Long Term Disability and the Receipt of Social Security Benefits

If you’ve purchased your Long Term Disability policy through your employer you will most likely find:

1. Any Social Security Disability benefits received will be subtracted from your Long Term Disability benefits and,

2. You have you “repay” the Long Term Disability carrier any lump sum that you’ve received for past-due Social Security Disability benefits.

How does this work? Let’s say that you have applied for and received Long Term Disability benefits in the amount of $2500 per month. The Long Term Disability policy that you purchased through your employer requires you to apply for Social Security Disability benefits. If you are approved to receive Social Security Disability benefits you will get $1500 per month. Under the terms of the ERISA policy, the Long Term Disability carrier will subtract the $1500 per month from your Long Term Disability benefits instead of paying you $2500 per month they will only pay you $1000 per month.

In addition, the Long Term Disability carrier will demand that you sign over a portion of the past due benefits that you received from Social Security Disability benefits to repay the overpayment for the those months that the Long Term Disability carrier paid you your full benefits.

I’m sure that your employer never explained to you the offset provisions in the Long Term Disability policy. Long Term Disability policies are offered to employers with the expectation that a certain percentage of the employers policy holders will become disabled and often will qualify for Social Security Disability benefits, this reduces the Long Term Disability carriers exposure and allows them to offer Long Term Disability policies to employers at “cheaper” rates.

Many private Long Term Disability benefits which, admittedly, are more expensive, don’t include this offset for the Social Security Disability repayment obligation. If you’re thinking about purchasing a Long Term Disability policy, you might want to ask your employer about the offset and Social Security Disability repayment language.

Long Term Disability lawyer, Nancy Cavey, who practices in the Tampa Bay area, can assist you in analyzing the Long Term Disability policy that you have purchased and assist you in making decisions as to whether or not you should purchase additional or alternative coverage.