Can I Quit My Job While on Long Term Disability?

Many long-term disability (LTD) recipients remain “employed” with their employer, perhaps listed as an “inactive employee”. But let’s say there has not been a formal separation either by resignation or termination. Can one “quit” the job while receiving long-term disability benefits?

Yes, you can quit your job while on LTD benefits, but it’s important to understand the potential consequences before you do. Whether it’s a wise decision depends on your specific situation and the terms of your disability policy.

Understanding Short Term vs. Long Term Disability Benefits

Short Term Disability (STD) typically covers you for a temporary period—think weeks or a few months—when illness or injury knocks you out of commission and you can’t do your job. For example, someone recovering from surgery or a broken leg might turn to an STD policy for income protection, as coverage often kicks in quickly and replaces a portion of your regular earnings (usually up to 6 months).

Long Term Disability (LTD), in contrast, is designed for more serious or long-lasting conditions. If an illness or injury keeps you from working for an extended period—usually months or even years—LTD picks up where STD leaves off. Policies vary, but benefits commonly begin after your STD coverage runs out, and can continue for several years or until you reach a certain age.

Both types of coverage have their own eligibility rules, waiting periods, and benefit amounts, so it’s wise to review your policy documents (or speak to your HR rep) for the fine print. Understanding these differences helps you know what to expect if you’re already on disability—or considering applying for it.

Criteria for Qualifying for Short Term and Long Term Disability Benefits

To be approved for Short Term Disability (STD) or Long Term Disability (LTD) benefits, you’ll need to meet the specific requirements set out in your policy. While every insurance company—think Guardian, MetLife, or Prudential—may include some unique twists, most share several basic criteria:

• Proof of Disability: You typically need documentation from your doctor confirming that your medical condition prevents you from performing the essential duties of your job.
• Waiting Periods: Most plans require you to be continuously disabled for a certain number of days (the “elimination period”) before benefits kick in. For STD, this might be a week or two; for LTD, it could be several months.
• Active Employment Status: You usually must be employed when you first become disabled. That’s why some folks remain listed as “inactive employees” while on claim.
• Medical Reviews: Ongoing benefits often depend on providing regular updates or medical reviews to show you’re still disabled, according to the insurer’s definition.
• Non-Work-Related Condition: Generally, the illness or injury must not be caused by your current job—a crucial distinction if you’re also considering Workers’ Compensation.

Your specific policy and employer’s plan will outline any additional requirements or limitations. Always review your summary plan description or consult with a knowledgeable professional if you’re unsure whether you qualify.

Factors to Consider Before You Quit

1. Your Eligibility for Ongoing LTD Benefits

In most cases, quitting your job doesn’t automatically stop your LTD benefits. If you’re already approved and receiving benefits, they usually continue as long as you still meet the policy’s definition of “disabled.” However, some policies require that you maintain an employment relationship with your employer, so it’s important to check your plan documents or speak with an attorney before you quit.

What to Look for in Your Employee Handbook

Your employer’s handbook can be a goldmine of critical details when it comes to leaves of absence and time off policies. It usually spells out:

• Types of leave available (medical, family, personal, etc.)
• How to request a leave or notify your employer
• Required documentation or forms
• Deadlines or notice periods you must meet
• Your rights and obligations while on leave
• Steps for returning to work after your leave ends

Be sure to review your handbook carefully before making any big decisions.

2. Impact on Health Insurance and Other Benefits

If your employer provides your health insurance and you quit, you may lose that coverage. You may be eligible for COBRA, or you may need to find private insurance. This can be an important consideration if you’re dealing with ongoing medical issues.

3. Future Employment and Vocational Rehabilitation

Some LTD policies include rehabilitation or return-to-work programs. Quitting your job could affect your participation in these programs or how the insurer views your potential for future employment. If the insurer believes you’re not cooperating with return-to-work efforts, it may use this as a reason to review or even terminate your benefits.

4. Is There a Separation Agreement or Severance Agreement?

Many employers require a separation agreement or severance agreement as a condition of separation. If there is a separation/severance agreement, one should carefully review the terms and conditions of such agreement to ensure that the claimant is not giving up their LTD claim as a condition for receiving the severance funds.

5. Employer-Sponsored LTD vs. Private LTD

If your coverage is through your employer (group LTD), leaving your job generally won’t affect existing benefits if you’re already receiving them. But if you haven’t been approved or are in the appeals process, quitting could complicate your claim. Private LTD policies, on the other hand, usually aren’t affected by your employment status once you’re approved.

The bottom line is that you can quit your job while receiving long-term disability benefits, but it’s not a decision to be made lightly. Depending on your specific LTD policy, your termination could affect your benefits, health care coverage, or your insurer’s assessment of your continued eligibility. Always take the time to review the terms of your plan and consider seeking legal advice if you’re unsure.

6. Leave of Absence and Your Rights

Before considering resignation, also be aware of your options for taking a leave of absence. Some employers offer paid time off (PTO), unpaid leave, or other disability benefits. You may also qualify for unpaid leave under the Family and Medical Leave Act (FMLA), which can protect your job for up to 12 weeks. Review your employer’s policies—often found in the employee handbook—and follow the required procedures for requesting leave, as this can affect your ability to return to work or remain eligible for other benefits in the future.

7. Legal and Financial Advice

Because quitting your job can have significant consequences—especially if you’re receiving employer-sponsored LTD benefits—it’s a good idea to consult with an attorney or financial advisor before making any final decisions. They can help you assess the risks and ensure you don’t inadvertently jeopardize your financial security.

For detailed guidance on how to approach resignation due to disability, including how to communicate with your employer, read our article on resigning due to a disability.

RELATED POST: Differences Between Group and Individual Disability Insurance

Schedule a Free Case Evaluation Today

At the Ortiz Law Firm, we understand how overwhelming it can be to navigate a long-term disability claim, especially when you’re also trying to make major life decisions like whether to leave your job. Led by attorney Nick Ortiz, our firm focuses exclusively on disability law, helping people across the country secure the benefits they’re entitled to.

We’ve handled thousands of appeals and lawsuits involving group (ERISA) and individual disability insurance. If you’re dealing with a denied claim, we offer free case evaluations, and there’s no obligation to move forward unless it’s the right fit for you. If you need help appealing a denial, contact us today to speak with someone who understands what you’re going through and knows how to help.