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Can I earn money while I collect long term disability benefits?



Disability attorney Gregory Dell discusses if a claimant is able to earn income while receiving long term disability benefits.

Disability claimants often ask me if they can earn money through some other method besides just collecting their long-term disability benefits. The answer to this question really depends on the language in your policy. If you have an own occupation definition of disability, then the likelihood is that you could work in some type of different occupation and earn money. However, if you don’t have an own occupation definition of disability, the probability is that if you earned any kind of money in some other profession, that any money you earn would be offset from your disability benefit payment.

So if you were earning $3,000 a month in a long-term disability benefit payment and you had some other occupation that paid you $1,500 a month, for example, the likelihood is that the disability carrier may claim an offset of $1,500, which would leave you with $1,500 left of your monthly benefit. So if you have specific questions about your policy and whether you can work and continue to collect your disability benefits, go ahead and give us a call and we’ll be happy to answer your questions.

There are 51 opinions so far. Add your comment now.

Diana Locke:

A family member is working 40 hours a week in a physical labor job. He was diagnosed with MS a few years ago, and his job is becoming more and more difficult as time passes. If he were to go on SS LTD, is there a cap on how much he could still earn at his job? I was wondering if he might be able to get SSD, but maybe still work half days, or whatever is allowed. There used to be an earnings cap, but I can’t locate one now.

Attorney Stephen Jessup:

Diana,

As we only handle privately insured disability policies, you would have to consult with a Social Security attorney as to your question to make sure the information provided is accurate.

Darlene:

I am going to try for disability. I wear hearing aids. My dr. told me it is nerve deafness that I got. I have been wearing them for years and it is now worse, I cannot hear nothing if I take them out.

James:

My disibility insurance listed my pre-disability income at $10,000 a month, however they only pay a max of $3,500 per the policy. My question is if 80% of my income is $8000 a month, would i be able to earn another 3 or 4 thousand a month via a new job and still be able to keep my disability payment? I realize each policy is different, but as an industry standard is accepted?

Attorney Stephen Jessup:

James,

There is unfortunately no industry standard as to your issue. If your policy allows you to work and still receive your benefit (or a portion of) then you may very well be able to. You will need to secure a copy of your policy to find out. Please feel free to contact our office to discuss how we may be able to assist you.

Craig:

I had a moderate stroke a few months ago which prevents me from performing the duties of my accounting job. I move towards a long term disability claim, am I able to work outside of my profession to suplement the loss in income?

Attorney Stephen Jessup:

Craig, without seeing your policy we would not know what type of work, if any, you could perform and still receive a benefit. Please feel free to contact our office with a copy of same to discuss how we may be able to assist you.

B Adams:

I’ll try to make this short. I am in disability. When determining the amt I would received it would be a percentage of what I was paid from my previous employer. I worked for a very large company and when my std ran out I was told my option would be to apply for social security without any mention of my ltd benefits. I was quite ill at that time and did not ask about ltd. Ss asked me to call old employer because it has been a period of time. They did have some notes from my disability claim but not any notes that mentioned my last conversation with them. I remember my case managers name. When I called my employer they stumbled on their words and said I would have to call them back the next day. I do see that several others have asked if you can work on ldt. I understand you would have to see their policy. In addition, I have had to work several jobs trying to make ends meet. Can you advise if there is a statue of limitations on asking to reinstate ldt benefits because you we not counseld appropriately by your case manager.

Attorney Stephen Jessup:

B Adams, a statute of limitations applies to the time with which you can bring a lawsuit. Typically, most policies have a 3 year timeframe from the time proof of loss was required. So if it has been 3 years since that date you would arguably not have a right to bring suit. This does not mean you cannot try to make application for the benefits though.

Kathy:

Can I have “passive income”, an investment property that is managed by a property manager with a LTD policy? I reviewed my LTD policy and did not see anything in the policy that indicated I could not do this. The property will be fully managed 100% by the property management company (I will not touch any aspect of the property).

Cigna at the 2 year mark said I was not disabled and I had to fight to get my disability back… Do not want to get caught living hand to mouth again if I can help it.

Attorney Stephen Jessup:

Kathy, passive income is not typically indicated as earned income for purposes of computing any offsets. I have yet to see it deemed income subject to offset under a Cigna policy.

Diane:

I am LTD from my job Navy Exchange on base in Bethesda Md ( it is a retail store for military personnel ). I went out the short term and exhausted all of my vacation , sick and everything. The went on LTD with the diagnosed of Transverse Myelitis on Oct 2014. I get money each month but it is really not enough. Question can I work to earn extra money to live on.

Attorney Stephen Jessup:

Diane, you would have to review your disability policy to see if it allows you to work. Also, the vast majority of policies reduce your benefit by work earnings so there may be no way to make additional money while on claim.

Sue:

If I’m eligible to collect LTD based on a medical condition, could I still work in my own/current job if it’s part time (meaning that I would earn less than 80% of my current income?) The following are definitions from my LTD policy, to give you a better idea of what I mean. It appears that I would be able to do some type of work if I have to show proof of earnings.

“Disability means that, solely because of a covered injury or sickness, you are unable to perform the material duties of your regular occupation and you are unable to earn 80% or more of your indexed earnings from working in your regular occupation. After benefits have been payable for 24 months, you are considered disabled if solely due to your injury or sickness, you are unable to perform the material duties of any occupation for which you are (or may reasonably become) qualified by education, training or experience, and you are unable to earn 80% or more of your indexed earnings.”

“Earnings While Disabled
During the first 24 months that benefits are payable, benefits will be reduced if benefits plus income from employment exceeds 100% of pre-disability covered earnings. After that, benefits will be reduced by 50% of earnings from employment. We will require proof of earnings and continued disability.”

Attorney Stephen Jessup:

Sue, the language you cited does indicate the ability to work while you are on disability so long as you meet all other terms and conditions.

Teara:

I am receiving long term disability through Aetna i was working for amazon. Aetna is calculating my benefits based on what I was making at Amazon. Can I work a part time job to receive extra income? Or will they stop or offset my disability for working?

Scott:

My employer terminated me for being out on medical leave too long but I am currently on LTD through Sun Life through their policy. I have a state government PERA account that was through the company but I did not have enough years in to ever qualify for retirement benefits. The only options are to just leave it there collecting interest or cash it out. With bills piling up this is money we could use.

I have a couple questions.
-If I ask directly to my Sun Life benefit analyst can they then make me cash it out?
-If I cash it out and it is counted against me can Sun Life deduct my monthly benefits for as many month as they want until the full amount is reached or can they only do one month?

I know each policy is different. I am afraid if I cash this out Sun Life will want to deduct my monthly benefit. The wording in the policy I don’t understand. First they mention that other income benefits do not include retirement benefits but then later they say any governmental retirement system as a result of your job with your Employer. I know you can’t say for sure do this or that but I am just looking for a general idea if I should even pursue this. I am going to put a couple parts of the policy below and am hoping for any information you can provide. Thanks!

What are Other Income Benefits?
Other Income Benefits are those benefits provided or available to you while your monthly LTD benefit is payable. These Other Income Benefits, other than retirement benefits, must be provided to you as a result of the same Total or Partial Disability payable under the Group Policy. Other Income Benefits include:

Any disability income benefits you are eligible for under:
a. any other group insurance plan of your Employer;
b. any governmental retirement system as a result of your job with your Employer.

The benefits you receive under your Employer’s Retirement Plan as follows:
a. any disability benefits;
b. the Employer-paid portion of any Retirement Benefits.
(Disability benefits that reduce your accrued retirement benefit will be treated as a retirement benefit. Retirement benefits do not include any amount rolled over or transferred to any other retirement plan as defined in Section 402 of the Internal Revenue Code.)

Attorney Stephen Jessup:

Teara, without knowledge of the language in your policy as it relates to disability, sources of other income or the ability to work we would not be able to properly advise you. That being said, if your policy does allow you to work there is typically some type of offset made as to the benefit amount based on the amount you earn in the alternate occupation.

Attorney Stephen Jessup:

Scott, arguably it would be an offset under your policy. I would not recommend mentioning it if they do not inquire directly.

Sammy J.:

I have LTD through Liberty Mutual. For the current year they are asking me questions about any companies, LLC’s or partnerships that I am involved with along with proof of income. I have passive income from rent paid on real estate that I have owned for years prior to my disability. The property was owned by my LLC. I just sold the property because I’m moving and don’t want to own any property any longer. Does rental income or the proceeds of sale of the property used to reduce my benefit amount? The rental property actually caused a loss each year on my taxes. Is the LTD company only looking for “earned” income?

Attorney Stephen Jessup:

Sammy, typically, under an employer provided ERISA policy the insurance company would only be looking for sources of earned income, and not passive income.

Johanna:

I am on Workmans Comp but will soon be receiving benefits from Aetna for LTD. Before all this started I had a BLOG and It does not generate income now but if it does, how will it affect me?

Attorney Stephen Jessup:

Johanna, the only immediate concern would be if your former occupation’s job requirements and the work you do on the Blog could be considered to be similar in nature. This could result in Aetna trying to argue you would not be disabled – but even that would be a stretch.

orty:

My wife is out on medical LTD. Her daughter has moved in with us and would be willing to pay her for watching the grandkids this summer. The kids are 7 and 10 so they are pretty independent, meaning they don’t need to be held. Her x wants to pay by check so he can collect child care on his taxes. I suspect there will probably be an offset to her disability because of getting paid? I don’t want to jeopardize her LTD for a hundred bucks a week.

Attorney Stephen Jessup:

Orty, that could be a potentially risky move that the carrier could capitalize in to try to terminate the benefit.

Michele:

I am collecting medical disability from liberty mutual. My part time job offered me full time status. I’m not allowed to work at my other job hence I’m in medical disability. I am able to work my other full time job since they are willing to make accommodations for me. How do I find out if the have the “own occupation” with in there policy?

Jo:

I receive long term disability from Metlife. If I take in a foreign exchange student and providea room for them and food but no transportation or any other things that would cause stress or energy. They will compensate me for providing a room and food, is this considered income and will it offset the disbility amount or cause problems with my disability?

Attorney Stephen Jessup:

Michele, first and foremost, does Liberty know you are working in any capacity? If so, I am assuming they are adjusting your benefit accordingly. If you return to full time it could certainly affect your disability claim, if (1) you’re not allowed to work and receive benefits per the terms of the policy, or (2) if the earnings go over what you are allowed to make under the policy then your claim could be terminated, or reduced down to a minimal monthly benefit. Without seeing your policy we would not be able to determine what would likely happen.

Attorney Stephen Jessup:

Jo, it would depend if you receive any formal tax filing documents – then certainly yes. If no, they may never find out, but I would not be able to say if it would be an offset.

Anthony M.:

Can you Enroll and earn a bachelor degree from a university while on disability? Long/short term? Any info or sources would be highly appreciated.

Attorney Stephen Jessup:

Anthony, yes, you can. However, please note that an insurance carrier can use the fact you earn a degree/take classes as a way to argue you would also have ability to work.

Brenda:

If I was in a medical field and ended up on LTD and SSI, I am not allowed any income except passive. If I paint a picture and sell it, is that passive ?

I am supposed to volunteer to try to build stamina, but I cannot afford the gas and other expenses to do so. If I am given say expenses is that passive?

Attorney Stephen Jessup:

Brenda, if you receive a W-2, 1099 or comparable tax filing it would not be passive. Selling items for income is questionable, especially when dealing with an insurance company.

A:

I’m half owner of a general construction company. We work the general construction company part-time/weekends, we just started the business back in April 2017. I also work full time at a company where I injured myself. Can I collect short term disability while working my side business. I just do paperwork and nothing physical in the general construction co.

Attorney Stephen Jessup:

A, it is dependent on your policy language and what you are allowed to do under same. Please feel free to contact our office to discuss your policies in detail.

Tom:

Can a family member give money to someone on LTD with out a offset being applied?

Attorney Stephen Jessup:

Tom, as long as it is not “income” then there should be no issue with any gift or loan.

Ron R.:

If I’m collecting long term disability lets say when I start getting my pension from work in 10 years and my 401 program, will long term insurance take some of that pension? I’m 52 years old.

Mort G:

If I have equity in my home and sell it will my LTD payments be offset by the profit?

Attorney Stephen Jessup:

Ron, we would need to see the policy language to determine any applicable offsets. If the pension is through the employer (as in they fund) then it would likely be an offset. Most policies exclude retirement benefits from deferred compensation programs such as 401(k).

Attorney Stephen Jessup:

Mort, as the profit is not income derived from work, there should be no issue if you make a profit on the sale of your home.

Florette:

I’m now collecting LTD and I have a second job. How would the disability company know I’m working another job. I didn’t tell them. I’m working in a completely different field and it’s a new business. Can I still collect?

Attorney Stephen Jessup:

Florette, if you fail to advise them if they ask, or complete a claim form in which you deny working you could be committing insurance fraud. Most policies do not allow you to collect work earnings without some type of offset under the policy, which could result in owing the company money. I strongly suggest you review your disability policy to determine if you are able to work while receiving benefits.

Melissa:

I am on LTD through Sedgwick. I would like to do Air BNB for a room in my place. I obviously can’t work nor could I. Would this income be OK?

TIA

Attorney Stephen Jessup:

Melissa, that should not qualify as earned income that would affect a benefit. It would essentially be no different than earning money from a rental property.

Mike:

Hello –

I am in litigation with my employer for an injury at work which I went on short them long term disability on & then they abruptly cut me off even though my injury has not improved. My question is my policy reads as “any occupation”. The law suit has been going on for 4 years now. Although I haven’t worked at all during this time & still don’t I did earn $500 one time being an extra in a movie where I was asked to stand in a background (which does not affect my injury). Will this small act of “income earned” in the last 4 years ruin my case?

Thank you for your input!

Attorney Stephen Jessup:

Mike, if you are in litigation I would assume you have an attorney representing you. If so, I would have to direct you to him or her to discuss your policy provisions.

Robert:

I am on LTD paid for by my employer. I was unable to manage payment of my mortgage and associated property taxes, insurances and living experiences on this income alone. Not wanting to lose my home I have started to use a short term rental site to rent out a room in my home to supplement my income. I pay a person to come in and clean etc as I am unable to do so. Is this considered ‘soft income’? Am I legally aloud to do this without it affecting my LTD?

Attorney Alex Palamara:

Robert, of course it all depends on the language of your policy, but in all likelihood, this soft income should not be an issue. Passive income like this is typically not listed in the policy as other income benefits and is typically not “offsettable” under LTD Policies. Therefore, you would likely be fine.

Linda:

I am collecting LTD with Cigna thru my past employer and also SSDI. Cigna knows about the SS and is only allowing me their amount after subtracting what I get from SS. My question is, I have a pension from my employer that I have not touched yet. I was thinking of transferring my lump sum pension into my 403b. I am 57 years old, but am able to take from my 403b after age 55 without penalty with our companies policy. I have not taken anything yet from the 403b. Am I able to take any money from the 403b while collecting LTD and SSDI? Also, can I transfer my pension into the 403b while collecting disability?

Attorney Victor Peña:

Linda, the answer to your questions depends on your policy. Sometimes, even rolling over your money into a different retirement annuity could cause the disability carrier to offset the amount rolled over. The same goes for any retirement benefits received. You should carefully review the section in your policy that describes other income benefits before transferring your money. Also, consider calling Cigna to ask them how your benefits could be affected before making any major decisions on your retirement plans.

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