What Happens When an Employee Goes on Long-Term Disability? (2026 Guide)
January 29, 2024 |
When an employee goes on long-term disability (LTD), they receive a portion of their income through their employer’s disability insurance plan while they are unable to work due to illness or injury. Typically, LTD benefits replace 50-70% of the employee’s pre-disability salary and can last from two years to age 65 or beyond, depending on the policy. However, going on long-term disability raises critical questions about job protection, benefits continuation, and legal rights — especially in California. At Pisegna & Zimmerman, we help employees and former employees in Los Angeles understand and protect their rights during the long-term disability process.
Understanding Long-Term Disability Insurance
Long-term disability (LTD) insurance is a benefit that provides income replacement when an employee cannot work due to a qualifying medical condition. It typically activates after short-term disability benefits are exhausted — usually after 90 to 180 days of disability.
How LTD Benefits Are Structured
Most employer-sponsored LTD policies share these common features:
- Benefit amount — Typically 50-70% of your pre-disability base salary
- Elimination period — A waiting period (usually 90-180 days) before benefits begin, during which you may use short-term disability or sick leave
- Benefit period — The maximum length of time benefits are paid, which can range from 2 years to age 65 or 67
- Definition of disability — Most policies use an “own occupation” definition for the first 24 months (you cannot perform your specific job duties), then switch to an “any occupation” definition (you cannot perform any job for which you are reasonably qualified)
- Offsets — Benefits may be reduced by other income you receive, such as Social Security Disability Insurance (SSDI), workers’ compensation, or state disability benefits
Employer-Paid vs. Employee-Paid LTD
Whether your employer or you pay the LTD premiums has important tax implications:
- Employer-paid premiums — LTD benefits are taxable income to you
- Employee-paid premiums (with after-tax dollars) — LTD benefits are typically tax-free
- Shared premiums — Benefits are partially taxable based on the employer’s contribution percentage
What Happens to Your Job When You Go on LTD?
This is one of the most important — and most misunderstood — aspects of long-term disability. LTD insurance protects your income, not your job. Your employment status depends on several intersecting laws and policies.
FMLA Protection (Federal)
The Family and Medical Leave Act (FMLA) provides up to 12 weeks of unpaid, job-protected leave per year for employees with serious health conditions. To be eligible, you must have worked for your employer for at least 12 months and logged at least 1,250 hours in the past year, and your employer must have 50 or more employees.
Once your 12 weeks of FMLA leave are exhausted, your employer is not legally required to hold your position. However, additional protections may apply under state law or the ADA.
CFRA Protection (California)
In California, the California Family Rights Act (CFRA) mirrors and expands upon the FMLA. CFRA applies to employers with five or more employees (compared to FMLA’s 50-employee threshold), providing broader coverage for California workers. CFRA also provides 12 weeks of job-protected leave.
ADA and FEHA Protections
The Americans with Disabilities Act (ADA) and California’s Fair Employment and Housing Act (FEHA) prohibit employers from discriminating against employees based on their disability. Key protections include:
- Reasonable accommodations — Employers must provide reasonable accommodations that allow a disabled employee to perform essential job functions, unless doing so creates an undue hardship
- Extended leave as accommodation — Under FEHA, additional unpaid leave beyond FMLA/CFRA may be required as a reasonable accommodation if it would allow the employee to return to work
- Interactive process — California employers must engage in a good-faith interactive process to explore possible accommodations before terminating a disabled employee
Important: In California, employers cannot set an automatic termination date based on the length of disability leave. Each situation must be evaluated individually, and the employer must engage in the interactive process before making any employment decisions.
Can Your Employer Fire You While on LTD?
The short answer is: it depends. An employer can terminate your employment while you are on LTD, but the termination cannot be because of your disability. Lawful reasons for termination during LTD may include:
- Company-wide layoffs or restructuring unrelated to your disability
- Elimination of your position for legitimate business reasons
- Inability to perform essential job functions with or without reasonable accommodation
If you believe you were terminated because of your disability, you may have a wrongful termination claim. Contact an attorney immediately to protect your rights.
The LTD Claims Process: Step by Step
Step 1: Notify Your Employer
Inform your employer and HR department as soon as you know you will need to go on long-term disability. They will provide you with the necessary claim forms and connect you with the insurance carrier.
Step 2: File Your LTD Claim
Complete the claim forms, which typically include sections for you, your employer, and your treating physician. File within the deadline specified in your policy — usually within 30-90 days of becoming disabled.
Step 3: Provide Medical Documentation
Submit comprehensive medical records, including:
- Diagnosis and treatment records from your physicians
- An Attending Physician Statement (APS) detailing your functional limitations
- Test results, imaging, and specialist reports
- Records of all prescribed treatments and medications
Step 4: Insurance Company Review
The insurance company will review your claim, which may include having their own medical professionals review your records, requesting independent medical examinations (IMEs), or conducting surveillance; a Los Angeles long term disability lawyer can review what the insurer requests before you respond. This process typically takes 30-45 days.
Step 5: Approval or Denial
If approved, benefits begin after the elimination period. If denied, you have the right to appeal, and how an ERISA long term disability denial works in California shapes that appeal. Under ERISA (if your plan is employer-sponsored), you typically have 180 days to file an administrative appeal.
What Happens to Your Benefits While on LTD?
Health Insurance
During FMLA/CFRA leave, your employer must maintain your health insurance on the same terms as if you were still working. After FMLA/CFRA leave is exhausted, health insurance continuation depends on your employer’s policy. You may be eligible for COBRA continuation coverage for up to 18 months, though you will be responsible for the full premium.
Other Benefits
Policies vary widely regarding other benefits during LTD, including:
- Retirement contributions — Typically stop when you are no longer receiving a paycheck
- Life insurance — Many group life insurance policies include a waiver of premium provision during disability
- Paid time off — PTO accrual typically stops during LTD leave
Returning to Work After Long-Term Disability
If your condition improves and you are able to return to work, several considerations come into play:
- Phased return — Many LTD policies and employers support a gradual return to work with reduced hours or modified duties
- Partial disability benefits — Some LTD policies provide partial benefits if you return to work in a reduced capacity and earn less than your pre-disability income
- Reasonable accommodations — Under the ADA and FEHA, your employer must provide reasonable accommodations to help you return, such as modified schedules, ergonomic equipment, or reassignment to a vacant position
- New position — If your original position was filled, your employer may need to offer you a comparable position
Should You Apply for SSDI While on LTD?
Many LTD insurance policies require you to apply for Social Security Disability Insurance (SSDI) as a condition of receiving LTD benefits. This is because the insurer can offset (reduce) your LTD payment by the amount of your SSDI benefit. Even if not required, applying for SSDI can provide additional income security if your LTD benefits run out.
In 2026, the SGA limit for SSDI is $1,690 per month, and SSA estimates the average monthly SSDI benefit for disabled workers at about $1,630.
Frequently Asked Questions About Long-Term Disability
How long can you stay on long-term disability?
The maximum benefit period depends on your specific LTD policy. Some policies pay benefits for 2, 5, or 10 years. Many employer-sponsored plans pay benefits until age 65 or 67 for disabilities that begin before a certain age. Check your policy’s benefit schedule for exact terms.
Can you be fired while on long-term disability in California?
California law provides strong protections for disabled employees. While employers can technically terminate employment during LTD, they cannot do so because of the disability. FEHA requires employers to engage in the interactive process and provide reasonable accommodations before termination. Violations can result in wrongful termination claims with significant damages.
What is the difference between short-term and long-term disability?
Short-term disability (STD) typically covers 60-70% of your salary for 3-6 months. Long-term disability picks up after STD ends and can last years or until retirement age. STD usually has a shorter elimination period (0-14 days) compared to LTD (90-180 days).
Does long-term disability affect my Social Security benefits?
No — receiving LTD does not reduce your future Social Security retirement benefits. However, if you receive both LTD and SSDI, your LTD insurer may reduce your LTD payment by your SSDI amount.
What happens when long-term disability runs out?
When LTD benefits expire, you may still be eligible for SSDI or SSI benefits through the SSA. You may also explore state disability programs, veterans’ benefits, or other assistance programs. Planning ahead for the end of LTD benefits is essential. See our guide on getting disability for qualifying conditions like gout to understand what medical conditions qualify.
Do I need a lawyer for a long-term disability claim?
While not required, having a long-term disability attorney is highly recommended — especially if your claim is denied or your benefits are terminated. Insurance companies have teams of lawyers and medical reviewers working to minimize payouts. Having your own legal advocate levels the playing field. If your claim is approved, learn how to track your disability back pay.
Get Legal Help with Your Long-Term Disability Claim
Going on long-term disability is stressful enough without having to worry about job security, insurance denials, or benefit calculations. At Pisegna & Zimmerman, our Los Angeles disability attorneys have extensive experience handling LTD claims, ERISA appeals, and wrongful termination cases throughout California. Contact us today for a free consultation to discuss your rights and options.