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Qualifying for Long-Term Disability Benefits: The Two Standards Claimants Usually Have to Meet

Many disability insurance policies provide two eligibility standards for benefits. The first is sometimes referred to as the “Your Occupation” (or “Own Occupation”) standard.  Under this standard, a claimant is eligible for benefits only if the disability prevents him or her from performing the essential duties of his or her own occupation

The second standard is referred to as the “Any Occupation” standard.  Under this standard, a claimant is eligible for benefits only if the disability prevents him or her from performing the “essential duties of any occupation.”

Under many disability policies, claimants seeking long-term disability benefits must only meet the “Your Occupation” standard in order to collect benefits for a pre-defined period, usually 18 months to two years. At the end of that period, claimants will then have to qualify for the more rigorous “Any Occupation” standard in order to continue receiving disability benefits.

To understand how the standards work, consider the following scenario: A UPS driver with permanent and chronic back pain cannot lift objects heavier than ten pounds.  She will likely qualify for disability benefits under the “Your Occupation” standard.  The reason is simple.  If she cannot handle most of her packages, then she cannot perform the “Essential Duties” of a delivery driver.

After a two-year-period, however, under many policies the driver will then have to qualify under the “Any Occupation” standard in order to continue receiving benefits.  Here, the insurer’s determination is more complicated:  Can the driver work as a dispatcher, customer representative, or any other occupation in which she did not have to lift heavy objects?

Disability policies usually contain terms related to the “Any Occupation” standard that protect the claimant from being unfairly denied benefits in disability insurance cases. For example, disability policies may provide that the “Any Occupation” standard covers only jobs that pay 60% or more of the income the claimant received prior to her disability.  So, for example, an insurer cannot deny benefits to a plastic surgeon with arthritis merely because she can find work as a parking attendant.  Insurers will also likely provide that the “Any Occupation” standard only applies to jobs that the claimant is qualified to hold.

Despite these considerations, the “Any Occupation” standard can be a difficult one for claimants. This is particularly true for those whose disabilities restrict some, but not most, of their physical and mental abilities. In these cases, the disability insurer will usually be able to find a job that the claimant can perform that is not as rigorous as the one he or she had before the disability.

Nevertheless, courts have laid out protections for claimants applying for benefits under the “Any Occupation” standard. These protections are aimed at ensuring that disability insurers make practical evaluations in any decision on benefits.  In Demirovic v. Building Service 32 B-J Pension Fund (2006), the Second Circuit examined a disability insurer’s denial of benefits under a “Any Gainful Employment” standard. (That standard is nearly identical to the “Any Occupation” standard.)  In that case, the court held that the insurer could not withold benefits from any claimant “who is physically capable, in the abstract, of any kind of work whatsoever, regardless of the claimant’s individual vocational circumstances.”  Rather, the insurer had to evaluate whether the claimant could actually find gainful employment.  In making that evaluation, the Second Circuit held that the insurer had to consider the claimant’s obstacles to finding work including her age, lack of English proficiency and long career as an unskilled laborer.

The Sixth Circuit has echoed the analysis in Demirovic.  In McDonald v. W.-S. Life Ins. Co. (2003), the court stated that the “mere possibility that a participant in an ERISA plan might be able to return to some type of gainful employment” does not provide enough of a basis to deny long-term benefits in light of overwhelming evidence to the contrary.

Even with these protections, claimants will confront challenges when contesting a denial of benefits under the “Any Occupation” standard.  This is especially true in an ERISA case where courts generally defer to the decision of the plan administrator so long as it is supported by a modest level of evidence.  Nevertheless, claimants can overturn a denial of benefits under the “Any Occupation” standard.  If your claim for disability benefits was rejected, consult with a disability insurance lawyer in order to determine whether you can challenge the decision in court.