This is a topic I have written about before, but how insurance companies handle Long Term Disability claims remains problematic. Generally, the following applies to group disability benefits policies, i.e., ones you secured as part of a group of employees.
Gross Monthly Benefit
A little background is in order. First, in determining the amount of the Long Term Disability benefits you are entitled to, the “Gross Monthly Benefit” (as described in most policies) must be calculated. The benefit percentage, generally 60%, but not always, is applied to result in the “GMB.” You would be entitled to this amount if there are no “offsets.”
Offsets against the GMB are defined in the policy. Social Security benefits are always one of those offsets. Remember that when I refer to “Social Security benefits,” this includes disability benefits, any related dependent benefits, and retirement benefits.
You cannot be forced to apply for Social Security benefits if you choose otherwise for whatever reason; however, Long Term Disability insurance policies generally provide that if the application is not made, your Social Security benefit entitlement can be estimated and deducted from the GMB. Thus, your Long Term Disability benefit amount would be reduced even though you are not receiving the amount claimed as an offset.
Retroactive Benefits
Within this framework, the issue arises when the claimant has received the GMB for an extended period while the Social Security claim awaits determination. Retroactive benefits will likely be paid once the Social Security Administration finally awards benefits. The amount of these retroactive benefits is the basis for the fee paid to your Social Security attorney (with a cap that generally cannot be exceeded).
In any event, the Long Term Disability insurance company now has to determine the overpayment amount that occurred when the claimant received the GMB and has now also received Social Security benefits. This usually results in an overpayment of benefits during the period covered by the retroactive Social Security benefits.
Calculating The Offset
In calculating the offset amount, the insurance company must consider the attorney’s fees to secure those benefits. It should be a flat deduction against the claimed overpayment because those fees were only for recovering the retroactive benefits. However, some insurance companies seek to “amortize” the Social Security attorney’s fees over the entire period during which those may be received, i.e., lifetime.
This is another example of the corporate conglomerate nickel and diming the deserving claimant. The monetary difference has never been significant enough to warrant action on that issue alone. Usually, benefits are paid, albeit in a lesser amount. The difference has never been more than $20.00 or $30.00 per month, but that adds up and would be better to have than not. Usually, my clients are grateful benefits are in place and legitimately do not want small battles to create concern about the bigger picture. Given the battles they likely have generally already endured, I cannot disagree.
Herbert M. Hill, P.A. Can Help With Your Long Term Disability Benefits Claim
If you have any questions about your Short Term Disability or Long Term Disability claim, please contact our office, and we would be glad to answer any questions you may have. Herbert M. Hill, P.A. is a law firm in Orlando, Florida. Our practice extends throughout the state, primarily emphasizing private and group Short Term and Long Term Disability insurance claims.
