Part-time work will reduce your long term disability benefits

June 23, 2016, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Long-Term Disability Benefits and Work

“Am I able to work without affecting my long-term disability benefit payments?” The short answer is yes,  but only in certain situations. 

For example, quite often your long-term disability policy will require that you  try  to return to work  at some point.  In some cases, a “graduated return to work” may be  recommended and attempted.  A graduated return to work plan will usually require prior approval from your long-term disability insurance company, your employer and your doctor.  Typically, a graduated return to work plan will  involve starting to work at a reduced number of hours and gradually increasing the number of  hours over a period of time until full time hours can been  reached. 

As part of an approved graduated return to work plan, a portion of your long-term disability  benefit payments  may   be reduced as a result of any  income  you receive from your  employer.  Another  way of looking at it, is  that your long-term disability benefits may continue to “top up” any income amounts you receive from your employer until  you have successfully returned to work  full time.  The amount of any long-term disability benefit reduction or “top up” will  depend on the specific wording of your long-term disability policy.

You will typically stop receiving  long-term disability benefit payments  once  you are successfully able to return  to the same full time job that you had before your disability started.  In the event however that  you stop working again due to disability within a certain period of time (for example  6 months), you may be eligible to  continue to  receive long-term disability benefit payments.  This is commonly referred to as a “recurrence period” or a “continuation” of your previous long-term disability claim.  If  you stop working again due to disability after a certain period of time (using the same 6 month example), usually after the recurrence period, a claim for long-term disability benefits will often be treated as a new claim and not as a continuation of any previous claim.  How this type of situation will  be  treated   in your claim  will  depend on the specific wording of your long-term disability policy.

If you are able to  work part-time, either for your employer or somewhere else, you may still be eligible to receive  long-term disability benefit payments in certain situations.    Your long-term disability insurance company will often consider the type of work that you are doing, the number of hours that you are working and  the amount of income that you are earning.  This will be compared to the specific wording and requirements of  your long-term disability policy in order to determine whether or not you are eligible to continue to receive long-term disability benefits. 

Example #1: In your pre-disability job, you worked 8 hours a day and earned an annual income of $50,000.00.  However, you are currently  only able to work   part-time,  for a maximum of  3 hours a day on Mondays, Wednesdays and Fridays at a rate of $11.25 per hour,  for a total annual income of $5,265.00. 

In this example, depending on the exact wording of your long-term disability policy,  you  will  likely still continue to satisfy  the test for disability and  be entitled to  continue to receive  long-term disability benefit payments.  Although you are able to perform some part-time work, you are  not able to return to  your pre-disability work duties, to full time hours or to what is commonly referred to as a “commensurate”  annual income amount.   Generally speaking, a commensurate  income amount is an amount that is determined to be comparable, sufficient, appropriate or  adequate, as compared to your pre-disability income amount.  Typically, a commensurate amount  will be somewhere in the range of 60 to 70% of your pre-disability income amount.  The exact commensurate amount will depend on the wording of your long-term disability policy. 

Example #2:  In your pre-disability  job, you worked 8 hours a day and earned an annual income of $50,000.00.  Your disability policy wording requires you to be totally disabled from “any occupation” in order to continue to receive long-term disability benefits.  You are able  to work  part-time,  5 hours a day Monday to Friday,  for a total annual income of $37,500.00.

In this example, depending  on the exact wording of your long-term disability policy,  it is highly likely  that you  will   not  continue to satisfy  the test for disability and that you will stop receiving  long-term disability benefit payments.   The reason being that you are working and you are able to earn a commensurate income amount (i.e in this particular example, 75% of what you were earning in your pre-disability job).

In the circumstances, it is very important to speak to an experienced long-term disability lawyer before  participating in a graduated return to work program, returning to work with your employer or starting to work somewhere else.  Speaking to an experienced long-term disability lawyer will help to ensure that you understand how your long-term disability benefits may be affected in your particular case. 

About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us at 1-519-742-7774.

The opinions expressed here, while intended to provide useful information, should not be interpreted as legal recommendations or advice.