Workers who have bought long term disability insurance plans through your employers and have become too sick or injured to work may be encouraged by their insurance company to apply for disability benefits from the Social Security Administration as well. Sometimes this can be a terrible mistake.
An insurance company will ask you to apply for Social Security disability benefits for three reasons, all of which benefit the insurance company:
Grounds for Denying a LTD Benefits Claim
The standards for qualifying for Social Security disability benefits are very stringent; if your claim is rejected by the SSA, your insurance company may use this as grounds to deny your claim with them.
Offset Their Monthly Payments
They want to “offset” — decrease — the amount of monthly payments they have to make to a claimant. The law allows an insurance company to reduce the amount of benefits it owes you if you also receive benefits from other sources such as Social Security. If an insurance company agreed to pay you $1,500 in benefits and you qualify for $1,000 a month in Social Security benefits, you should be receiving $2,500 in benefits a month, right? Not quite. Because of the “offset,” you’ll still only be receiving $1500 dollars in benefits a month — $1000 from Social Security and $500 from the insurance company.
Reimbursement for Benefits Already Paid
The insurance company also expects to be “reimbursed” for the benefits they’ve already paid you. When you apply for Social Security benefits, you become eligible for benefits from the date you apply. However, it may take as long as 18 to 24 months to receive a Social Security Disability Award. You’ll receive a lump sum settlement for the back due benefits owed to you from the time you applied until the time you were awarded benefits, which can amount to several thousand dollars.
Your insurance policy probably contains a “reimbursement” clause in the fine print. Most employee group LTD insurance policies do. It gives insurance companies the right to be reimbursed for the monthly benefits they paid you while awaiting the SSA’s decision. They’ll want to be reimbursed for the total amount you received as a lump sum settlement from the SSA.
This can be a real problem for a claimant who has had to use their Social Security lump sum award to pay their medical bills, living expenses and other necessities. In situations where a claimant can’t pay back the full amount in a lump sum, sometimes the insurance company will hold back the entire LTD monthly benefit towards the amount of SSD benefits that the claimant owes.
When purchasing a group or individual long term disability insurance plan, always review the policy details carefully to avoid any surprises when you have to file a claim.
Speak to a Disability Benefits Attorney
M. Stanley Whitehead is a board certified Social Security attorney who helps clients all over the U.S. secure the disability benefits they deserve. To ensure the best results when filing an insurance claim for long term disability benefits, the attorneys at the Law Offices of M. Stanley Whitehead advise applicants to seek legal representation from a qualified disability benefits attorney at the start of the claims process. The same laws that allow insurance companies to offset and seek reimbursement also give you the right to appeal an insurance company’s decision to deny your claim for disability benefits.
If you’re a disabled worker who is concerned the Social Security disability offset or reimbursement you are paying is appropriate, contact the law offices of M. Stanley Whitehead to schedule a free initial consultation.