How to Avoid Getting Screwed Over if Your Employer Offers Disability Insurance

Art: Robin Mead

Some employers offer disability insurance. This is often called Long Term Disability or LTD. If your employer offers LTD, you are lucky. Very lucky. Many disabled people wish they were you right now. Of course, you do not want to do anything to unintentionally sabotage your good fortune.

If you are still working now, and you are dealing with chronic illness, or you think there is any chance at all you may someday need LTD, there are things you can do to protect yourself. Here’s some common LTD regrets:

Quitting Your Job

Some insurance companies will make it more difficult (or impossible) to apply if you quit your job before applying. Many of our readers report that started by applying for short term disability, and then applied for long term disability before the short term had ended. Other people took sick days or FMLA and while they were out, applied for short term disability and then long term disability. Resignations: A Disability Claim No-No

Losing the Opportunity to Get LTD

Some people walk away from the opportunity to get LTD. They decide to switch to another job without benefits. Or become self-employed. Or reduce their hours so much they lose job benefits. Or not pay for LTD insurance if it is offered at an extra cost. All we can say is: If you are chronically ill, OH MY GOD DON’T DO THIS.

Losing the Opportunity to Get STD

STD is Short Term Disability. It can offer you pay while you are waiting for your LTD decision. Most LTD policies do not pay for the first four or five months, so if you have the opportunity to qualify for STD, it is usually wise to do this. Some employers offer LTD and STD at an additional cost. If you have chronic illness, please think carefully before turning down this opportunity.

Assuming You Can Apply for Social Security Instead

Some people think they don’t need to LTD, because they can always just apply for Social Security. Not so. Social Security disability commonly takes three years before you see your first disability check. If you are able to apply for LTD, you may be able to have income to live on that entire time. For some people, getting both LTD and Social Security will also mean higher income.

Trusting Your Employer 

The people who work at Human Resources are hired to protect your employer, not you. The people who work at your employer’s disability insurance company are hired to save the insurance company money, not to help you get your needs met. They may be perfectly nice people, but they still have to do their job, and their job is to protect their employer.

Stories from readers who listened to their employer and lived to regret it: Human Resources is Not Your Friend

Giving Up on LTD

Amy was told she should give up on LTD and just apply for Social Security. She was kind enough to share her story to help others: Amy Regrets Listening to Her Lawyer About SSDI & LTD

Changing Work Tasks

Some LTD policies require that you prove you cannot work at your current job. Other policies require you prove you can’t work at any job in the country. Many policies start one way, and then switch to the other way after a few years. Check your policy. If you are going to want to prove that you can’t work at your current job, it may cause issues if your current job changes to be something easier or more sedentary.

Reducing Your Hours

One common regret people have is switching to part time hours with lower pay. LTD is based on your last month of pay. Lowering your pay can lower your disability check every month for the rest of your life. In some cases, switching to part time work can completely disqualify you from being eligible for disability insurance, if your employer does not offer this benefit to part time employees. There are two exceptions to this rule. To learn more about the exceptions, take a look at Rose’s story: Rose Reduces Her Work Hours Without Reducing Her LTD

Not Reading Your Contract

If you apply for LTD without reading your contract, you may be in for some surprises down the road. Unhappy surprises.

Buying Pre-tax LTD 

Check to see if your employer can allow you the option to purchase your LTD post-tax. Your employer may not be aware this is possible. You may need to contact the insurance company and work with your Human Resources department. Real Life Example: John opted to pay an extra $7 per month to cover the taxes. Eventually, he became disabled and received an extra $250 every month.

Making Bad Decisions at The Doctor’s Office

The decisions you make, and the things you say, and the things you do right now may turn out to have a big impact on you later. How to Go to the Doctor Without Regret

Making Bad Decisions in The Rest of Life

Big regrets reported by our readers: 10 Biggest Life Regrets

Tools For Troublemakers

If There is Any Chance You Will Ever Apply for Disability…

Sample Letter for Requesting a Disability Accommodation in the Workplace

How to Protect Yourself While Applying for Long Term Disability

Thanks for Reading

🌸 This page is part of the free online guide: The Sleepy Girl Guide to Social Security Disability 

🌸 Art on this page by Robin Mead and Elizabeth D’Angelo.

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10 thoughts on “How to Avoid Getting Screwed Over if Your Employer Offers Disability Insurance”

  1. i
    have been in the building trades for 39 years,i have copd and three buldging discs in my back and many other health issues.i have been on pain management for three my pain management doctor told me she does not fill out dissability claims this is not a claim for social securety . its just a claim for dissability from the building trades.what doctor do i need too fill out this form …..


  2. I had no idea that part-time work can completely disqualify you from disability benefits in some cases. People who need those benefits right no be able to work full time. I hope they can get to an agreement with their bosses for their own sake.


  3. I just found your blog not too long ago after searching on google for guidance on how to fill out disability papers and start the process.

    This blog has helped SO MUCH!!! I am just starting to be able to read through it all but there is such great information there and so organized!

    Also, I absolutely LOVE the artwork! Thank you so much!!


  4. This isn’t correct. Disability benefits purchased with post tax dollars (by the employee rather than employer) are still subject to ERISA law.


  5. I worked for a major international insurance company, which offered STD and LTD as free employee benefits, with the option to pay a little out of each paycheck towards a higher percentage of disability benefit should I ever become disabled. The STD automatically kicked in anytime I was hospitalized, without me having to fight the company, and I was mighty grateful for the couple of dollars per pay period I contributed to get the 60% rate of my pre-disability paycheck. After 6 months on STD my claim converted to LTD, which was just myself and my dr fill in gout more forms and submitting more office notices to support my continued claim. I was encouraged to apply for SSDI, and I applied all by myself, and thanks to having kept great records on all the Drs, medications, and hospitalizations and filling out the online application and all paperwork in great detail and having a supportive dr my claim was approved for SSDI within 4 weeks of applying online, and my approval coninsided with the end of the 6 month SSDI waiting period since date of disability (last day of work) so I got my first check the following month after I was notified I was approved. My mom also applied for SSDI by herself and was approved in 4 weeks. I do believe working for the insurance company and knowing the inside of how things go helped me to be my own advocate and greatly helped me get my SSDI claim approved fast and keep my LTD benefits nearly 8 years now. I found this site in researching to help my significant other who is dying a slow painful death of a covered blue book SSDI condition yet he was denied recently (he says this is th 4th time denied) for SSDI and according to the denial letter the correct diagnosis for which he should automatically qualify was not even on the claim, nor were any records received from the specialist who treats and manages it nor was that dr part of the claim either….but he never knew this. So we are gathering eveyrything we need to start over and apply again, and this site is a great resource.


  6. Good Day,
    Thank you for giving so much of yourself into this free information for us. Do you have a blog to help with navigating through workman’s comp? I have mold toxicity due to inspecting home with black mold in them. I was never issued the proper training or equipment. My doctor says I am poisoned with mold and will not fill out another form until I go through workman’s comp. He said it is for my best interest. Any help would be appreciated. Thanks


  7. Do NOT purchase LTD thru your employer…Purchase your own private disability policy…Why ? When purchased thru the employer, an LTD policy becomes subject to the ERISA law which was originally intended to protect employee benefits, but instead protects insurance companies….How ?? By first forcing you to appeal the claim before you can file a lawsuit and then limiting what you can sue for….The insurance company likely isn’t going to change its decision during appeal and you don’t get paid any benefits in the meantime….Then, when you file the lawsuit, the damages you can claim are limited…If you lose your house in the meantime, tough luck…you cannot sue to recover the value of the house you lost…or any other property….You can only sue for the back benefits plus interest…

    Also, employer LTD policies whose premiums are paid for with pre-tax
    money generally provide disability benefits that are taxable….

    LTD private policies purchased with after tax money are not subject to the ERISA law….and the benefits are non taxable…You can sue for breach of contract, bad faith, lost property, emotional distress, loss of credit, and possible punitive damages…


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