Common Questions and Answers Related to Disability Benefits and Employment or Termination of Employment
What Happens to My Long-Term Disability if I Lose My Job?
It is possible to continue receiving disability benefits after your employment has been terminated. Indeed, most people who receive long-term disability benefits for an extended duration (more than a few months) will have their employment terminated eventually. Meanwhile, long-term disability plans usually provide disability benefits until retirement age, provided the claimant remains disabled. Thus, there is nothing usual about receiving long-term disability benefits even after your employment has terminated; on the contrary, it’s the norm. Some long-term disability plans exclude coverage if the employee is terminated “for cause” (meaning gross misconduct), but those plan provisions are rare. As with any benefits-related question, it’s best to request a copy of the plan document from your employer to determine your rights.
It is also important to acknowledge an employee’s circumstances leading up to his or her last day worked prior to their disability. Most employees contemplating filing a disability claim cannot simply “up and leave” their job – their main or sole source of income. They will try to fight through their disability until they can no longer do so. Courts have acknowledged this fact. For example, in Rochow v. Life Ins. Co. of N. Am., 482 F.3d 860 (6th Cir. 2007), the United States Court of Appeals for the Sixth Circuit held that disability insurers cannot deny a disability claim solely because the claimant worked after he or she first began experiencing symptoms of the disabling medical condition.
Does Being on Disability Protect My Job?
No, receiving disability benefits does not protect your job. In fact, many employers will terminate a disability claimant’s employment after they have received long-term disability benefits for a certain period of time. Employers do so because they deem it unlikely that the employee will be returning to work at any point in the foreseeable future. Employers also cite a need to fill the employee’s position as justification for terminating an employee who is receiving long-term disability benefits.
However, there is a significant difference between terminating an employee who has been receiving long-term disability benefits and terminating an employee who intends to seek long-term disability benefits (or other employee benefits). Section 510 of the Employee Retirement Income Security Act of 1974 (“ERISA”) permits an employee to sue their employer if the employer terminated the employee for the purpose of interfering with the employee’s right to benefits. Section 510 also allows employees to file a lawsuit against the employer for retaliating against the employee for the employee’s attempt to access employee benefits (including long-term disability benefits).
Do Disability Payments Continue After Termination?
While it is rare, some long-term disability policies do state that employees are ineligible for disability benefits if the employer has terminated their employment for cause. Whether your specific disability policy contains this type of language will determine whether a for-cause termination precludes receipt of long-term disability benefits.
It also bears mentioning that your health insurance coverage will also likely be affected by your termination. Employer-sponsored healthcare benefits typically end upon the final day of the month in which the employee was terminated, unless the employee elects to continue coverage via COBRA. This can cause issues with your ongoing long-term disability claim, as you are still required to provide ongoing proof of disability in order to maintain your disability benefits. Therefore, if financially possible, it is important that you continue to seek medical treatment despite your lack of employer-sponsored healthcare benefits. In addition to COBRA, you may be eligible for discounted health coverage via www.healthcare.gov.
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Can I Get Short-Term Disability After Being Fired?
Short-term disability benefits provide income replacement for non-work related injuries or illnesses that render an employee unable to work for a limited period of time. While employers are generally not required to provide short-term disability benefits, many do. The maximum amount of time an employee can receive short-term disability benefits varies based on the governing disability policy – employees can receive benefits for as short as several weeks or as long as one year. If your employment is terminated prior to filing a short-term disability claim, then you may face more resistance getting your claim approved.
Unlike the FMLA, short-term disability benefits do not provide for job protection. Therefore, it is possible to be fired from your job while on a short-term disability leave. This is where the federal Americans with Disabilities Act (“ADA”) can be relevant. The ADA requires that employers with 15 or more employees offer workplace accommodations that would permit the employee to perform their job duties. Some states, including Illinois, require employers with as few as one employee to provide reasonable accommodations. A temporary leave request could qualify as a reasonable accommodation, provided the request does not cause the employer an “undue hardship.” (For a comprehensive list of reasonable accommodations, visit www.askjan.org.) Ultimately, however, if you remain unable to return to work due to your disabling condition, your employment could be terminated.
If you find yourself in a situation involving disability benefits and a termination of employment, you should not hesitate to reach out to an experienced employee benefits attorney given the complexity surrounding these issues. In many instances, you may still be entitled to benefits despite losing your employment. You may also have a cause of action against your employer if it terminated you to prevent you from accessing your disability benefits.
Can I Be Fired if My Short-Term Disability Claim Is Denied?
An employer may not terminate an employee for exercising his or her right to apply for disability benefits, even if the disability claim is denied. To do so would be unlawful interference with benefits, which is prohibited by ERISA (29 U.S.C. § 1140) and state law as contrary to public policy.
However, if you have been on leave for more than 12 weeks in a 12-month period, your employer may terminate you for job abandonment, according to the Family Medical Leave Act. That is true regardless of whether your disability claim is approved or denied.
Can I Collect Unemployment if Terminated While on Disability?
The short answer is yes, you can collect unemployment if you are terminated while on disability. However, it is not always advisable to do so. First, any unemployment benefits you receive are likely considered deductible income under your short-term or long-term disability policy such that there is no benefit to claiming both.
Second, most state unemployment agencies require that you represent that you are ready, willing and able to work, which is at odds with receiving disability benefits. If your STD or LTD plan administrator finds out you are receiving unemployment benefits, he or she could potentially weaponize that information against you, for example by using it to portray you as not credible.
That said, if your STD or LTD application is has been denied, and you are appealing, or if your application remains pending while you are without income, it may be prudent to apply for both benefits and see which gets approved, with the understanding that you may have to repay your disability carrier for any benefits it overpays by virtue of your unemployment benefits.
Can I Apply for Disability While Working?
Yes, you can apply for short-term disability benefits while working. To do this, simply ask your employer or disability plan administrator for a copy of the short-term disability application and complete it, along with a questionnaire by your doctor. For the disability onset date, pick some arbitrary date in the future.
Although the fact that you are currently working might seem like it would hurt your chances of being approved for disability benefits, courts have recognized that there is no “logical incompatibility between working full time and being disabled from working full time,” since “[a] desperate person might force himself to work despite an illness that everyone agreed was totally disabling.” Hawkins v. First Union Corp. Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003).
If the benefits plan is governed by ERISA, the plan administrator must decide your claim within 45 days, but it can extend that time period twice, by no more than 30 days, respectively, for a total of 105 days. Thus, if you wish to avoid an interruption in income, you should apply at least 105 days before you intend to cease working.
