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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 73 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.

Steve:

How do I get a copy of my companies private disability insurance that I have signed up for do I just contact HR and ask what is that set up any red flags?

Attorney Alex Palamara:

Steve, typically you can request the policies from the insurance company or from your employer. With regards to the potential red flags, I often tell my clients to say that they would like a copy of all the policies they are covered under, not just the disability policy. You can also state you are working with a financial advisor who wants to make sure you are fully covered with the appropriate insurance coverage in case you need to purchase more. Or something along those lines.

Mark S.:

I own a home which I rent out. If I collect LTD will the rental income reduce my LTD monthly benefit? What if I sell the home and make a profit, will it reduce my LTD benefits? If I start drawing on my SS or on my 401k will either reduce the LTD benefits I am seeking?

Attorney Rachel Alters:

Mark, disability benefits can be offset by other income you receive, but it’s usually income you receive from working (active income), income you receive from social security disability, from a 401k that you cashed out on etc… Usually passive income from rents or investments are not considered other income. But it is best that you review your LTD policy to be sure.

S:

I am pregnant and will be on maternity leave using benefits provided by my state, like FMLA and short term disability. I am also considering starting a business with my husband. I am wondering if I can collect income on the business while on maternity leave from my full time position?

Attorney Victor Peña:

S, you can earn as much income as you want while on maternity leave but it may affect your ability to receive disability benefits. You will have to review your disability policy to see if there is an income component to the definition of disability.

Connie:

Can I work a light duty job while on Ltd?

Attorney Alex Palamara:

Connie, most LTD policies do allow for partial disability benefits if you are disabled and working. However, there are many restrictions and you will want to review your policy closely to see what you can and cant do. That being said, please remember that the insurance company will utilize anything they can to justify a denial of your claim. If you would like a free consultation, please do not hesitate to contact us.

Barbara:

I was recently fired from my job due to a long-term disability. I am receiving long-term disability from Sun Life financial. My job paid out my vacation time in a lump sum. I earned This time before I got hurt. Does the insurance company have the right to offset my monthly payments until I have met the amount of the lump some payment? Or would I miss this check this month as I received the payout, And next month go back to normal? If I get a workers compensation settlement for a lump sum, would Sun Life take that as well in entirety? Is there any way to protect any of this money?

Attorney Alex Palamara:

Barbara, the policy governing your claim will list what can be an offset to your monthly benefit. Unfortunately, I can almost guarantee that workers compensation settlement will be an offset. If you can get a copy of your policy, please contact me so that we can discuss it and your inquiries.

Janet:

I have been on LTD do to Lupus, and I was recently contacted by my LTD case manager for my yearly update, and he got on the subject of my 401k. I had told him I did not have one, and he was asking me questions about it. I was so nervous about the interview because he wasn’t a very warm person and I was getting bad vibes from him that I forgot that I did have one at one time but cashed it in 18 years ago while I was on LTD. I am 56 years old, and they may be thinking I am drawing on it, but when it was cashed in it wasn’t a lot of money and I could no longer contribute to it plus I was losing money, because at that time the market was doing badly, and thought I would lose all of it and I used it to pay bills and repairs on my home.

They would be aware of it because on my original application the questionair asks about 401Ks and I answered yes I had one. It was an honest mistake, and I did not realize until now that the company would consider that extra income and it would have needed to be reported to them. Should I call my case manager back up and explain the error? I cannot afford to lose the benefit. Thank you.

Attorney Cesar Gavidia:

Janet, some policies offset by retirement plan benefits you have drawn or are drawing during our period of disability. If you drew your retirement benefits prior to your period of disability it is not income that they may offset. However, if you drew your retirement benefit while on LTD then they may determine that benefits were overpaid and seek a repayment of those benefits. Not all forms of retirement benefits are “other income benefits” that the insurer may offset. You should review your disability insurance policy to determine whether the disability insurer can offset 401k benefits. If an overpayment of benefits occurred because you drew on your retirement while on LTD then the disability insurer may seek reimbursement from you for the difference between what it paid you and what you drew from your 401k.

Wayne:

I am currently on LTD but may be cleared to go back to work part time. How will my LTD be affected?

Attorney Stephen Jessup:

Wayne, that will depend on the language contained in your policy as it relates to return to work, partial disability, work earnings, etc. If you have a copy of your policy please feel free to contact our office for a review of same.

Joe:

I am on LTD from my job. I helped my wife purchase a small Tavern from her niece. My wife is considered owner and runs all aspects of it along with her family. I helped her financially purchase the business so the liquor license had to go in my name. I assist in no way with the business but can the insurance company still consider the bar as income since the license is in my name? It will, of course, be part of our joint tax return.

Attorney Stephen Jessup:

Joe, without seeing the language in your policy we would not be able to tell. Some policies will indicate that if you are the owner of the business income derived from the business will be attributable to you. We would need to see a copy of your policy to best advise you. Please feel free to contact our office to discuss your situation further and for a free review of your policy.

Pamela T.:

I am on long-term disability from Liberty Mutual. Due to my health we need to have additional income to pay for medical costs. The policy contains a provision for income sources that are considered deductible from monthly benefit. The page listing those sources do not include investment (savings) income or rental/investment income.  Here is my situation. My spouse and I own a piece of vacant land.  We were going to build a primary residence, but with my health problems that is not possible.  It is under contract and we are doing a 1031 tax-deferred exchange into like-kind property.  The new property being purchased is a small percentage fractional ownership in a commercial building. We we will receive rental income from a long-term lease. There cannot be any active participation in the operations per the TIC agreement.  Income will flow to an LLC pass-through and then to our personal 1040.

Can Liberty Mutual claim this as a deductible income source although there is no active employment and it does not meet any of the categories listed on the only page in the policy? This is what it shows:

Your gross LTD benefit will be automatically reduced by the amount of income you are eligible to receive
from otller sources, including but not limited to:
. Social Security benefits (including disability, retirement, and dependents’ benefrts but excluding survivor benefrts)
. Earnings from any form of employment
. Railroad Retirement Act
. Workers’ Compensation benefits
. Any state or public employee retirement or disability plan
. State disability benefits
. Any other group plan providing total disability benefrts sponsored by or contributed to by the Company
. Benefrts for disability, retirement, or both that you receive under a retirement pIan, to the extent that such
benefrts are attributable to employer contributions, excluding distributions from the Company
4o1(k) Plan, the Cash Balance Plan, and nonqualifred plans of deferred compensation
. Third-party recovery for loss of income by judgment, settlement, or otherwise, including recovery amounts
you may receive from future earnings
. Unemployment insurance laws or programs
. Maritime maintenance and cure
. Occupational disease Iaws
. Any income received for disability under a g’overnment compulsory benefrt or program that provides for loss of time from your job due to your disability, whether such payment is made directly by the plan or program or through a third party

My CPA states that rental / investment income is passive and is not considered active.

Thank you for your time and explanation.

Attorney Alex Palamara:

Pamela, in order to give you a true answer I would need to see your actual policy. So I cannot give you any legal advice. From what you posted, I do not see the investment income falling into any of those categories, but I truly would need to see your policy to give you a real answer. Please contact us for a consultation.

Tim:

How would my LTD company know if I am working if I have not told them?

Attorney Stephen Jessup:

Tim, an insurance company can always conduct surveillance, do investigations as they relate to social media posts/other information contained on the internet, request of earnings statements and tax filings. Additionally, their claims forms explicitly inquire if you have income to report or are working. Failing to disclose work activities is insurance fraud, so if you are working it would be in your best interest to advise the carrier. Some policies do allow for one to work and collect benefits so if you would like to discuss your claim further please feel free to contact our office to discuss same.

Kat:

I am 55, receive $5,000.00 under a Sunlife LTD policy which would pay another 8.5 years. I am presently under the own occupation definition.

I suffered a TBI, went through rehabilitation for a year and a half and am unable to perform the reading, complex legal analysis, litigation, executive functioning and case management of my former position relying on the higher end cognitive skills. At two years, I will move to any occupation definition for earning 80% of my former salary. My former salary was $110,000.00/ year as an attorney and, given my ongoing deficits, my adjuster informed me that they wouldn’t be able to locate a job I could do at the 80% of former wage.

I am bored and would like to work. I may be able to get a job as a residential dorm adviser at a boarding school where my duties would be to monitor the girls in the dorms, provide supervision, ensure they do their homework and laundry, and communicate with their parents about how they are doing in residential life. It is not a full charge job and there would be supervision over me as well. The job would pay about $4,000.00 per month.

Would that pay reduce my disability amount?

Would the benefits for health insurance from the new employer be used as additional income to add to the new salary? (my old job included health benefits as well.)

Would the benefit of the 10 month housing be counted as income? (I have to maintain my own home away from campus that I own and will return to when not working at the school and being on campus is a requirement of the job)

Attorney Stephen Jessup:

Kat, we would need to see your policy to properly advise you how the potential work activity would/could affect your disability claim/benefit. Please feel free to contact our office to discuss your claim in greater detail to determine your options under your LTD plan.

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