How Are Long-Term Disability Benefits Affected By Supplemental Income?
As a long-term disability (LTD) insurance policyholder, you may find yourself in a particularly vulnerable position. Despite the fact that you have been rendered disabled, your insurer may delay, undervalue, or deny your legitimate claim for long term disability benefits. Insurers are always on the lookout for opportunities to minimize their various liabilities. If you are receiving supplemental income, your insurer may see it as an opportunity to avoid having to pay out benefits.
Fortunately, in most cases, you are entitled to received LTD benefits even if you are receiving supplemental income from various sources. You may even be entitled to work (part-time or full-time), depending on the language of your insurance plan.
Passive Income Sources
Passive income sources (such as rental income, investment income, etc.), will not effect your ability to receive LTD benefits. Keep in mind that eligibility for long term disability insurance does not depend on your accumulated wealth or level of income — it is a wage replacement that pays out on the basis of you being unable to perform an occupation. You could ostensibly be a multimillionaire and still receive LTD benefits. If your insurer denies or unreasonably delays your benefits claim on the basis of your income, then you may be entitled to sue and recover damages on the basis of wrongful denial.
Working for Income
If you are disabled, and you are working for an income — part-time or full-time — then it could affect your eligibility to receive LTD benefits, but only in the sense that your continued ability to work could reflect poorly on your qualification as a “disabled” person pursuant to the language of your insurance plan.
Insurance plans vary significantly. In some LTD insurance plans, the definition of “disabled” is narrow enough to allow the policyholder to work at their existing job in a part-time, reduced role. In other plans, the definition of “disabled” may allow the policyholder to work at an alternative job, but they will not be considered disabled if they can substantially perform their existing occupation. Finally, some plans will only pay out benefits if the policyholder can show that they are rendered incapable of performing any occupation.
How does this play out in real-world terms?
Suppose that you suffer serious injuries that render you disabled to the degree where you cannot work at your existing occupation (physical labor in the construction industry). Your long term disability insurance plan defines “disability” as the inability to perform one’s existing occupation. As such, if you work at an alternative occupation, such as non-physical office work, then you could feasibly earn an additional income while still qualifying for LTD benefits.
If your insurance plan defines “disability” as the inability to perform any occupation, then you might have your benefits withdrawn (or denied) due to working.
Qualifying for SSD Benefits
Remember: every insurance plan is different. Depending on the language of your long term disability insurance plan, you may be required to file for Social Security Disability (SSD) benefits so as to minimize the potential liabilities of the insurer. If you obtain SSD benefits of $1,000 per month, for example, then your private insurer can use that to offset and reduce their own payment by a proportionate amount.
Generally speaking, you will still be eligible to receive LTD benefits even if you qualify for SSD benefits (though your LTD benefits will be reduced to accommodate the SSD benefits). Make sure to consult with an attorney to determine how you should approach SSD qualification given the particularities of your insurance plan.
Speak With an Experienced Chicago Long Term Disability Attorney for Further Guidance
If you are currently suffering from a disabling condition (and you have long-term disability coverage), then you may be concerned about how your eligibility/benefits are affected by accumulated wealth, or by various supplemental income sources (i.e., rental income).
Your concern is not without merit. Long-term disability disputes are fairly common. Insurers often attempt to minimize their liabilities by taking advantage of ambiguous provisions in the insurance contract. As such, it’s certainly possible that insurer will argue that the existence of a particular income source will reduce your LTD benefits, or that your insurer will even deny benefits altogether.
Here at Bryant Legal Group, P.C., our attorneys have represented disabled policyholders for several decades, helping them to challenge the benefits decisions made by their disability insurer. Call (312) 561-3010 to connect with an experienced Chicago long term disability attorney today.