How does a plan define disability if there is no Social Security determination?

Many adoption-agreement forms for a set of IRS-preapproved documents present a choice of ways to define a disability.

Often, one of those ways is to follow the Social Security Administration’s determination that the person is eligible to receive Social Security Disability Insurance benefits under the Social Security Act of 1935. Suppose the plan sponsor ticked that box.

But what if there would be no Social Security determination because the participant is an alien, but not a qualified alien, or is a citizen or qualified alien but lacks sufficient Social Security work credits?

Does a basic plan document provide a fail-safe provision to determine a disability if there would be no Social Security determination?

And what if no document states any such provision: May a plan’s administrator interpret the plan to treat a participant as not disabled, absent a Social Security determination, no matter how bad the individual’s physical or mental condition?

Great question.  For the most part, the DB plans I saw had no alternative procedure or standard.  

In some documents, the definition reads as follows:  "Total and Permanent Disability means a physical and mental condition of a Participant resulting from bodily injury, disease, or mental disorder which renders such Participant incapable of continuing any gainful occupation and which condition constitutes total disability under the federal Social Security Act".  Careful reading reveals that this definition does not explicitly require the participant to apply for (and receive) SS disability; it's possible a plan's administrative committee might interpret it that way in the examples you provide, especially leaning on the word "constitute".  However, I never saw it happen.

Here’s what’s in the plan documents of a particular client I’m thinking about:

“For purposes of this Plan, disability will mean (select one) [of four options]:

Option 3: The Participant is eligible to receive disability benefits under the Social Security Act, as determined by the Social Security Administration.”

Considering that this might be a shorthand that refers to a fuller provision in the basic plan document, I looked there. Nothing.

(The plan sponsor hopes the plan is designed so the plan’s administrator need not face a discretionary decision about whether a participant is disabled.)

A possible reading of the quoted definition of disability is that whatever the plan might provide because of a participant’s disability is not provided unless the claimant presents to the plan’s administrator the Social Security Administration’s disability determination. And that this applies even if the participant’s physical or mental condition is such that, were she a citizen with a sufficient work history, she would get the Social Security Act’s disability benefit.

But some might worry that denying a benefit because the participant is not a citizen (and is not a qualified alien) might be contrary to one or more Federal civil-rights law, including those that preclude an employer’s discrimination regarding alienage or national origin.

We prefer not to use the Social Security definition but prefer to line it up with the employer's basic long-term disability definition.  The SS definition requires that they cannot "engage in any substantial gainful activity" and most of our clients do not use that strict of a standard.  I have not run into your "equal protection" argument, but I can see where there is a concern (and perhaps gives us another con to the SS definition).  Here is language we suggested under a Schwab prototype we recently reviewed.

Of course, this assumes the Employer maintains a long-term disability plan (and that it is not self-insured/administered).