THE BUSHORN FIRM | The Important Intersection of Long Term Disability Insurance And Social Security Disability
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The Important Intersection of Long Term Disability Insurance And Social Security Disability

Whether you realize it or not, Social Security Disability (SSD) Income plays an important role in your long-term disability insurance claim, regardless of whether you have been awarded SSD benefits or not.

  1. Most long-term disability insurance policies require that you apply for Social Security Disability benefits. The insurance companies will even often connect you with a company that will help you with your Social Security Disability application. As an attorney, I have seen many instances where the third-party helping with a client’s Social Security Disability claim does not do an adequate job assisting my client. I always recommend that my LTD clients seek the advice of an attorney knowledgeable of Social Security Disability benefits.
  2. Most long-term disability insurance policies provide that your long-term disability insurance benefits may be reduced by your monthly SSD benefit. This is referred to as an “offset”. It is important to speak with a knowledgeable long-term disability insurance and ERISA attorney who is familiar with proper calculation of these offsets.
  3. If you do not apply for SSD benefits, many policies allow the insurance company to reduce your monthly long-term disability insurance benefit by an amount the insurance company estimates you could receive as SSD benefits if you had applied and been approved.
  4. Many disabled individuals begin receiving long-term disability insurance benefits before their SSD Income benefit is approved. When this happens, the disabled person may end up owing the insurance company the difference between the long-term disability insurance benefit actually received, and the long-term disability insurance benefit the disabled person would have received had the SSD Income benefit been applied as an offset to the long toerm disability insurance benefit from the outset.
  5. For instance, suppose Mary started receiving a long-term disability insurance benefit of $2,000 per month beginning June 1, 2014. Then, in December 2015 she is awarded Social Security Disability benefits of $1,500 per month beginning June 1, 2014. Assuming the long-term disability policy language permits it, her long-term disability insurance carrier could say that her new LTD monthly benefit is only $500 per month ($2,000-$1,500). As long as the policy permits it, her insurance carrier could also calculate a overpayment based on the difference between the amount she received ($2,000 per month) and the amount she should have received once the SSD offset is applied ($500). Some policies allow the disabled person to reduce their monthly LTD benefits so that when they are awarded SSD benefits, they do not owe the insurance company a large amount of money. It is important to speak with an ERISA long-term disability offset attorney if this situation arises.
  6. A finding by the Social Security Administration that you are disabled should be considered by your long-term disability insurance carrier when considering your claim for LTD benefits. When appealing a denial, it is important to update the insurance carrier if your Social Security Disability claim was approved.
  7. It is not uncommon for the insurance company to miscalculate the proper SSD Income offset amount, or commit another error which resulted in the disabled individual receiving less money from the insurance company. For instance, if you hired an attorney to represent you through the SSD claim process, the amount paid to your attorney should be subtracted from the overall offset. Contact Claire Bushorn Danzl today if you have a question concerning your SSD offset.
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