Impact of Long Term Disability on SSDI Benefits

Many people who are receiving Long Term Disability (LTD) benefits may not realize their obligations under the LTD policy, and they may need guidance on how Social Security Disability Insurance (SSDI) benefits may affect LTD benefits. Understanding the relationship between these two forms of financial assistance can provide a clearer picture of their potential impact on you. Social Security lawyer Russell J. Goldsmith has over 35 years of experience in these matters. He provides honest, individualized attention to each case as he pursues an outcome suited to each client’s needs and goals.

Social Security Disability Insurance (SSDI) is a government program that provides monthly benefit payments to individuals who establish that they have disabilities that have prevented them from working for one year or longer. Most people pay into SSDI via their payroll taxes and FICA contributions.

Many employers also provide Long-Term Disability (LTD) insurance to their employees, as a supplement to SSDI coverage. LTD insurance is a group insurance plan that also protects employees in the event that they become disabled. Typically, you or your employer (or both of you) will pay a monthly premium for LTD insurance, if it is provided by your employer. Together, these two types of insurance are meant to cover you if you do suffer from a long-term disability.

Under most LTD policies, the terms require employees to apply for SSDI benefits if they are receiving LTD benefits. Therefore, in the event that you do become disabled and begin receiving LTD benefits from your employer, you will need to apply for SSDI. Typically, your employer’s LTD insurance carrier will offer the option of a representative to help you pursue your SSDI claim, paid for by the LTD insurance carrier. However, these representatives may not be attorneys, and their representatives are hired by and work for the insurance carrier. The extent to which they are looking after your interests versus the insurance carrier’s remains in question. What the insurance carrier will not tell you, many times, is that you have the right to hire your own private attorney and the insurance carrier will cover the cost associated with your attorney’s fees. Retaining an attorney who works for you, and not the LTD insurance carrier, is always in your best interest. Many times, we see insurance carriers asking for paperwork or statements from their insured that are not required by the terms of the policy. Many times, the long term disability insurance carriers will deny their claim while the Social Security disability claim is pending. In these circumstances, a representative hired by the insurance carrier would not be capable (as they are not a lawyer) or interested in advising or assisting you. If they are in fact an attorney hired by the insurance carrier, they would have a conflict of interest in trying to assist you with how you should fight the insurance carrier. However, if you hire a private lawyer (such as ourselves), we can provide you with the advice and potentially assistance you need to fight the insurance carrier’s denial. Your attorney will review your contract to determine what your specific rights are under the LTD insurance policy.

The reason most LTD insurance policies require beneficiaries to apply for SSDI immediately is because of the offset provision in the contract. Generally, if you are receiving LTD benefits and are awarded SSDI benefits as well, your LTD benefit amount will be reduced by the amount of your SSDI benefit. To illustrate, if you are currently receiving $1,000 per month from your LTD carrier, and are then awarded $500 per month in SSDI benefits, your LTD benefit monthly benefit payment will be lowered to $500 per month.

In addition, since SSDI benefit claims are rarely approved as quickly as LTD benefits, your LTD insurance company will be paying the entire benefit amount for some time. You may be required to sign a reimbursement agreement, in which you agree to reimburse the insurance company for the amount of retroactive benefits issued to you by the Social Security Administration. Essentially this means that when the Social Security Administration finally approves your SSDI benefit claim, you will owe your LTD insurance carrier the amount of past-due benefits that you are paid. The past-due benefits are the amount of SSDI benefits beginning from the date you filed for SSDI benefits to the date you begin receiving them. Another option may be that the LTD insurance company reduces your monthly payment until the back-pay amount is satisfied. We will advise you as to whether these reimbursement agreements should in fact be signed at all.

Insurance policies are complex, and there may be other provisions that affect your disability benefits. As just one example, your LTD insurance carrier may not be entitled to the Cost of Living Adjustment included in your SSDI benefit. An experienced Social Security attorney will be able to read your contract and determine how your LTD benefits will be impacted by the application and receipt of SSDI benefits (and, likewise, how the receipt of SSDI benefits ultimately can ensure that your LTD benefit claim is less likely to be denied in the future as a result of a favorable result in your Social Security disability claim).

A knowledgeable attorney can explain any issues that may arise during the SSDI benefit application process and assist you in obtaining the benefits you deserve. At the Law Offices of Russell J. Goldsmith, we offer each client a free initial consultation regarding his or her SSDI claim. Set up a time to talk now with Attorney Russell J. Goldsmith by calling (800) 773-8622 or completing our online form.