Long-term disability income insurance (LTD) helps individuals who become unable to maintain full-time jobs due to disability to stay afloat financially. Many of these people are anxious to try working part-time while on long-term disability once they are able to establish a plan for managing the condition that has caused their disability, even in cases where low chances of recovery make it unlikely that the individual will ever return to full-time work. Some long-term disability plans will allow individuals with approved claims to combine LTD benefits with part-time employment, usually with a reduction in the benefit payments. Before attempting part-time work with long-term disability, however, it is important to be sure what is permitted under the terms of your specific policy and also to take care in developing a plan for your potential return to part-time work that prioritizes your personal health.
Can You Make Money While on Long-Term Disability?
Individuals receiving long-term disability benefits may be able to earn some income without losing benefits, but typically their earnings will be subject to strict limitations. Exceeding any maximums specified under the terms of the policy can lead to a termination of benefits.
These income limitations are separate from any termination of benefits due to the specific activities involved. If your part-time job requires you to engage in activities that your LTD application for benefits suggested were off-limits given your condition, then your work activities may be used as evidence that you no longer meet the criteria for disability under the terms of your policy. In addition to terminating your benefits, the disability insurance company may review your case history to look for evidence that you were capable of working all along, and that your initial claim for LTD benefits may constitute fraud. Even if you are innocent, no one wants to become involved in a case alleging insurance fraud, so it is important to consider both income limitations and work activities as you evaluate the types of jobs that might realistically allow you to mix LTD benefits with part-time employment.
Will Private LTD Policies Let You Work Part-Time?
Often an important indication of how likely your long-term disability policy is to offer options for working part-time while on long-term disability is whether your specific policy is structured as an own occupation vs. any occupation plan. Although there is no inherent connection between group vs. individual LTD and own vs. any occupation coverage, most group plan LTD policies tend to use any occupation definitions of disability, while own occupation policies are much easier to obtain through private disability insurance purchased directly through an insurance company. Many individuals planning to combine part-time work with long-term disability coverage may already be familiar with the differences between own occupation vs. any occupation disability insurance, but a brief review of the key points that distinguish the two types may help to establish why balancing part-time work and LTD is much more likely to be an option with own occupation coverage than with an any occupation disability plan.
Any Occupation
Any occupation policies only consider an individual to be disabled if they are unable to work in any job, regardless of skill level or pay scale. Often even the ability to work a few hours per week is considered disqualifying for this type of long-term disability insurance. Receiving LTD benefits with part-time employment may still be a possibility under an any occupation policy if your particular plan uses a disability measure similar to that used by the Social Security Administration (SSA). Under SSA guidelines, individuals who otherwise meet the SSA’s criteria for Social Security Disability Insurance (SSDI) benefits are nonetheless disqualified if they are able to engage in “substantial gainful activity” (SGA).
The SSA uses an annually-updated monetary amount to determine how much income an individual may earn before the income is considered “substantial.” The bar for private any occupation policies has the potential to be even higher than the notoriously strict standards employed by the SSA, so if you have any occupation disability insurance, you may want to review the terms of your specific policy with the assistance of an experienced disability lawyer before you give up on working part-time while on long-term disability.
Own Occupation
A disability income insurance policy is considered an “own occupation” plan if the policy provides income replacement benefits if you are unable to continue working in the same career you had before becoming disabled. An own occupation structure may theoretically allow an individual to not only blend LTD benefits with part-time employment, but potentially take up full-time work in a less-demanding position. In practice, however, working part-time while on long-term disability is much more realistic for most people than embarking on a separate career while receiving benefits, for personal health reasons as much as to comply with insurance policy requirements.
One factor you may want to keep in mind is that there is some variability in how own occupation policies define your “own” job. Some policies aimed at professionals in fields that demand significant formal training and that are subject to specific license or certification requirements treat any job that requires the same category of professional license or qualification to be an individual’s “own” occupation. Unless you work in an industry with very little stratification in how different positions are compensated, this way of framing your own occupation may not be especially helpful. Other policies look at how much of your former income work in a new position can reasonably replace. As is often the case, you may want to review your policy terms with a professional before assuming that you will be able to engage in part-time work with long-term disability as long as you are not returning to the same job you had before becoming disabled.
LTD Benefits With Part-Time Employment: Effects of Policy Riders
One further consideration that can sometimes complicate the picture for both types of long-term disability insurance is the purchase of supplementary coverage or policy riders. Both individuals on employer-sponsored group plans, and those who have privately purchased individual disability insurance, sometimes opt to buy policy riders to enhance the standard coverage provided under the terms of their base policy. If you have purchased a policy rider or supplemental coverage, be sure to review the terms of your added personal insurance alongside the plan documents that outline the benefits and restrictions that apply to your base policy.
What Are the Maximum Hours You Can Work While on Disability?
Many people preparing for the possibility of balancing part-time work with LTD understandably think of their efforts first and foremost in terms of the time and effort involved. They think of how work hours may need to be balanced against medical appointments, or of the physical and mental stamina many others take for granted as they head off to work each day. They also think of the accommodations they may need to adhere to medical activity restrictions or limitations on their time spent in particular types of labor.
Working Part-Time While on Long-Term Disability: Limitations on Earnings vs. Hours
If you are evaluating your options for working part-time while on long-term disability, however, you may find it helpful to know that in many cases long-term disability insurance policies that do allow individuals to combine LTD benefits with part-time employment make adjustments to benefit amounts based on the total income earned, rather than the total time spent. What this may mean for you if you are balancing part-time work and LTD is that your benefits may be reduced more for working at a higher-paying job with fewer hours than at a lower-paying job at which you spend several hours per week.
Balancing Part-Time Work and LTD: Combining Residual LTD Benefits With Part-Time Employment
Because long-term disability benefits are intended to replace a percentage of your pre-disability wages, often disability insurance policies that do not terminate an individual’s benefits for working part-time will instead reduce the benefit payment amounts. The calculations insurance companies use for determining the amount of these reductions can vary, but usually the underlying principle is that the amount an individual is earning through part-time work can be “subtracted” from the amount paid in benefits.
Under this model, the percentage of the pre-disability income an individual is replacing remains essentially the same, regardless of whether all of that amount is provided by LTD benefits vs. a combination of LTD benefits with part-time employment income. The reduced benefit payments individuals may receive if they are working part-time while on long-term disability are known as “partial” or “residual” benefits, so if you have questions about whether you are eligible to combine part-time work with long-term disability, you may want to review your policy documents to look for provisions for those types of benefits specifically.
Part-Time Work With Long-Term Disability: Positioning Yourself for Success
If you are hoping to combine LTD benefits with part-time employment, your options may depend to a large degree on the terms of your particular disability insurance policy. Balancing part-time work and LTD requirements can be especially tricky for individuals with conditions whose severity fluctuates significantly over a period of weeks or months, making it difficult to predict how much work they may be able to handle in even the relatively near future. Some long-term disability policies, especially those that offer own occupation coverage, contain provisions for working part-time while on long-term disability, but combining part-time work with long-term disability coverage will often mean a reduction in the LTD benefit payments. As you review your options, do not forget to stay in touch with your healthcare team to make sure that any plans you make for balancing part-time work and LTD do not interfere with the management of your medical condition.
