Often, after it becomes clear that an individual can no longer perform the duties of their occupation and must apply for disability benefits, they will attempt to work reduced hours and/or phase out their job prior to stopping work altogether. Usually, a claimant will not want to leave their company and co-workers short-handed or employers will request that the employee stay for a “transition” period. However, you could be severely damaging your disability insurance claim by phasing out your job duties or agreeing to a transition period before you officially stop working.
Transitioning down from your job and/or phasing out your occupational duties can have a devastating effect on your disability insurance claim and the amount of monthly disability insurance benefits you are able to ultimately receive. First, if you agree to an extended transition period in which you phase out your occupational duties over time, your insurance company may argue that you changed your occupation and/or the duties of your job. Many long term disability plans define disability as the inability to perform the material duties of your regular occupation. Often, insurance companies will argue that an individual changed the material duties of their occupation when they phased out certain material duties during an extended transition period. For example, a computer programmer typically is required to type more than four hours a day. If a computer programmer becomes unable to type over four hours due to carpel tunnel syndrome, he or she would be considered disabled and eligible for benefits under most disability insurance plans. However, if the computer programmer agrees to an extended transition period, limited to typing less than four hours a day and supervising and training less senior employees for the rest of the time, the computer programmer may have to prove that he or she is disabled from typing less than four hours a day. Thus by phasing out his or her occupational duties and training his or her replacement, the computer programmer may have made it more difficult to satisfy the definition of disability under the plan. Essentially, if you perform certain duties long enough, those become your occupational requirements. Similarly, if you work part-time or modify your occupational demands for an extended period of time, your insurance company may assert that you have an entirely new occupation. Accordingly, to establish that you are totally disabled, you may have to show that your condition has worsened to the point that you cannot perform the part-time work you have been doing or engage in the modified occupational duties you have been performing, despite clearly being disabled from your original position.
Second, under many long term disability plans, the amount of disability insurance benefits is determined by calculating a set percentage of your income or salary. If you reduce your hours or phase out your occupational duties over time, you may be actually reducing your disability benefit by lowering your salary or monthly income. Thus, it is essential to understand how your benefit amount is calculated and over what period of time the insurance company will look to when determining your income or salary. Often, disability insurance plans contain ambiguous wording, thus, it is always recommended that you consult a legal professional before making a decision to phase out your occupational duties.
Your pension benefit may also be affected by phasing out your occupational duties. Under many pension plans, the benefits are based on multiplying the number of years with the company by a percentage of your final average salary. By reducing your work hours or phasing out your occupational duties, you may be unknowingly lowering the amount of your pension benefit, by reducing your ending salary with your company. Thus, it is essential that you understand the effect that a transition period may have on all your employee benefits. At Disability Insurance Law Group, when a client comes to us prior to filing a claim for disability benefits, we always perform a thorough evaluation of all of our clients’ employee benefit plans before proceeding.