Of the many documents which an Insurance Company may submit to you in connection with commencement of either your claim or the later payment of benefits, is one typically entitled “Social Security Reimbursement Agreement,” or words to that effect. Many inquiries have been received about whether this document should be signed. This is one instance in which the answer is a rather simple “yes” but let me explain the reasoning.
As discussed elsewhere on this website, the Insurance Company is typically entitled to an offset of at least part of the benefits you receive from the Social Security Administration. I say “typically” because this is often the case; however, the Plan Documents governing your benefit entitlement should be examined to determine whether the Insurance Company can rightfully claim this offset. The Plan Documents and securing a copy thereof is also a topic addressed elsewhere on this website.
One reason the Insurance Company requests the Social Security Reimbursement Agreement is to ensure that you understand the offset (presuming it exists). Also, it is not unusual for group Long Term Disability benefits to be paid prior to an award and payment of Social Security benefits. The Insurance Company will agree to pay the gross or full amount (before the offset) of group Long Term Disability as long as the Social Security Reimbursement Agreement is signed evidencing an understanding of the entitlement to an offset and, more importantly, the potential obligation to “reimburse” the Insurance Company for any overpayment resulting from a subsequent award of Social Security benefits.
There are couple of points to keep in mind. First, there typically is no offset against Short Term Disability benefits because the Social Security Administration does not pay benefits from the date of disability. Second, the amount of the offset which the Insurance Company can claim is limited to the “Primary Insurance Amount” which, for present purposes, can be described as the amount of Social Security benefits due in the first month of entitlement thereto. The effect of this is that the Insurance Company is not entitled to offset any subsequent “Cost of Living Adjustments” paid by the Social Security Administration.
One point which must be kept in mind is the hiring of an attorney for purposes of pursuing your Social Security claim. If you get to the point of needing to do so, it is suggested that you do not use the attorney recommended by the Insurance Company even though they suggest they will pay the attorney’s fee. It is disingenuous for them to make this suggestion. First, you should have your own local attorney represent you rather than one of the nationwide, impersonal Social Security attorney firms. Second, any fee you incur as a result of representation will ordinarily be deducted from any amount you are required to reimburse the Insurance Company from any overpayment resulting from receipt of Social Security benefits.
Please keep in mind that the foregoing is not intended as legal advice applicable to any individual person’s legal situation. Its sole purpose is to give a general idea of the existing status of the law as it applies to the point of law addressed above. You cannot rely on the foregoing as legal advice. You cannot make legal decisions based on its contents. If you have questions arising out of this point of law, you should contact an attorney who routinely handles claims involving disability policies of insurance. The law offices of Herbert M. Hill, P.A. handles such cases and would welcome the opportunity to discuss your case with you, at no charge.
Herbert M. Hill, P.A. is a law firm located in Orlando, Florida with a practice extending throughout the state of Florida and the southeastern United States. Areas of practice include disability and employment benefit claims of all sorts. The firm handles any claims arising under the Employee Retirement Income Security Act (known and referred to as “ERISA”) for disability benefits, medical benefits, retirement benefits of any sort, including pension, 401k, termination agreements or the like as well as claims arising under private disability policies.