of disability in their insurance policy.

However, figuring out whether their own situation falls within the boundaries set by an insurer can be a tricky job for a layperson, which is why I always suggest that an insured person collecting LTD benefits talk to a lawyer before starting a new job.

In my experience, the amount and importance of any extra income LTD claimants plan to make usually pales in significance compared with their benefit payments. With the policy in hand, an experienced long-term disability lawyer in Oakville can talk you through your return-to-work options while minimizing the chances of a disruption to benefits.   

Own occupation vs. any occupation

The specific wording of an individual’s private or group LTD policy is critical to determining whether — and to what extent — they can work while receiving benefits, but two provisions, in particular, are key to the analysis.

Under most standard LTD policies, injured workers must show that they are totally disabled from performing the essential tasks of their “own occupation” in order to receive benefits for the first two years.

Many LTD claimants receiving benefits under the “own occupation” test are able to participate in other work: for example, a firefighter’s injury could prevent them from fulfilling the tasks of their normal occupation, but still allow them to be employed in a less physically demanding job, such as a delivery driver or data entry clerk.

After 24 months, the policy wording usually changes, typically requiring an insured person to be totally disabled from employment in “any occupation” for which they are “qualified or may reasonably become qualified by training, education or experience” to continue receiving benefits.

The latter test is much tougher to meet since it widens the potential pool of available work that a person’s injury prevents them from performing. It also makes it much more difficult — although not impossible — to earn money from another employment source without jeopardizing your entitlement to LTD benefits.

Limits on earnings and offsets

Whether they are receiving benefits under an “own occupation” or an “any occupation” policy, claimants will often face limits on the amount of income they can earn without jeopardizing their LTD benefit payments.

Again, the wording of individual policies will differ, but some LTD insurers give themselves the right to terminate benefits when a claimant’s income exceeds a certain proportion of their pre-disability earnings – typically 70 or 80 per cent.

Other LTD insurance providers include clauses known as “return to work incentives” that prevent an insured person’s total benefits and wages from exceeding 100 per cent of their pre-disability income.

In addition, many LTD policies include offset provisions that allow the insurer to reduce benefit payments to wage-earning claimants once their income exceeds a certain threshold. For example, the offset could kick in on a dollar-for-dollar basis once a claimant’s income passes 20 per cent of their pre-disability earnings, but the specifics will depend on the particular policy.  

Challenging terminations

Many LTD claimants will find that their insurer begins pushing for a return to work at the two-year point — regardless of the person’s ability to return to the workforce — and may even terminate benefits on the basis that the insured individual could be doing other suitable work.

Despite its name, the “any occupation” test cannot be satisfied by any job that an insured person is capable of performing. Importantly, the onus is on the insurer to identify work that is not only suitable to the insured person’s training, education and experience, but also comparable financially to their pre-disability occupation.

For example, a person who earned a six-figure salary in an executive position before going on LTD may be able to argue that a low-paying retail or desk job is inappropriate, even though they are physically and mentally capable of doing this work, as the pay is not commensurate with their pre-disability income.

Our firm has acted for clients in these kinds of case, retaining vocational experts to challenge insurer denials of LTD benefits based on inaccurate assessments of claimants’ skills and qualifications.

Let us be your long-term disability lawyers in Oakville!

If your claim for disability benefits has been denied or terminated and you would like an opinion on your case, call our office at (289) 529-0404 to schedule a consultation.

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