If you're getting Long-Term Disability (LTD) benefits, you might wonder: can I work part-time when I'm on Long-Term Disability?
The answer is usually yes! Long-Term Disability policies are all different and so it's important to consult the terms of your specific policy (also called the “plan documents.”) If you don’t have a copy of the policy terms, you should be able to obtain them from either the Long-Term Disability insurance company or your employer. The plan documents are usually a document that is around 30 to 50 pages long. If you have a document that is only a couple of pages long, that is likely the “summary plan description” which is not as detailed as the full plan documents.
Your plan documents should have specific provisions regarding returning to work. Before you return to work part-time, you will want to ensure that you have a complete understanding of what will happen to your LTD benefits. The following are a few considerations to keep in mind:
(Please note – this information applies only to Long-Term Disability benefits through a private insurance company. Social Security Disability benefits have different rules.)
The Insurer May Use Your Part-Time Work Against You
When reviewing your claim, it is possible that the insurer will use evidence that you can work part-time as evidence that your condition has improved and should be able to work full-time. To mitigate this, it can be helpful to have specific information from your doctors about your restrictions and why you cannot work full-time. For example, are you able to work two hours per day but after that you are too fatigued to continue? Can you perform some work with flexible hours but couldn’t do a 9-5 because your symptoms are unpredictable? Helping the insurance company understand why you still cannot return to work full-time can help you keep the benefits that you are entitled to. It is also important to ensure that you are not exceeding your doctor’s restrictions. If the insurance company finds out that you are doing so (either through surveillance or your self-reports), that will impact your doctor’s credibility.
Your Long-Term Disability Benefit May Decrease
How your work earnings will impact the amount of your Long-Term Disability benefit depends on the terms of your policy. Policies sometimes specify that work earnings will not offset the LTD benefit at all for a certain period of time (sometimes referred to as a “return to work incentive”), but after a certain number of months or years an offset will apply. The policy may only offset your LTD benefit if your LTD benefit plus your work earnings for a given month exceed your pre-disability earnings. Here is sample language from a policy:
For the first 24 months the Employee is eligible for a Disability Benefit, the Disability Benefit is as figured above. If for any month during this period, the sum of the Employee's Disability Benefit, current earnings and any additional Other Income Benefits exceeds 100% of his or her Indexed Covered Earnings, the Disability Benefit will be reduced by the excess amount.
After the first 24 months, the Disability Benefit is as figured above, reduced by 50% of his or her current earnings received during any month he or she returns to work. If the sum of the Employee' s Disability Benefit, current earnings and any additional Other Income Benefits exceeds 80% of his or her monthly Indexed Covered Earnings, the Disability Benefit will be reduced by the excess amount figured above.
As you can see, this often involves some complicated math! If you’re working part-time, make sure to send in your pay records regularly to the insurance company so that they can calculate the proper benefit.
If You Earn Too Much, Your Long-Term Disability Claim May End Forever
Some policies specify that benefits will end if you earn over a certain amount. For example, a plan may state that benefit payments will stop if work earnings exceed 80% of your pre-disability earnings. Bonuses are a very important consideration as earning a large amount of money in one month could be a major problem for your LTD benefit. Depending on exactly how your policy is written, the insurance company may permanently end your benefit if you exceed the policy’s earnings threshold in any particular month. If you aren’t able to work enough hours to be eligible to get covered under an LTD policy again, this can put you in a very tough situation. An attorney can help review the terms of your policy and assess if any arguments can be made to overturn an LTD denial that occurs on this basis.
Know Your Policy Before Returning to Part-Time Work
All this is not said to discourage you from working part-time on Long-Term Disability! Working on a limited basis can gain you some extra income and can improve your overall well-being. It might also be recommended by your providers as part of your physical or mental recovery. Do make sure that you are aware of the terms of your policy and consult with an LTD attorney if you would like to better understand what those policy terms say.