Reasons Why LTD Permanent Disability Can Be Canceled

If you're receiving long-term disability (LTD) benefits, keep in mind that your insurance company can end your monthly payments for certain reasons—for example, if your health improved to the point where you’re able to return to work. Every LTD plan is different, however, so you should check your policy’s summary plan description (or the policy itself) for the exact reasons why your long-term disability may be discontinued.

Even if you don’t think you’ll return to work for a while (if at all), it’s important to become familiar with the most common reasons that benefits are cut off so that you can avoid making errors that can interrupt your monthly LTD payments.

Why Would My Long-Term Disability Be Canceled?

The most common reason to have your benefits canceled is that the LTD insurance company no longer thinks that you’re disabled, usually because they’ve seen you engaging in activities that suggest you have fewer work restrictions or they’ve actually seen you doing a job.

Discovery of Activities by Surveillance

When you receive 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)

Depending on your policy, the insurance company may stop your payments if you work while you're collecting LTD benefits. (You might still be eligible for at least partial LTD if you only earn a small portion of what you used to make before you became disabled.) Consult your policy to learn how working might affect your continued eligibility for long-term disability.

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. So, for example, your policy might conclude “naturally” after two years if you’re receiving payments due to depression, anxiety, or PTSD. (Common exceptions to this two-year rule include dementia, schizophrenia, and bipolar disorder.)

From the insurance company’s perspective, this two-year rule is necessary to exclude claims where mental illness symptoms are exaggerated or even entirely 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 stopped after only two years.

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 such as arthritis, carpal tunnel syndrome, or back pain. Additionally, disabilities based on alcohol or drug abuse will almost always be subject to the same limitation, unless you’re enrolled in an inpatient treatment facility when your 24-month period expires. (In that case, the LTD company will pay benefits until you’ve been released, subject to a limit.)

When Your LTD Can Be Canceled For Not Following 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.

You Didn’t 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 within a certain timeframe. Insurance companies generally require you to apply for SSDI because they’re allowed to "offset" your Social Security payments against your LTD benefits. So for every dollar you get from Social Security, they don’t have to pay you a dollar in LTD.

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 policy’s allotted time frame, your long-term disability benefits could be cut off.

You Didn’t Continue Medical Treatment or Missed Doctors’ Appointments

Long-term disability insurance policies generally require you to submit periodic proof that you continue to be disabled. This usually means you’ll need to get an annual recertification by your doctor that you're still disabled or you’ll need to attend regular medical examinations.

One of the most common reasons LTD benefits are canceled is due to a 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.

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 even for the rest of your life.

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.)

Can You Be Terminated From Your Job While On Long-Term Disability?

Yes, you can be fired or let go from your job while out on private long-term disability. That’s because LTD only offers wage replacement payments, not job protection. However, federal legislation such as the Family and Medical Leave Act (FMLA) and Americans with Disabilities Act (ADA) may protect your job, provided you meet certain requirements.

If your employer fired you while you were out on disability leave, check out our article “Can I Be Fired While on Leave for Disability?” to see if you have a claim for wrongful termination.

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.

Regardless of the reason, if you feel your claim is being wrongly denied or your insurance company says they’re going to cancel your payments, your next step likely is going to be to appeal the LTD denial, hopefully with help from a long-term disability attorney. Insurance companies don’t always play fair, and an experienced attorney will understand the insurance process and know how to fight against unfair practices.