The differing standards for obtaining disability benefits from federal, state, and private sources may often leave a claimant unsure of the standard to be met. While public assistance for disability benefits often requires that the claimant be unable to perform any gainful employment, a lesser standard is applied when claiming benefits, such as disability income insurance benefits, from private sources. Consequently, it may be possible to obtain private disability insurance benefits while the claimant remains employed.
Private Disability Insurance
There are two basic types of private disability insurance policies: (1) occupational, and (2) general. An occupational disability policy provides the insured with a source of income in the form of disability benefits when the insured is no longer able to perform substantially all of the material acts of his or her occupation, as designated in the policy. A general disability policy typically provides benefits when the insured is unable to perform substantially all of the material acts of any occupation. Whether an insured under a general disability policy satisfies the definition of total disability depends on the insured’s training and experience and future ability to secure gainful employment.
Both types of coverage serve to compensate the insured for the inability to engage in gainful employment; however, the scope of the coverage available under the two types of policies differs greatly. Both types of coverage require that the insured sustain some type of physical or mental loss, often as a result of a specific cause, such as an illness or accident. However, neither type of insurance coverage requires that the insured be completely incapacitated before benefits can become due. Instead, an insurer is required to consider a variety of factors before reaching a determination of a claimant’s right to benefits.
The financial benefit of obtaining an occupational disability policy is evident in the flexibility it may give the insured who sustains a disability. For instance, if a surgeon with a stated field of expertise becomes unable to practice his specialty, but remains physically and mentally capable of practicing medicine generally, disability benefits may become due and owing under an occupational disability policy. The same entitlement of coverage would not be available if the insured obtained only a general disability policy.
The fact that an insured continues to work may not bar the insured’s entitlement to disability benefits under certain circumstances. When evaluating the impact of continued employment, several factors become pertinent. First and foremost is the length of time the insured continued employment after the disabling event. Any extended period of continued employment may easily preclude the recovery of benefits. Nevertheless, when the return to work has been suggested by the treating physician as therapeutic in nature and is ultimately unsuccessful, a finding of total disability may still result. Further, where the return to work is against the advice of a treating physician and is performed out of economic necessity, total disability may still exist.
A disabled employee who is retained on the payroll as a courtesy and reward for years of service may qualify for disability benefits where it is shown that the employee did not earn the compensation. The actions of the employer may be seen as a charitable gesture and not as compensation for gainful employment. Similarly, the retention of an otherwise disabled employee who is performing only minor tasks is not seen as a bar to benefits. This is because the employee is not performing substantially all the acts of the former employment. So too, when an insured continues employment, but is only able to perform a reduced workload, a finding of totally disabled may be possible. However, an insured who continues to work for an extended period of time and experiences only a decrease in efficiency may be precluded from recovering total disability benefits since the impact of the disability does not prevent the insured from performing substantially all of the requirements of his or her occupation. Obviously, the ultimate determination of total disability depends on the facts of the particular situation.
While the insured, under an occupational policy, may continue working in some other field, the courts and the insurer will closely examine what the insured’s actual occupation was at the time of the disabling event. For this reason, the insurer is under no obligation to assume that the insured was engaged in the listed occupation at the time of the disabling event and is wholly within its rights to require the insured to substantiate that the listed occupation was the insured’s real occupation at the time of the disability. This factor often comes into play with a professional who may have employment involving a specialized area of expertise while simultaneously engaging in other forms of business. However, it must be remembered that the sources of the insured’s income are not determinative. Instead, the focus will be placed on the insured’s capacity to engage in his or her occupation.
From the point of view of a disabled claimant, the ability to engage in some form of employment while collecting disability insurance benefits could prove economically essential. Whether the insured is given the option to continue working in some capacity or must sustain a disability that precludes any material employment is dependent upon the terms and conditions of the particular insurance policy.