Applying Long Term Disability Benefits with Social Security Disability Benefits

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It’s sometimes difficult to separate long-term disability (LTD) benefits and Social Security Disability (SSD) benefits, and not just because they serve the same basic purpose. Whether you possess long-term disability coverage through a group plan or an individual plan, you will still be required to apply for Social Security Disability. This is a standard clause in every long-term disability plan.

The reason, from the insurance company’s point of view, is to offset their costs and protect their bottom line. You are required by the terms of the insurance contract to reimburse the insurer with any Social Security Disability benefits you receive.

An Example to Illustrate Applying Long Term Disability Benefits with Social Security Disability Benefits

Let’s say your long-term disability insurer decided that – taking into account your disability, costs and other factors – you are entitled to $1200 under the terms of the insurance contract. Obtaining Social Security Disability benefits is a notoriously arduous process. It could potentially take years for you to be approved. Let’s assume that after a year of the administrative process and a hearings you are finally approved for Social Security Disability for $800 a month. After this point your long-term disability provider will only be sending you checks for $400 a month, the initial $1,200 minus the $800 SSD is now paying you.

The length of the Social Security Disability process is the catalyst for many long-term disability disputes. As you can imagine, it’s in the best interest of a disability insurance company to get Social Security Disability to start paying as soon as possible. They don’t want to be paying you that full $1,200 for two years while your SSD claim is sitting in limbo. They often make a deal with an insured. You can either a. take a reduced amount equal to what you would be paid with the “estimated” social security benefits (and there’s no reason to assume their estimate is going to be conservative) or b. pay the company back for that $800 a month they were paying you before your SSD claim was approved.

Neither of these options are good for you, the long-term disability insured and beneficiary. This may not be much solace right now, but your Social Security Disability benefits are calculated based on the day you first filed. That means if you filed on January 1, 2015 but didn’t begin receiving benefits until December 1, 2015, SSD will compensate you for those 11 months of benefits on which you’ve been waiting.

That may not make you feel better right now, while you’re struggling to make ends meet, and it may make you feel worse when your Long Term Disability provider wants you to pretty much hand over that lump sum as compensation for what they’ve been paying out to you since January 1, 2015.

If you want to learn more about long-term disability insurance and what you can do to ensure your family has the money they need to get by, contact the experienced long-term disability attorneys at David Allen & Associates.

If you need help dealing with your Long Term Disability insurance provider, please contact our dedicated attorneys at (877) 876-4800 today.