It is possible, and these days often financially necessary, for someone receiving long-term disability (LTD) benefits to work part-time, always mindful not to trigger the loss of their LTD benefits.
Many who are on LTD do work part time to make ends meet, but whether one can is highly dependent on the specific terms of the insurance policy, typically provided through an employer group plan or purchased individually. Private LTD policies are governed by the contract language (often under ERISA for group plans), not government programs like Social Security Disability Insurance (SSDI), so rules can vary by insurer.
To obtain a copy of your policy terms, direct inquires to the long term disability insurance company or your employer who can provide the plan documents which will have specific provisions regarding returning to work. Before you do anything, ensure that you understand what will happen to your LTD benefits if you decide to work part time. Always review your policy documents and consider consulting an attorney before starting any work as missteps can lead to benefit reductions or termination.
Typical Caveats and What’s Common in Policies
Most private LTD policies include provisions for “partial” or “residual” disability benefits, which are designed to encourage a gradual return to work by allowing part-time employment while supplementing income. These aren’t universal—some policies are more restrictive—but a typical policy might include the following practices:
Earnings Thresholds: Benefits are often adjusted based on how much you earn from part-time work relative to your pre-disability income
- If you earn *less than 20% of your pre-disability earnings, your LTD benefits usually remain unchanged.
- If you earn 20-80%, benefits are reduced proportionally (e.g., dollar-for-dollar or 50% offset after the first year). The goal is to ensure your total income (work & benefits) doesn’t exceed 100% of pre-disability earnings.
- If you earn 80% or more, you run the risk of benefits being terminated entirely.
Policy Phases: Many policies have an “own occupation” period (often the first 24 months), where you’re disabled if you can’t do your specific job. During this time, part-time work in a different role is more feasible. After that, it shifts to “any occupation,” where proving disability is harder if you’re working part-time, as it might suggest you could handle more. During all phases, it is important to provide strong evidence from doctors explaining why you can’t work full-time (e.g., due to fatigue, pain, or cognitive issues) and notify your insurer about any work and income, often monthly.
- Trial Work Periods-Some policies offer incentives like a “return-to-work” benefit, where you can try part-time work for a limited time (e.g., 6-12 months) without immediate benefit loss.
*Note that these are generalizations of general policies, it is important to review your specific plan as they can vary from one company to another.
Part Time Work While on LTD Example
Imagine Sarah, a 35-year-old marketing professional earning $80,000 annually before a chronic back injury forces her onto LTD. Her policy has a 24-month “own occupation” period and partial benefits provision.
Initial Phase: For the first two years, Sarah receives 60% of her salary ($4,000/month) in LTD benefits. She starts a part-time freelance writing gig from home, earning $1,000/month (about 15% of pre-disability income). Her benefits stay the same since it’s under 20%. She reports this to her insurer and provides doctor’s notes stating she can only sit for 2-3 hours daily without severe pain ensuring the the insurer does not assume she is fit to work full time.
Adjustment: If her freelance income rises to $3,000/month (37.5% of pre-disability), her benefits might drop by 50% of the excess earnings (e.g., reduced to $3,250/month total income cap consideration).
Post-24 Months: The policy switches to “any occupation.” If Sarah’s part-time work suggests she could handle a full-time desk job elsewhere, the insurer might investigate and terminate benefits, arguing she’s no longer totally disabled. To avoid this, she gets updated medical evidence emphasizing ongoing limitations.
*This scenario shows how part-time work can supplement income but requires very careful monitoring to stay within policy limits.
The main risks come from how insurers interpret your work as evidence of recovery or policy violation.
Common risks include:
Exceeding Earnings Limits: Hitting 80%+ of pre-disability income often leads to automatic termination. Even temporary spikes can prompt reviews.
Evidence of Improvement: Insurers may surveil you or request records; if part-time work implies you could do more (e.g., no doctor notes on full-time restrictions), they might deny ongoing claims.
Policy Transition to ‘Any Occupation’: After the initial period, proving you can’t work in any suitable job becomes tougher if you’re already employed part-time.
Non-Compliance: Not reporting income, failing to provide medical updates, or working in your “own occupation” without policy allowance can result in benefit claw backs or denial.
To minimize risks, read insurance plan carefully, document everything, get professional advice from an experienced LTD attorney, and if available, consider a trial period. If benefits are wrongly terminated, your attorney can appeal or sue under ERISA to restore benefits. If you have questions regarding LTD insurance, including denial of long term disability benefits, contact the employment law offices of Alan C. Olson & Associates for help today at 262-785-9606.
