Long-term disability (LTD) and Social Security Disability Insurance (SSDI) are two very different disability benefits:
Long-term disability is an insurance policy you (or your employer) pays for to help cover your expenses in the event you become disabled through injury or illness.
The Social Security disability benefits program is a government-funded program that you pay for through the government tax system.
Being approved for Social Security disability benefits can be a long process- usually longer than the long-term disability process. For this reason, it is good to have a long-term disability policy as well.
You may be under the impression that you can only receive one or the other, but that is not true. You can file for Social Security disability while receiving long-term disability benefits.
How Will My Social Security Benefits Affect My Long-Term Disability?
You may have heard that the long-term disability company will make you file for Social Security disability benefits. There are many long-term disability benefits plans that do have this written in as a requirement. Check your policy to be sure of the language and the requirement. If it is required, you must comply or your LTD benefits may be reduced by the insurance company.
The LTD insurance company has an interest in seeing you approved for SSDI. If you are approved, this will offset the cost to the long-term disability insurance company – making it in their best interest to see you approved. This is why it is oftentimes a requirement in the policy.
For example: If you are receiving $2,000 a month in benefits from the LTD insurance company and you’re approved for SSD for $1,000, then you will still receive $2,000 a month in total benefits, but $1,000 will come from the LTD claim and $1,000 will come from the SSDI claim.
Claimants make the argument that this is unfair; however, insurers will point out that this policy is what keeps premiums low. Offsets can also apply to other income like worker’s compensation, short-term disability, or even third-party settlements like a personal injury case.
Many insurance companies will offer you the assistance of one of their representatives to help you navigate your case. Just remember that they work for the insurance company and have an interest in saving the insurance company money if possible.
Overpayments and Backpay
A Social Security claim can take a long time for approval; it may even take several years. When a disabled person is approved, they are usually awarded back pay. Backpay could be up to 12 months of benefits, and it’s generally dispersed as a lump sum.
Due to the offset policy in some LTD plans, this means that the LTD insurance company may be entitled to some of your back pay. The LTD company argues that they overpaid you, so they are recouping the money.
The insurance company uses your Notice of Award letter to calculate how much they overpaid you. The figure is usually the back pay minus fees for your attorney (usually 25%). Always double check the math because mistakes do happen.
Ways To Pay
Insurance companies will give you three options:
- The first option is to pay the full amount owed upfront (which is their preferred option).
- The second option is to make monthly payments by reducing your long-term disability reward until the debt is paid.
- The third option (which is not necessarily recommended), is to refuse to pay it, but your long-term disability benefits will be terminated until you pay off the debt.
Expect your insurance company to have you sign a Social Security Reimbursement Agreement that states you will repay the debt to them from your back pay. Unless your LTD policy expressly requires it, you are not obligated to sign this form.
Working with a Long-Term Disability Attorney In Your LTD Claim
It can be tricky to navigate the long-term disability process, but working with an experienced disability attorney will give you the best chance of getting the benefits you deserve. If you have been denied disability benefits, do not lose hope. Many people are denied benefits the first time they apply. You have the right to file an appeal and to get more information that may help your case.
While the process can be daunting, your expert disability attorney will be able to guide you through the process. Getting expert help is often the difference between being denied and being approved for benefits. An experienced long-term disability attorney can help you stay on top of your deadlines, help you gather your documents, assist you during field interviews, and give you guidance that will help you get your claim approved. They do not get paid until you win your case. You can seek help without worrying about upfront costs or unexpected bills.
The Ortiz Law Firm has successfully represented people in disability cases across the United States. If you would like to talk to an experienced disability lawyer about your claim, Nick Ortiz offers a free consultation with no obligation to use our firm. During the call, you can ask any questions you have regarding your claim, and he will answer them. To see how we can help you win your long-term disability case, call us at (888) 321- 8131.
