Disability Benefits and Coverage
Return-to-work activities can have a wide variety of consequences on your disability benefits, depending on the particular provisions of your ERISA group long term disability plan or individual disability income policy.
Effect on Benefits:
The applicable definition of disability contained in the plan or policy will be the principal determinant of whether benefits will continue under a plan or policy of disability insurance. Broadly, such definitions may be categorized as:
- “own occupation” (the inability to perform the duties of your own particular occupation);
- “any occupation” (the inability to perform any occupation for which you are qualified by education, training, or experience); and
- “regular occupation” (the inability to perform the duties of your occupation as it is performed in the national economy, rather than for your specific employer).
Some plans may switch from one definition to the other after a period of time (typically from “own” to “any” occupation after 24 months of benefits). Return-to-work activities that are distinctly different from the duties of your prior occupation might have no effect on “own occupation” benefits. For example, an airline pilot may experience a substantial deterioration in vision that prevents him from doing his own occupation, but may permit him to return to work as a telephone sales representative. Such telephone sales activities might permit him to continue receiving “own occupation” benefits, but could lead to the termination of “any occupation” benefits.
Some disability definitions contain specific provisions prescribing the amount of return-to-work earnings during disability below which benefits will not be affected.
Some plans contain “residual,” “partial,” or “rehabilitation” disability provisions. These may authorize return-to-work activities, but typically also prescribe formulas for reducing the amount of benefit payable based upon the earnings from these activities. These provisions may also require that the claim administrator be notified, and approve, all return-to-work activities.
Effect on Coverage:
If disability benefits are terminated because of a return to work, consequences vary.
Individual Disability Income Policies: Typically, an individual disability income policy can be continued in force if you resume the premium payments. This may be your best option, since purchasing a new disability policy may be prohibitively expensive (or impossible) given your pre-existing medical history of illness or injury.
Employer-Sponsored Long Term Disability Plans: If your disability benefits under an employer-sponsored long term disability plan terminate because of a return to work, the effect onyour coverage may depend on where you return to work, whether your new employer has disability coverage, and whether you experience a recurrence of disabling symptoms within a short period of time.
- Return to Work with New Employer: Typically, coverage under an employer-sponsored long term disability plan ends when benefit payments end, leaving you without coverage. If your return-to-work was with a new employer and that employer has no disability coverage, this may mean you have no replacement coverage, whatsoever, leaving you without benefits in the event of a new period of disability. If the new employer has disability coverage, you may nonetheless have to serve an eligibility period and/or a pre-existing condition period in order to qualify for coverage for a further disability.
- Return to Work with Former Employer: If you return to work with your former employer, there’s a good chance you will simply resume coverage under your old long term disability plan (assuming that your employer hasn’t switched insurance companies in the meantime, in which case you may have to serve new eligibility and pre-existing condition periods).
- Recurrent Disability: If your return to work is short-lived (typically less than 6 months), and you become disabled again by the same condition, it is possible that your disability will be treated as a “recurrent disability” by the same long term disability plan that paid you disability benefits previously. Typically, recurrent disability benefits are treated as a continuation of the previous disability, and, therefore, may be payable without any waiting period. Please note, however, that some long term disability plans will count your renewed disability as a recurrent disability only if your return to work was with your former employer.
If you never had privately purchased individual disability coverage, buying such coverage after a period of disability will be difficult (or impossible) to obtain. Consequently, the most viable possibility for replacement disability insurance coverage will be through employment — either with your former employer (in which case you will be re-enrolled in, or resumed on, the group plan) or a new employer. Employer-sponsored group coverage, unlike individual insurance, is commonly provided without proof of good health. Nonetheless, if the plan is provided by a new employer (or is with your former employer, but provided by a new insurance company), it may restrict benefit payments for a pre-existing condition only to those disabilities that occur after a prescribed period of time. Moreover, if you are returning to work on a reduced schedule, you may not qualify for coverage until your average weekly work hours exceed a certain number. The bottom line is that if you are considering a return to work with your former employer or a new employer, it is important to verify that the employer does provide disability insurance coverage, and assess the eligibility, coverage requirements, and disability benefits under than coverage. If no coverage is offered (or if you will not qualify as eligible for that coverage), your “reward” for returning to work may be the complete loss of disability insurance coverage for a future disability.
As the discussion above should make clear, it is extremely difficult to offer any generalized information regarding the effect of return-to-work activities on disability benefits. The precise effect will depend on (i) the type of plan (individual disability income insurance policy or employer-sponsored long term disability plan; (ii) the particular provisions of the policy or plan (definitions of disability, partial or residual disability, rehabilitative employment) under which you are currently receiving disability benefits; (iii) your prior occupational duties, hours and earnings; (iv) your new return-to-work occupational activities, hours and earnings; (v) the particular termination and recurrent disability provisions of the policy or plan under which you are receiving disability benefits; and (vi) the existence and eligibility requirements for any disability coverage provided by your return-to-work employer. The discussion on this webpage, therefore, should not be viewed as a detailed road map, but as an overview of the sorts of issues that may arise as a result of return-to-work activities. In short, evaluating the risk posed by return-to-work activities requires a careful reading of plan provisions, in conjunction with a close analysis and comparison of those activities with prior occupational duties, experience, and earnings history. Therefore, consultation with a lawyer before embarking on any return to work may be extremely helpful to understanding the impact of such work on your disability benefits and coverage.
New York Long-Term Disability Lawyers (including New York City, Long Island, Hudson Valley, Capital District,
Mohawk Valley, Southern Tier, Western New York, Finger Lakes, Central New York, and North Country)