Nowadays, a lot of people have more than one job. They will have their main job as a nurse, teacher, etc. And they will have a part-time or seasonal position somewhere else. The question a lot of these individuals have is whether they can continue working their side-hustle job while on long-term disability (LTD) for their primary job.
In theory, you could be incapable of doing the essential duties of your own occupation and still have the ability to do your side job. For example, suppose you are a teacher and went on LTD because your anxiety prevented you from teaching in front of the class. However, your anxiety doesn’t prevent you from continuing your side hustle job selling hand-crafted jewelry on Etsy. In that case, you could prove that, yes, your anxiety is stopping you from being a teacher. But it does not prevent you from doing your side hustle, where you don’t have to communicate with anyone or be responsible for an entire class.
On paper, this seems like a relatively simple thing to prove. However, it is never that easy in the real world. Insurance companies hate the idea of paying you while you continue to work somewhere else. And they will often deny claims for this reason. With that said it’s not impossible. You can, in some situations, continue to work your secondary while on long-term disability for your main job.
To learn more about working while on LTD, check out our article: Can You Work Part-Time While on Long-Term Disability in Canada?
How to Determine if Working a Second Job is an Option for You
To determine if this is possible for you, the first thing you need to do is read your policy, specifically the part that defines ‘own occupation.’ We’ve noticed recently that a few insurance companies have added a clause in their own occupation definition that says something along the lines of:
“You are unable to complete the essential duties of your own occupation, AND you are not engaged in any other employment unless it is part of an approved rehabilitation plan.”
If your policy says something like this, you may be unable to continue working your secondary job. However, you should always consult with a disability lawyer before making this assumption.
Now, if your policy doesn’t say anything about working somewhere else, then you may have a chance as long as you meet the definition of disability as defined by your policy.
If this is the case, the main thing you have to prove is why you can’t do the duties of your own occupation, say as a teacher, but can simultaneously fulfill the duties as creator and seller of handcrafted jewelry on Etsy. You need to be able to show that there is a distinct separation between both jobs in terms of duties and responsibilities. And explain why you CAN’T do one but also why you CAN do the other. This is difficult, but we have seen clients who have successfully received long-term disability benefits while working their secondary job. But keep in mind, if you decide to try this, you will likely have a difficult road ahead of you.
What Happens After You’ve Been Given the Okay to Work Your Side Job While on Long-Term Disability?
Now, suppose you are able to convince the insurance company to allow you to continue working your side hustle while on long-term disability for your main job.
What happens next?
Most policies have a clause which allows the insurer to offset the money you earn from your side job. And that will apply even if you had that side job before applying for LTD. So, you may be in a situation where you are going to be living at a much-reduced income — especially if you’ve gotten used to earning money from two jobs. This is one of the main problems with only having one job insured for LTD because that plan is only going to consider your income from one job, not your personal income from all your jobs.
However, it’s not always going to be a direct offset of money. So, it’s not a matter of you earned $20,000 from your side job, so they are going to deduct $20,000 from your benefits. Instead, it could go to an all-sources deduction, which is a common feature found in most group disability policies.
The all sources of income deduction clause basically says that your total earnings for a given year can’t exceed a certain percentage of your pre-disability income—for example, 80%. So, in that situation, they would look at what’s 80% of your pre-disability income for your insured job, let’s say it’s $50,000. And then they would start reducing your benefit as soon as you start earning more than that amount.
Example:
- Pre-disability earnings: $62,500
- All sources of income threshold: 80% of your pre-disability earnings, which is $50,000
- Yearly LTD disability benefit amount: 60% of pre-disability, which is $37,500
- The amount earned from your secondary job: $12,500
In this scenario, the insurer couldn’t offset anything from benefits because you haven’t exceeded the 80% threshold. However, if you earned more than $12,500, then the insurer could start deducting that income from your LTD benefit.
Keep in mind this is an example. Every policy has unique wording and criteria. So you need to read yours to understand how it will work in your situation. If you are having trouble comprehending how offsets will work in your policy, call us today at (888) 732-0470, and we can break it down for you.
The Exception: individual policies that insure more than one job
Like anything, there are always exceptions. And the exception to everything we’ve discussed in this article is if you have a true own occupation policy. These types of policies are common among medical professionals, lawyers and independent business owners. However, this kind of coverage is rare in group disability insurance policies. How it works is these policies insure you for your specific profession.
For example, if you were a dentist who developed a severe tremor in your hand and this tremor prevented you from working as a dentist, you could continue to collect long-term disability even if you found gainful employment in another field. So, if you have true own occupation coverage, you could likely continue working your second job without dealing with offsets or anything like that. But you should never assume this is the case. It will all depend on the wording of your policy. You should always consult with a disability lawyer before making any conclusions.
Final Thoughts
As you can see, working a secondary while on long-term disability for your main job is a complicated matter. You will likely be faced with push-back from the insurer, offsets, and other obstacles. For that reason, we highly recommend getting disability insurance that covers all your jobs. That way, you will have coverage for each position.
We also recommend speaking to a disability lawyer. These situations are extremely nuanced, and a lawyer can help guide you through your next steps. Call us today at (888) 732-0470 for a free consultation.
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