Reasons Why LTD Permanent Disability Can Be Canceled

Understanding why your long-term disability benefits can be terminated is the first step to fighting back against the insurance company.

By , J.D. · University of Missouri School of Law

If you're receiving long-term disability (LTD) benefits, keep in mind that your insurance company can terminate your monthly payments for certain reasons. It's important to be familiar with the most common reasons that LTD benefits are cut off so you can do what you can to keep receiving benefits for as long as you're disabled.

Every LTD plan is different, so it's likely that not everything that follows will apply in your case. For information about your particular plan, check your policy's summary plan description or—even better—the policy itself.

Here are some of the reasons your long-term disability benefits could be stopped or denied.

Why Would My Long-Term Disability Be Stopped or Denied?

The most common reason to have your benefits terminated is that you're no longer disabled—at least, you're not disabled in the eyes of the insurance company.

Discovery of Activities by Surveillance

If you're receiving long-term disability benefits, it's likely that your insurance company will check up on you from time to time. And you should exercise caution when interacting with anyone you suspect could be an investigator.

It's also possible that your LTD insurer will arrange a surveillance team to track you for several days. This can include:

  • following you on your daily errands and to doctor's appointments
  • parking outside your house to watch you, and
  • recording your activity on video.

If you're observed engaging in activities that are inconsistent with your impairments, the insurance company might determine that your condition has improved and your long-term disability benefits could be canceled.

You're Still Working (or Working Again)

If you work while you're collecting LTD benefits, the insurance company might stop your payments—depending on your policy. If you only earn a small portion of what you used to make before you became disabled, you might still be eligible for at least partial LTD benefits.

Consult your policy to learn how working might affect your continued eligibility for long-term disability and how much your LTD insurance will pay if you work.

Time Limitation on Mental and Chronic Conditions

Many policies contain a 24-month limitation on disabilities arising from mental, nervous, and psychological impairments, as well as certain other chronic conditions. This is why long-term disability benefits sometimes end after two years.

LTD Limitations on Mental Health Coverage

It's not uncommon for long-term disability insurance to limit coverage for mental impairments. Your policy might only allow you to collect 24 months of benefits if you're receiving LTD payments due to any of the following:

  • depression
  • anxiety
  • post-traumatic stress disorder
  • chronic fatigue syndrome, or
  • a similar impairment.

Your LTD policy might have exceptions to this two-year rule for organic mental disorders like dementia and organic brain disease and illnesses such as schizophrenia and bipolar disorder.

The rationale behind this limitation, from the insurance company's perspective, is that most of these impairments can be exaggerated or outright faked. While this policy does keep premiums lower than they otherwise would be, this comes as cold comfort to the vast majority of LTD recipients with bona fide mental illnesses whose benefits are terminated after only two years.

LTD Benefit Limits for Other Chronic Conditions

Some policies also apply the 24-month limitation to other chronic conditions. Your long-term disability coverage might be limited if you're getting benefits because of conditions like:

  • arthritis
  • carpal tunnel syndrome
  • back pain, and
  • other chronic pain conditions.

In addition, disabilities based on alcohol or drug abuse will almost always be subject to the same limitation. But if you're confined to an inpatient treatment facility when your 24 months expire, most insurance companies will continue to pay benefits until you're no longer confined—subject to a cap.

Your LTD Can Be Canceled If You Don't Follow Policy Terms

When you're disabled, it might feel unfair if your insurance company requires you to jump through hoops to get the long-term disability benefits you deserve. But if you don't follow the terms of your LTD insurance policy—including meeting all deadlines—your long-term disability can be canceled.

Failing to Apply for Social Security Disability Benefits

If you've been approved for LTD benefits, your policy likely requires you to apply for Social Security disability insurance (SSDI) benefits. And your insurance company undoubtedly has set a time limit for you to do so. (Check your policy terms.)

Insurance companies generally require you to apply for SSDI because they're allowed to "offset" your Social Security disability payments against your LTD benefits. (So for every dollar you get from Social Security, they can withhold a dollar of your LTD benefits).

Because of this offset, insurers naturally have an interest in seeing you approved for Social Security disability. So, if you don't file a claim with the Social Security Administration (within your LTD policy's allotted time frame), your long-term disability benefits could be terminated.

Failing to Continue Treatment or Missing Doctors Appointments

Long-term disability insurance policies generally require you to submit periodic proof that you continue to be disabled. The required proof could consist of:

  • an annual re-certification by your doctor that you're still disabled, or
  • a requirement that you attend regular medical examinations.

One of the most common reasons LTD benefits are terminated is failure to receive regular medical treatment. Even if your doctor has told you there's "nothing else that can be done for you," if you stop seeing a doctor, your insurance company might interpret that as proof that your condition has improved and you can go back to work.

And of course, even if you've continued to receive regular treatment, your LTD benefits can be cut off if your medical records indicate that your condition has improved.

When Does Long-Term Disability End?

Different long-term disability policies have different terms. Your LTD policy might pay benefits for several years, until you reach retirement age, or for the rest of your life—depending on the policy you have. And there are other factors that can affect when your LTD benefits end.

Shifting Definition of Disability After 24 Months

Many LTD policies contain a provision that changes the meaning of "disability" after 24 months. In those policies, disability can initally be defined as "the inability to perform your own occupation" due to a physical or psychological impairment. When 24 months have elapsed, the definition of disability can narrow to "the inability to perform any occupation."

That means that if you're medically capable of performing any job that exists in the economy, your long-term disability benefits could be terminated. It doesn't matter whether such jobs are available, only that they exist. (It's similar to how Social Security determines if you can work.)

Aging Out of LTD Coverage

Your long-term disability benefits will usually end when you reach full retirement age for Social Security (66 or 67, depending on when you were born) or upon your death. If you're over 60 when you're approved for LTD benefits, your benefits might continue past your normal Social Security retirement age, but generally only for a few years.

Check out the Maximum Benefit Period chart in your LTD policy to see when your benefits expire.

What If My Long-Term Disability Is Unfairly Denied or Stopped?

If your insurance company notifies you that your long-term disability benefits are going to be stopped or that your LTD claim is being denied, it's important to know why. Some issues, like missing paperwork, might be simple to correct with a phone call to your insurer. Other issues are more complex.

Plus, insurance companies don't always play fair. If you feel your long-term disability claim is being wrongly denied or you're insurance company says they're going to cancel your benefits, you should consider talking with an attorney. An experienced attorney understands the insurance process and how to fight against unfair practices.

(Learn more about your right to appeal a denied LTD claim.)

Updated January 10, 2023

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