Residual Disability and the Own-Occupation Clock

Step 1 - gross benefit. 60% × $9,000 = $5,400. This is below the $10,000 plan maximum, so $5,400 is the gross monthly benefit.

Step 2 - proportional loss. The plan defines residual disability as a proportionate loss of earnings: ($9,000 − $4,500) ÷ $9,000 = 50%. Residual benefit before offsets = 50% × $5,400 = $2,700.

Step 3 - offsets. Other income benefits total $1,800 + $900 = $2,700. The Social Security benefits still count during the trial work period, and the pension is a plan-defined other income benefit.

Step 4 - raw payable. $2,700 − $2,700 = $0.

Step 5 - minimum benefit floor. The plan guarantees the greater of 10% of the gross benefit, or the stated dollar minimum. 10% × $5,400 = $540. Because the raw calculation is zero, the floor controls and Dana is paid $540 per month.

The judgement content is in steps 3 and 5: an administrator who stops at step 4 pays nothing and creates a claim dispute, and one who applies the floor before offsets overpays. The order matters.

At month 25 the question shifts from "can Dana do her own occupation?" to "can she do any occupation for which she is reasonably fitted by education, training, and experience, and which pays a stated earnings threshold - commonly 60% to 80% of pre-disability earnings?"

Her part-time work is now evidence, not disqualification. Under an own-occupation definition, working in one's own occupation at reduced capacity frequently ends or limits the claim, because the test is capacity to perform the occupation. Under an any-occupation definition, the same work is a data point about residual capacity: she is performing a sedentary-to-light role at half time despite a back injury, which suggests she could perform other sedentary roles full time.

The administrator must therefore:

• Obtain a current transferable skills analysis and a labor-market survey identifying specific occupations at the earnings threshold.
• Reconcile the treating physician's restrictions with the demands of her actual job and of the identified alternatives.
• Check whether the plan's any-occupation language is "any occupation" or "any occupation for which she is reasonably fitted" - the second is far harder to support a denial on.

A denial at month 25 without a documented skills analysis and a specific alternative occupation is the single most common source of bad-faith exposure in LTD. The file needs that evidence before the definition change, not after an appeal.

At $6,300 per month, the loss of earnings is ($9,000 − $6,300) ÷ $9,000 = 30%. Residual benefit before offsets = 30% × $5,400 = $1,620.

On the offset side, this is where the case turns on facts rather than arithmetic. Continued Social Security disability benefits at this earnings level are questionable - the trial work period is time-limited and the substantial gainful activity threshold is an earnings test. If Social Security ceases, the offset drops by $1,800, which would produce $1,620 − $900 = $720 payable, still above the $540 floor. If Social Security continues, the raw calculation is $1,620 − $2,700, which is negative and the floor controls at $540.

The administrator should not simply accept whichever answer the claimant reports. Request the Social Security award letter and any cessation notice, and index the claim file to the date benefits actually change - overpayment recovery rules apply if offsets were taken on stale information.

Separately, confirm the pension offset treatment under the plan document: many plans reduce the pension offset by the portion attributable to employee contributions, and Dana's defined benefit accrual may not be entirely employer-funded. That single provision can be worth several hundred dollars a month to her.