How does an Overpayment occur in a Disability claim?
Posted on 19. Oct, 2010 by herb in FAQs
It is unfortunate that so many people do not realize that the disability insurance company is allowed to offset benefits you receive from other sources, thereby dramatically reducing or even, in some cases, eliminating the benefit entitlement. Just about every person who comes to me is surprised to learn that the disability benefits they paid for are not over and above “other benefits” to which they are also entitled. Those “other benefits” which your disability insurance company might claim as an offset against (or, reduction of) your disability benefits might include Social Security Disability benefits, workers’ compensation benefits, claims against third parties who cause the disabling medical condition, retirement benefits and others. The governing Plan Documents, “Summary Plan Description” and insurance policy need to be reviewed in detail to determine which “other benefits” can be used to offset benefits. Also, the method by which the deduction can be taken needs to be considered. Issues concerning receipt of lump sums of “other benefits” routinely arise as well.
The strange phenomena I have experienced is that when these other benefits are received, the disability insurance company will simultaneously claim the overpayment and then soon after find a reason to deny the benefits they owe. This may seem somewhat astonishing but that is only because it is. The point being that when you receive “other benefits” from other sources, you need to proceed with caution. The first issue is the correct amount of the overpayment. This is one area in which this author can provide particular assistance because the undergraduate degree I received before going to law school was that of a Bachelor of Science in Business Administration with a major in Accounting. I am not suggesting I can assist you with tax or accounting issues; I just have no problem dealing with numbers which can get quite complicated in these situations.