I’m currently on long-term disability because of mental health issues related to my workplace. I want to start a side business selling crafts on Etsy and at markets. If anything, my side hustle is helping to improve my mental health. But would earning income from it invalidate my long-term disability (LTD) payments?
THE FIRST ANSWER
Rajiv Haté, personal injury and disability lawyer, Kotak Law, Mississauga
Whether side income will affect your disability benefits depends on the language of your disability policy, as well as what stage you are at in your disability claim. Insurers will look at how much time and energy you are devoting to it and how much income you are earning. The insurer may view your side business as demonstrating you have the capacity to work, whether at your own occupation (if the job duties are similar to your own job) or in another occupation, and this could result in the denial of benefits. This is especially true if your claim is at the stage where the test for being considered “Totally Disabled” is whether you can perform “any occupation” (compared to when the test is whether you are able to perform your “own occupation”).
Some policies may allow you to have a side business without affecting your benefits if it is under a certain threshold. Other policies do not allow any kind of work while you are receiving benefits, unless specifically permitted by the insurer. Most policies allow for the deduction of any income you receive or earn from the long-term disability benefits payable. Therefore, even if it does not completely invalidate your payments, it may result in a reduction of the long-term disability payment. You should review your policy and consult with the insurer or a qualified legal professional if you are unsure how it will affect your claim.
If the side business will improve your mental health, you could obtain a medical note from your doctor confirming this.
If you start a side business, transparency is key. You should tell the insurer, as failure to disclose this information could lead to the denial of benefits or even the insurer seeking repayment if they determine that you purposely withheld this information and the side business shows that you are able to work and/or have been earning income.
THE SECOND ANSWER
Shikha Shukla, legal strategist, Osuji & Smith Lawyers, Calgary