The Definition of Gainful Occupation In Long-Term Disability Policies

Long-term disability (LTD) policies typically define "disability" in one of two ways. Own occupation policies consider you disabled if you have a medical condition that prevents you from performing the main duties of your usual work. Any occupation policies define disability more narrowly, as the inability to work at any other job—not just your regular job—for which you are reasonably suited. Under this policy provision, if you can work in any gainful occupation, you'll be denied LTD benefits.

Many LTD policies shift from requiring that you can't work in your "own occupation" to requiring you to be unable to work in "any occupation" after a certain period of time (often 24 months). If you're injured and filing a claim with your LTD provider, it's important to understand the terms insurers use and how they decide whether you can perform any occupation.

What Is a Gainful Occupation?

In general, a "gainful" occupation is one where you earn at least 60% of your pre-disability wages. This means that before your insurance company can deny your disability claim (or terminate your benefits) under an "any occupation" plan, the company must demonstrate that you can reasonably perform some job that would pay you 60% of your prior earnings, considering your education, training, and experience.

The 60% figure is typical but not universal, so be sure to check the specifics of your policy. Some policies will pay out if you have a 20% or higher loss in earnings, meaning that a gainful occupation is one that provides you with at least 80% of your pre-disability wages.

For example, say you're a surgeon who sustains a carpal tunnel injury that causes tremors in your hands. Assuming you have medical documentation of the injury, you'll almost certainly be found to be disabled under an "own occupation" policy, since being a surgeon requires fine motor skills. But whether you'd qualify for benefits under "any occupation" plan is a more difficult question that depends on your prior salary, ability to perform other jobs, and expected earnings at those other jobs. If you earned $300,000 per year as a surgeon before your injury, your insurer would have to show that you could reasonably earn at least $180,000 per year (60% of $300,000) in another job before denying your claim.

What Does "Reasonably Suited" Mean?

Your insurer can't just conclude that you can do any random job before denying your "any occupation" policy—you must be reasonably suited to perform a gainful occupation, based on where you live, what skills you have, what type of education you have, and your medical limitations. As is often the case with legal terms, the phrase "reasonably suited" is open to interpretation. Here are a few factors that could make an occupation "unreasonable" for you to perform:

• Few or no positions within that occupation exist within a reasonable commute of your home.
• The job requirements are beyond your skills or educational level. (Note that while you can't reasonably perform a job for which you're underqualified, the fact that you might be "overqualified" for a job will rarely be taken into account.)
• The job wouldn't allow you to attend regular medical appointments.
• Your doctor hasn't released you to perform the required tasks of the position.

Submit as much favorable medical evidence as you can, including an opinion from your doctor explaining your limitations, so that your insurer can accurately assess what types of jobs, if any, you could perform. The exact type of evidence you'll need depends on your disabling condition. If you have a mental health disorder, you'll want to provide counseling notes from a therapist or psychologist, while physical conditions are best supported by objective imaging such as X-rays.

Who Decides Whether You Could Work at Another Occupation?

LTD insurers often work with vocational experts (VEs) to establish that there are "other jobs" out there that claimants can perform and to determine the compensation associated with those jobs. VEs are well-versed in the specifics of the labor market and often have experience placing disabled people in suitable occupations. They rely on a number of sources for their opinions, including the Bureau of Labor Statistics, the (outdated) Dictionary of Occupational Titles, and employer surveys.

As with medical doctors and many other kinds of "expert witnesses," VEs can—and often do— disagree with one another. With occasional exceptions, a VE employed by an insurance company is more likely to find that a disability applicant could obtain gainful employment. Attorneys who handle LTD cases frequently hire their own VEs, many of whom have biases in the opposite direction.

Although VE testimony can be critical to whether you are granted or denied benefits, ultimately it is the claims administrator (or plan administrator) at your insurance company who makes the final decision as to whether your claim is approved or denied. While many claims administrators will be more likely to believe the insurer's VE than the one a disability attorney hires, having favorable VE evidence in the administrative record is crucial if your claim is denied and you wish to appeal, especially if you plan to file suit in federal court.

My Claim Was Denied Because the Insurer Said I Could Do Another Job, What's Next?

If the insurer's VE says that you're reasonably suited to another occupation and denies your claim—and, unfortunately, many claims are denied at first—you can appeal the denial. At this stage it's probably a good idea to consult an experienced LTD disability attorney. Your lawyer will know how to cross-examine a VE who works for the insurance company, whether by way of written questions or an oral deposition. Likewise, your lawyer can elicit useful testimony from a VE who is favorable to your case—helping you obtain your LTD benefits on appeal.

Depending on your LTD policy, you may be required to also file for Social Security disability if you win your appeal. Then, if your Social Security application is approved, the insurance company might require you to "pay back" your LTD benefits or offset any current payments by the amount you're receiving from Social Security. Many private insurance companies will also provide lawyers for claimants to attend Social Security hearings. But even if you don't win your appeal, if you're unable to work at any job full-time for at least one year, you may still qualify for Social Security disability benefits—regardless of whether your LTD claim was paid.