What Happens When an Employee Goes on Long-Term Disability?

If you're out of work on long-term disability (LTD)—insurance that replaces part of your income when illness or injury keeps you from working—you may be concerned whether your job will still be there when you're ready to return, and what happens to your benefits if it isn't. The short answer: LTD insurance protects your paycheck, not your position, and your employer might be able to let you go while you're still collecting benefits. Job protection comes from separate laws, like the FMLA and the ADA, and it only applies if you qualify.

Losing your job doesn't automatically end your LTD payments. Below, we explain how FMLA and ADA protections work, and why eligibility hinges on whether you were covered on the date you became disabled, not the date you filed your claim.

Does Being on Disability Leave Protect My Job?

Whether your job is protected while you’re out on disability depends on whether you’re taking time off under laws such as the Family and Medical Leave Act (FMLA) or the Americans with Disabilities Act (ADA) and if you're collecting short-term or long-term disability benefits through your employer’s insurance.

Typically provided through an employer, long-term disability insurance replaces a portion of your income when a serious illness or injury prevents you from working for an extended period. Most LTD plans pay 50% to 70% of your pre-disability base salary, and benefits generally continue for two to five years, or until age 65 in some plans.

If you’re receiving short-term or long-term disability benefits, it’s likely through your employer’s insurance policy, which doesn't provide any job protection while you’re out on disability. The purpose of disability insurance is to provide income protection if you’re unable to work. It does not offer any measure of job security. Your employer is under no obligation to continue employing you simply because you’re receiving disability benefits.

However, if you take disability leave under a medical leave law like the FMLA, or are entitled to reasonable accommodations under a disability law like the ADA, your job is more likely to be protected in your absence.

Job Protection Under the Family and Medical Leave Act

The FMLA allows certain workers to take up to 12 weeks of unpaid, job-protected leave per year to deal with personal or family medical issues. FMLA leave, which is often taken at the same time as paid short-term disability benefits, can be used to recuperate from your own illness or injury.

You can’t legally be let go as long as you’re on FMLA leave. However, exceeding 12 weeks of leave—even by a day—leaves you open to termination.

When you return from FMLA leave, your employer must give you back your old position or one that is substantially similar, assuming you can still perform the essential duties of the job.

Even if you’re not entitled to leave under the FMLA, you may be protected by state laws that extend FMLA-like benefits to employees of small and medium-sized companies. Check with your human resources department, your state’s department of labor, or an employment law attorney to learn more about the job protection laws in your state.

Job Protection Under the Americans with Disabilities Act

The ADA requires employers with 15 or more workers to make reasonable accommodations for employees with disabilities. The ADA defines a disability as a physical or mental impairment that “substantially limits a major life activity.”

Under the ADA, before firing a disabled employee for not being able to do their job, an employer must first try to work with the employee to accommodate their disability. For example, the employer could offer a more flexible schedule, wheelchair ramps, or some other accommodation that might allow the disabled employee to continue to perform the essential duties of the position. The employer does not need to offer accommodations that would cause the business “undue hardship.”

You can also request unpaid leave as a reasonable accommodation. Your employer is likely to allow you to take unpaid leave if you're expected to return in a reasonable amount of time and to be able to do the job when you return (with further accommodations, if necessary).

How Long Can an Employee Be on LTD Before Termination?

There's no set period of time during which you can't be fired when you're on long-term disability.

Under the FMLA, once your FMLA leave is over, the law doesn't prevent your employer from letting you go if you don't return to work or if you can no longer do the essential functions of the job.

And under the ADA, if your employer has attempted to make various reasonable accommodations for you and you're still not able to perform the essential duties of the job (or if no reasonable accommodations exist that would allow you to work), the ADA doesn't prevent the employer from firing you.

Read more about whether you can be fired when you're on disability leave.

What Happens to My Disability Benefits If I Lose My Job?

If you’re terminated while you’re out on disability, you’re probably still entitled to disability benefits.

As long as you were covered by a short- or long-term disability insurance policy at the time you became unable to work, you can file for short-term or long-term disability benefits, regardless of whether you’re still on your employer’s payroll. What matters is whether you were insured on your disability onset date (when you became unable to work), not whether you’re insured on the date you file your claim.

Think of it this way: If John has a car insurance policy that expires on August 31, he'll be covered for damage to his car from a hailstorm that occurred on August 30, even if he’s been on vacation and doesn’t file his claim until September 3, after his policy has expired. Disability insurance works the same way.

Ask your employer for a copy of your long-term disability plan, which will state the eligibility requirements for both short-term and long-term disability coverage. The requirements are generally similar for both policies. For instance, if the short-term disability plan requires you to work full-time (at least 35 hours per week) to be eligible for benefits, the long-term plan should as well.

Make sure that you were working the required number of hours as of the date you filed your short-term disability claim. If you were, you should be eligible for long-term disability benefits as well, even if you were no longer employed when you file the claim for long-term benefits.

When to Contact a Disability Lawyer

If your employer or its insurance company tries to deny you long-term disability benefits, or if you’ve been discharged from a job while on disability leave and you think you should have been protected under the FMLA or ADA, you may want to contact an employment or disability law attorney to discuss your options.