Navigating the intersection of part-time work and long-term disability (LTD) benefits can be complex and challenging. In fact, the ambiguities around this issue often leave many individuals uncertain about their rights and options. It is important to note that earning income while maintaining disability benefits can vary widely depending on the following factors:
- The type of disability coverage you have;
- The nature of your work limitations; and
- Specific policy provisions.
Understanding these nuances is crucial for making informed decisions about your financial security and work prospects.
Understanding Long-Term Disability Coverage Types
Long-term disability benefits typically fall into two main categories: (i) employer-sponsored group policies and (ii) individual disability insurance policies. Each type has distinct rules regarding part-time work and benefit eligibility.
- Employer-sponsored group long-term disability policies: These types of policies are often governed by the Employee Retirement Income Security Act (ERISA) and typically define disability as the inability to perform the material duties of your own occupation for an initial period, usually 24 months. After this period, the definition often changes to the inability to perform any occupation for which you are reasonably qualified by education, training, or experience. Many group policies include provisions for “partial” or “residual” disability benefits, which allow beneficiaries to work part-time while receiving reduced benefits.
- Individual disability insurance policies: Purchased privately, these policies often offer more flexibility and may include more generous definitions of disability. These policies frequently have built-in partial disability benefits and may allow for longer periods under the “own occupation” definition. The specific terms vary widely among insurers and policy types.
A majority of people purchase long-term disability coverage through their employer’s group plan. Typically, these long-term disability plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA). In contrast, if you purchased an LTD policy on your own, then any disputes would be subject to state law.
Social Security Disability and Part-Time Work
Social Security Disability Insurance (SSDI) operates under different rules than private insurance policies. The Social Security Administration uses a concept called “substantial gainful activity” (SGA) to determine ongoing eligibility. For 2025, the SGA threshold is $1,620 per month for non-blind individuals and $2,700 for blind individuals. Earning above these amounts could result in loss of benefits, regardless of whether the work is part-time or full-time.
However, Social Security does provide several work incentives and trial periods. The Trial Work Period allows beneficiaries to work for up to nine months within a rolling 60-month period without losing benefits, regardless of earnings. During this period, you continue to receive full disability benefits while testing your ability to work. After the trial work period ends, there’s an Extended Period of Eligibility lasting 36 months, during which you can receive benefits for months when your earnings fall below the SGA threshold.
Partial and Residual Disability Benefits
Many, but not all private or employer-sponsored long-term disability policies include provisions for partial or residual disability benefits, designed specifically to address situations where individuals can work but with reduced capacity or earning potential. These benefits recognize that disability isn’t always an all-or-nothing condition and that returning to some level of work activity can be beneficial for both physical and mental health.
Partial disability benefits typically require that you suffer a loss of income due to your disability while working in your own or another occupation. The benefit calculation often involves comparing your current earnings to your pre-disability income, with the insurance company paying a percentage of the difference.
For example, if your pre-disability income was $5,000 per month and you now earn $2,000 working part-time, you may be eligible to receive a benefit equal to 50 percent of the $3,000 difference.
Residual benefits work similarly but may have different calculation methods and eligibility requirements. Some policies require a minimum percentage of income loss, such as 20 percent or 25 percent, to qualify for residual benefits. Others may require that you initially qualify for total disability benefits before becoming eligible for residual benefits. These vary from policy to policy so it may be wise to consult an attorney before considering a return to work.
Vocational Rehabilitation and Return-to-Work Programs
Many long-term disability policies encourage and support return-to-work efforts through vocational rehabilitation programs. These programs may provide job training, education assistance, workplace accommodations, or job placement services. Participating in approved vocational rehabilitation activities typically doesn’t jeopardize your benefit eligibility and may even extend your benefit period in some cases.
Insurance companies often have strong incentives to help beneficiaries return to work, as this reduces their long-term claim costs. As a result, many insurers offer generous return-to-work provisions, including continued benefit payments during transition periods and coverage of rehabilitation expenses.
Key Considerations and Potential Challenges
Working while receiving long-term disability benefits requires careful consideration of several factors. Policy language is crucial – you must thoroughly understand your specific policy’s definitions of disability, partial disability, and any work-related restrictions. Some policies may require that any work activity be approved in advance by the insurance company, while others may allow work as long as it’s consistent with your medical restrictions.
Medical documentation remains essential when working part-time on disability. For example, your medical records should support the notion that your part-time work activities are consistent with your medical limitations and that you remain disabled according to your policy’s definition.
It is also important to note that many long-term disability policies require prompt notification of any work activity and regular reporting of earnings. If you fail to timely report income (or the reported income is inaccurate), it could result in penalties and/or policy termination.
Best Practices for Navigating Part-Time Employment and Disability Benefits
If you’re considering part-time work while receiving long-term disability benefits, start by carefully reviewing your policy documents to better understand the applicable rules and procedures. Considering the complexities and nuances associated with these types of disability benefit policies, it is recommended to consult with an experienced disability benefits attorney with Bross & Frankel.
Maintain detailed records of all communications with your insurance company, medical documentation, and work-related activities. Keep thorough documentation of your income, work hours, and job duties to ensure accurate benefit calculations and compliance with reporting requirements.
Work closely with your healthcare team to ensure that any work activity is medically appropriate and well-documented. Regular communication with your doctors about your work capabilities and limitations helps maintain the medical support necessary for continued benefit eligibility.
Have Questions? Speak to a Disability Benefits Lawyer
Working part-time while receiving long-term disability benefits is possible, but it is critically important to understand the applicable rules and requirements of your particular policy. Whether through private insurance policies with partial disability provisions or Social Security’s work incentive programs, opportunities exist to maintain some level of work activity while maintaining the financial protections associated with disability benefits.
If you are getting push back from the insurance company about your work status, contact Bross Frankel PA today. Our disability benefits law firm will take on the insurance company for you to help you get long-term disability benefits. We represent people with disabilities throughout New Jersey and Pennsylvania as they seek disability benefits. We have significant experience handling long-term disability claims and aggressively advocate for our clients’ rights in each case. To learn more or to schedule a free, confidential case review with one of our long-term disability attorneys, give us a call at 856-795-8880 or fill out our online contact form.