Every week, people call in to ask us if they can quit their job while on an open long-term disability (LTD) claim. So, we decided to write this article to explain whether this is, in fact, something you can do as well as the ramifications and effects that may occur if you do quit.
Generally speaking, you have to be very cautious about quitting your job while involved in a LTD claim. Whether that be that you haven’t applied yet, you’re waiting on a claim approval, you’re appealing a denial or are on an approved claim. Regardless of what stage you are at, you should always seek legal advice from an experienced disability lawyer before making that leap.
To be clear, an insurance company doesn’t have the authority to tell you can’t quit your job. However, they can cut off your benefits or, at the very least, make your life more difficult. So, you need to approach these kinds of situations very carefully. Oftentimes there isn’t a good enough reason to quit your job. It will only complicate your claim and your ability to get back on benefits in the future. So, it’s really important to ask yourself why you want to quit and whether it is worth the hassle.
Now that you know quitting can have detrimental effects let’s talk about what those effects are.
This article is part of our Ultimate Guide to Long-Term Disability in Canada. Check it for a more detailed discussion on how long-term disability works.
What Effects Does Quitting Your Job Have on Your Long-Term Disability Claim?
Before we dive into this section, it’s important to note that your disability claim is separate from employment. If you are covered under an insurance policy, and an event happens that triggers your right to make a claim under the policy — called a crystallizing event — your right under the policy is crystalized at that moment. Simply put, you could lose your employment and still have the right to claim benefits.
So, in theory, you could quit your job and continue to receive long-term disability benefits. And your claim would continue independently of your employment. With that said, this is not a given. More often than not, you will run into complications. The following is an overview of those complications.
Resigning before you apply for LTD may make you ineligible for benefits
If you are thinking about applying for benefits but haven’t yet applied, then quitting may not be the best idea. This is because many insurance policies have clauses that require you to be an active employee at the time you submit an application for LTD. Thus, if you quit your job before applying, you may become ineligible for long-term disability benefits. So, if you need to get on long-term disability but haven’t submitted your application, we strongly advise that you don’t send in your two weeks.
It may raise red flags for the insurance company
The other thing to consider is quitting will be seen as a red flag by your insurance company. They will start questioning the reasons behind your resignation. And may infer that your leave was due to a toxic work environment rather than a disability. This could give them a reason to stop your benefits. Or at the very least, it could make them suspicious of you.
New employers don’t have to accommodate you
Your current employer has obligations to you under the Human Rights Act. They have a duty to accommodate you short of undue hardship. However, if you quit your job, you’re now back in the open marketplace. New employers don’t have a duty to accommodate you right out of the gate. So, by quitting, you are making it harder for yourself to get a job. Overall, it is often in your best interest to at least try to go back to your former employer, even if it’s your plan to leave eventually.
If you start a new job, you may not be eligible for benefits under the pre-existing condition exclusion clause
The next thing you should be aware of is if you start working for another employer, you may not be eligible for long-term disability benefits under the new plan because your condition would fall under the pre-existing limitation clause.
Each policy will have a different definition of a pre-existing condition. So, you need to read your benefits booklet to find out exactly how it’s worded in yours. However, a pre-existing condition is usually defined as a medical condition for which you’ve had treatment prior to your enrolment in your insurance policy.
If an insurance company determines that your condition was pre-existing, they can deny you benefits. Therefore, you need to be careful about quitting and starting with a new employer. Because if you ever needed to go on long-term disability again, you may not be eligible for their LTD benefits until the pre-existing exclusionary period ends. Exclusionary periods usually range from 6 months to two years.
With that said, depending on your policy and how long it took to relapse after your return to work, you may be able to get your benefits reinstated through your old plan under the recurrent disability clause. But this can be difficult — especially if you quit your last job. If you ever find yourself in this kind of situation, you should always reach out to an experienced disability lawyer.
The insurance company may deny your benefits if you don’t follow their rehabilitation plan
This one really comes down to the wording in your policy. However, under most policies, claimants have an obligation to complete rehabilitation plans and treatment plans that are recommended by the insurer. Where you can run into trouble is insurers know that your best shot at getting back to work is by returning to your former employer. Your former employer has a duty to accommodate you under the Human Rights Act. Whereas new employers don’t have that duty. New employers can just refuse to hire or accommodate you. So, insurance companies want to go back to your former employer and will usually create a return-to-work plan based on that principle.
If the insurer puts together a rehabilitation plan that stipulates that you must return to your former place of work, then they could terminate your benefits if you refuse. They can do this based on the fact that you did not comply with the conditions in their policy (i.e. to follow their rehabilitation plan).
These situations are very complicated, however. You may be able to argue the insurer can’t stop your benefits just because you weren’t willing to return to your former employer. If you find yourself in this kind of situation, you should also seek legal advice.
You may not be able to get back on benefits once the recurrence period ends
Most LTD policies have a recurrence clause that allows claimants to go back on LTD if they become ill or disabled again after returning to work. The recurrence clause allows them to go directly back on benefits without having to reapply or undergo another waiting period. This clause sets out a timeframe for which this is permitted — usually within six to 12 months. And if a claimant misses this window, then they would need to reapply and undergo another waiting period.
How this ties into quitting is if you resign and work somewhere else and become ill again after the recurrent disability time frame ends, then you will no longer be able to reapply for benefits under that policy. Simply put, if you quit and miss the recurrence period, then you wouldn’t have a right to your benefits under the policy. In contrast, if you stayed with your employer and kept paying your premiums, then you would have this right — even after the recurrent disability time period ends. So, you need to be very mindful that quitting may prevent you from getting on benefits again if you surpass the recurrent disability deadline.
Some policies require you to be an employee in order to claim recurrent disability
Recently, we’ve seen a few insurance policies with recurrent disability clauses that have very interesting wording. These clauses say that even if you are within the recurrent disability time frame, you can only get back on benefits if you are still an employee of the employer under the plan. Meaning you need to be working for your former employer in order to claim recurrent disability.
So, if you quit your job, you would not be able to get back on LTD benefits even if you met the recurrent disability deadline.
We haven’t seen many policies with this wording. However, we suspect that other insurance companies will start adding this language to their policies as well. So, make sure you read your benefits booklet to find out how the recurrent disability clause is worded in yours.
You won’t be entitled to severance if you quit
You should also be mindful that if you quit your job, you won’t be entitled to severance or termination pay. An employer only has to pay severance if they terminate you. So, if you quit, you won’t receive this compensation.
Oftentimes it’s best to stay with your employer and wait for them to terminate you due to frustration of contract. That way, your employment will end, and you will still get severance.
You may lose rights to other employee-sponsored benefits
The final thing you need to be aware of is sometimes people have other benefits that are tied to their employment. These benefits have nothing to do with long-term disability. For example, some employees have employee-sponsored medical or pension plans. You have to be an employee to access these benefits. Keep in mind, even if you are on long-term disability, you are considered an employee. So, by quitting, you will no longer have a right to these benefits.
Final Thoughts: Can I quit my job while on long-term disability
Overall, quitting your job while on long-term disability is almost never a good idea. It will likely cause several issues with your claim and complicate your ability to get on LTD in the future. For that reason, we recommend that people avoid quitting while on long-term disability. With that said, we will never advocate for someone to stay in a toxic environment. If you absolutely need to leave your job, then you should. But keep in mind you may run into a few problems. If you find yourself in a situation like this, please contact a disability lawyer as soon as possible.
Our lawyers at Resolute Legal have experience dealing with cases like this. Call us today at (888) 732-0470 for a free consultation.