How Disability Insurance Companies Interpret “Any Occupation” for High-Wage Earners

Disability insurance plays a critical role in protecting an individual’s income in the event that they become unable to work due to illness or injury. For high-wage earners, having comprehensive disability insurance is especially important because it can protect a substantial income. However, when it comes to receiving benefits, the definition of “disability” can vary depending on the policy, and one of the most challenging aspects for claimants to navigate is the interpretation of the term “any occupation.”

Understanding “Any Occupation” Disability Insurance

Disability insurance policies are generally divided into two categories when it comes to defining disability:

1. Own Occupation (Own Occ): Under an “own occupation” policy, the claimant is considered disabled if they are unable to perform the duties of their specific profession. This is a more favorable definition for the policyholder because it focuses on whether they can continue in their current profession, regardless of their ability to work in other occupations.
2. Any Occupation (Any Occ): Under an “any occupation” policy, the claimant is only considered disabled if they are unable to perform the duties of any occupation for which they are reasonably suited by education, training, or experience. This is a stricter standard and can make it more difficult for a claimant to qualify for benefits, especially if they are highly educated or skilled.

Most group insurance policies through an employer have an initial period of “own occupation” disability, followed by a subsequent need to meet the definition of “any occupation” disability. For high-wage earners, the “any occupation” standard can be particularly problematic because it takes into account the individual’s ability to perform jobs outside of their current role. Insurance companies often argue that if a high-income professional can perform any job—even one that pays significantly less—they are not entitled to disability benefits under an “any occupation” policy.

The Language of the Policy Will Control

Every insurance policy can be different.  Many policies include as part of their definition of disability a reference to comparative income.  To be disabled, the insured must be disabled from “any occupation” and unable to earn at least 60% of their prior income, for example. Some policies may state that the insured’s income in a new occupation must “comparable to” the insured’s original income. Some policies may refer to “station in life,” which courts interpret to include income considerations.

The definition of “income” matters as well.  Some policies limit “income” to the base salary earned by the insured.  Others include “bonuses,” but do not define what constitutes a bonus.  This creates issues in an economy where many employees receive large portions of their compensation through stock awards.

It’s important to note that employers negotiate the language in group disability insurance policies.  If you are in a position to opine on such decisions made by your employer, think carefully about how the language of the policy will affect you and your co-workers.

How Insurance Companies Evaluate “Any Occupation” for High-Wage Earners

When a high-wage earner files a disability claim under an “any occupation” policy, the insurance company will typically conduct a thorough evaluation to determine whether the claimant can perform another job. This evaluation usually focuses on the following key factors:

1. Education, Training, and Experience

One of the first things an insurance company will consider when evaluating an “any occupation” claim is the claimant’s education, training, and experience. For high-wage earners, this can be a double-edged sword. While a high level of education or specialized training can make it easier to earn a substantial income, it also broadens the range of jobs that the insurance company may argue the claimant is capable of performing.

For example, a highly educated lawyer or executive with an MBA may be considered capable of performing administrative or consulting roles, even if they are no longer able to work in their specific profession. The insurance company may argue that the claimant’s education and experience qualify them for these lower-paying jobs, making them ineligible for benefits under an “any occupation” policy.

Courts have held that it is reasonable to expect an insured to obtain “on-the-job” training for a new career

2. Functional Capacity and Job Market Realities

Disability insurers will also assess the claimant’s functional capacity to determine whether they can perform the duties of any other occupation. This typically involves reviewing medical records, functional capacity evaluations (FCEs), and independent medical examinations (IMEs) to determine the extent of the claimant’s physical or cognitive limitations.

However, the job market realities also play a significant role in this evaluation. Even if a high-wage earner can physically or cognitively perform another job, those jobs may be limited to lower-paying occupations. This is where the insurance company’s interpretation of “any occupation” can diverge from the claimant’s expectations. While the claimant may argue that a job paying a fraction of their former salary is not a reasonable substitute, the insurer may only be concerned with whether they can technically perform the work.

The jobs actually available in the local area matter as well. If the insured has tried to obtain other jobs suggested by the insurer and been denied by prospective employers as “overqualified,” that is evidence that a court can consider when determining whether or not an insured can actually find new employment.

3. Reasonably Suited Occupations

One of the most critical aspects of interpreting “any occupation” is determining what types of jobs are “reasonably suited” to the claimant based on their education, training, and experience. For high-wage earners, this can be particularly difficult because they are often highly skilled in a specific area. The question then becomes whether it is reasonable to expect them to take a job that is far below their previous level of income or prestige.

Insurance companies often interpret “reasonably suited” broadly, arguing that if the claimant can perform any job that aligns with their education and skills, they are not disabled. For example, a surgeon who can no longer perform surgeries due to a physical disability might still be considered able to work as a medical consultant or healthcare administrator, even if those roles pay much less than their previous job.

The Ninth Circuit recently held that an insured can be denied benefits because he is able to receive training that will enable him to perform a new occupation. In Walker v. AT&T Ben. Plan No. 3, No. 22-55450, 2023 U.S. App. LEXIS 11810, at *6 (9th Cir. May 15, 2023), the court held that where the insured agreed that he could learn the new occupations proposed by the insurer with one month to over six months to a year of training, the insured was not disabled from any occupation.  The language in that disability policy required the insured to be “qualified or may reasonably become qualified based on training, education or experience.”

4. Income Replacement and Proportionality

For high-wage earners, one of the most contentious issues in “any occupation” disability claims is the income disparity between their former job and the alternative occupations suggested by the insurance company. Disability insurers often focus on the claimant’s ability to perform any work, regardless of how much the job pays.

This can be problematic for claimants who earned a substantial income before their disability. For example, an executive earning $500,000 annually might be considered capable of working as a business consultant earning $80,000 per year. While the insurance company may argue that the claimant can still work and is therefore not disabled, the drastic reduction in income may make this alternative job unrealistic from the claimant’s perspective.

Some policies may include language that addresses this issue by requiring the alternative occupation to provide a certain percentage of the claimant’s pre-disability income, or requiring the insurer to consider “station in life.” However, many “any occupation” policies do not include this type of income protection, which can leave high-wage earners with significant financial losses when they are capable of working in a lower-paying job.

5. Age and Vocational Rehabilitation

The claimant’s age can also impact how insurance companies interpret “any occupation” claims. For younger high-wage earners, insurers may be more aggressive in arguing that they can be retrained or find alternative employment. Vocational rehabilitation programs, which are sometimes offered by insurance companies, may be used to support the claim that the individual can be retrained for a different occupation.

For older claimants, however, vocational rehabilitation may be less practical. A 60-year-old senior executive, for example, may have limited opportunities for retraining or entering a new field at a significantly lower pay grade. In these cases, the insurance company’s interpretation of “any occupation” may still be strict, but the claimant’s age and likelihood of finding suitable employment may weigh in their favor.

Challenges High-Wage Earners Face with “Any Occupation” Claims

High-wage earners face several unique challenges when filing “any occupation” disability claims. Insurance companies are often incentivized to deny or limit claims, and the vague nature of the “any occupation” definition gives insurers significant discretion in interpreting whether a claimant is disabled.

Here are some common challenges:

1. Low Threshold for Alternate Jobs

Insurers often set a low threshold for what constitutes an “occupation.” High-wage earners may be denied benefits if the insurer determines they can perform any low-paying or administrative job, regardless of the claimant’s previous income level. This can be frustrating for professionals who have spent years building a career and earning a high income, only to be told they must accept a low-wage job.

2. Discrepancy Between Skills and Income

Many high-wage earners are highly skilled in their profession, but those skills may not translate easily to other occupations. However, insurers often look for any job the claimant can physically or cognitively perform, without considering whether it is realistic for the claimant to take a job that pays significantly less than their prior earnings.

3. Pressure to Accept Vocational Rehabilitation

Insurance companies may pressure high-wage earners to undergo vocational rehabilitation, arguing that they can be retrained for another occupation. While vocational rehabilitation can be useful in some cases, high-wage earners may find that the jobs they are being retrained for do not offer the same level of income or career fulfillment as their previous occupation.

Strategies for High-Wage Earners to Protect Themselves

High-wage earners can take several steps to protect themselves from the challenges associated with “any occupation” disability claims:

1. Choose “Own Occupation” Policies

When purchasing disability insurance, high-wage earners should consider opting for “own occupation” policies instead of “any occupation” policies. “Own occupation” policies provide broader protection because they focus on whether the claimant can perform their specific job rather than any job.

2. Look for Policies with Income Proportionality Clauses

Some disability insurance policies include provisions that require the alternative occupation to provide a certain percentage of the claimant’s pre-disability income. High-wage earners should look for policies with this type of income protection to avoid being forced into significantly lower-paying jobs.

3. Document Skills and Job Requirements

High-wage earners should carefully document the specific skills and requirements of their job. In the event of a disability claim, this documentation can help support the argument that their profession requires specialized skills that cannot easily be transferred to another occupation.

4. Consult an Attorney

High-wage earners facing “any occupation” disputes should consider consulting an attorney who specializes in disability insurance claims. An attorney can help navigate the complexities of the claim process, challenge unfair denials, and ensure that the claimant’s rights are protected.

Conclusion

For high-wage earners, disability insurance claims under an “any occupation” policy can be particularly challenging. Insurance companies often interpret “any occupation” broadly, which can lead to claim denials if the insurer determines that the claimant can perform any lower-paying job. To protect themselves, high-wage earners should carefully review the terms of their disability insurance policy, consider “own occupation” coverage, and be prepared to advocate for their right to fair benefits in the event of a disability claim.