The Long Term Disability and Social Security offset is one which has caused consternation for many recipients of benefits under group disability benefits plans offered through their employer.
When Social Security benefits begin, there is a reduction in the amount of Long Term Disability benefits according to the provisions of just about every group disability benefits plan the author has reviewed. This comes as a surprise to many and is the cause of many initial contacts with our office. In this blog, we will explain the Long Term Disability and Social Security offset.
What Is Meant By Offset?
Social Security offset refers to a provision in many Long Term Disability (LTD) policies that allows the insurance company to reduce the amount of your monthly LTD benefit by the amount you receive in Social Security Disability Insurance (SSDI) benefits. This means that if you are receiving both LTD and SSDI benefits, the amount of your LTD benefit may be reduced by the amount of your SSDI benefit.
The reason for this offset is that many LTD policies include a provision that requires you to apply for SSDI benefits, and if you are approved, the insurance company can use the SSDI benefit to reduce its own liability. In other words, the insurance company is allowed to “offset” its own payments by the amount you receive from the government.
It’s important to note that not all LTD policies include a Social Security offset provision, and the terms of each policy can vary. If you are considering an LTD policy, it’s important to carefully review the terms and conditions to understand how the social security offset provision may affect your benefits.
The Problem With The Offset
It’s disappointing that the social security offset provision is permitted, as many of our clients were not aware of its existence and had counted on receiving both Long Term Disability (LTD) and Social Security benefits. Unfortunately, courts have upheld this provision and the insurance company’s right to reduce benefits. However, it’s important to note that this does not mean your LTD benefits will cease entirely, but rather they will be paid at a reduced amount. As part of our service, we regularly review these calculations to ensure that the offset is not overstated. Insurance companies are only allowed to offset the amount received in the first month of entitlement to Social Security, with no adjustments for Cost of Living Increases.
The Social Security benefits we are referring to here include any benefit received from Social Security, including disability and retirement benefits, for elderly claimants. Social Security is not the only basis for an offset against Long Term Disability benefits. If there is a personal injury claim arising out of, for example, a motor vehicle accident, the insurance company is entitled to offset that portion of any settlement attributable to lost wages. The same is true of workers’ compensation claim and wrongful termination claims, among others.
Herbert M. Hill, P.A. Can Help
If you have questions about any aspect of your pending or anticipated Short Term Disability or Long Term Disability claim, please contact us today. These types of claims are our focus and we would be happy to speak with you. If you would like, after discussing your case, we can set up a conference. In most circumstances, that conference would be free of charge but in no circumstance would you be under any obligation to hire me nor would you feel any pressure from me to do so. We look forward to speaking with you about your case.
