Can I Work or Collect Unemployment While I Collect Long-Term Disability?

Question:

I hurt my back after working as a furniture mover for 15 years, and I can't go back to work. I have a herniated disc with nerve root compression along with arthritis in several other discs. I can't lift anything over 10 pounds. I've been collecting short-term disability for the past few months, and my long-term disability benefits will kick in next month. But I know already it's not going to be enough to live on. Can I get a new job while I'm collecting long-term disability benefits? If I can't find a job, can I collect unemployment?

Answer:

Whether you can work and collect long-term disability (LTD) benefits at the same time -- or collect unemployment benefits while you're collecting LTD benefits -- depends on your LTD policy, and possibly how long you've been collecting LTD benefits. If your LTD insurance policy says that you can collect benefits when you are unable to perform "your regular occupation" or "your own occupation" due to your impairment, injury, or illness, you would be allowed to work at a different type of job while you collect LTD benefits. For instance, you could collect LTD benefits and start working a desk job -- if your LTD policy pays out when you can't work your own occupation. The same goes for unemployment benefits. If you are ready, willing, and able to work at least some types of jobs, you can apply for unemployment benefits even though you're collecting LTD benefits under an "own occupation" policy due to being unable to perform the duties of your regular occupation.

If, however, your long-term disability insurance policy says that you are disabled only if you are unable to perform the duties of "any occupation," then you cannot work at another type of job or collect unemployment benefits. Most policies that use this definition add that, for a line of work to be able to count as something you could do, it must be a job to which you are reasonably suited "based on your job training, education, or experience." (For instance, if the only jobs you can now do require a college education and you don't have it, you would be considered to be unable to work in any occupation.)

Many employer-provided (ERISA) long-term disability policies start off with an "own occupation" definition of disability and then, after you have been collecting LTD benefits for two years, switch to "any occupation" definition of disability. After two years, if someone is working or collecting unemployment benefits, your LTD benefits could be terminated because you'll no longer be considered disabled.

To figure out whether you have an "own occupation" or "any occupation" policy, or whether your policy switches from "own occupation" to "any occupation" after two years, request a copy of your policy or its Summary Plan Description page.

Keep in mind that many insurance policies allow the insurance company to offset long-term disability payments with unemployment benefits. This means that if you're collecting a certain amount in unemployment benefits, the insurance company can usually deduct that amount from the LTD benefits it pays you. For more information, see Nolo's article on collecting LTD and unemployment at the same time.