By: Melissa Davidson
Long term disability (LTD) policies, or disability pensions, are benefits offered as part of employment at many companies. These benefits are different from Social Security disability benefits. If you have an LTD policy, it is important that you apply for both LTD and Social Security disability benefits.
Almost every long term disability policy requires the claimant to also apply for Social Security Disability benefits. The reason for this mandate is that any benefits that the claimant receives from Social Security disability are offset, or subtracted, from the long term disability benefit. For example, if a person is owed $2,000 per month under a long term disability plan, and Social Security pays that person $1,500 per month, then the LTD policy will only pay $500 each month. In some cases, the LTD policy is also allowed to deduct the Social Security disability benefits paid to the claimant’s children.
I find it shocking that the courts and the government allow this to happen. Insurance companies should not be allowed to save themselves money by offsetting a government benefit. They especially should not be allowed to offset the Social Security benefits paid to a claimant’s children, when the insurance company never paid a benefit to the children.
I strongly encourage readers to send letters to their senators and congresspersons asking that changes be made to the law that allows insurance companies to offset government benefits thereby saving themselves millions of dollars.
Despite this harsh reality, it is still a good idea to apply for both types of benefits, if you are eligible to do so. It’s a good idea to have benefits coming from two sources because you never know when one source may review your claim and terminate benefits. Also, most LTD policies contain a minimum payment amount. So even if your Social Security payments are more than your LTD benefit, you may still be owed the minimum amount each month. It may not be much, but every dollar counts these days.
The Charles Hankey Marks & Crider is a unique firm because we are able to assist clients with both the Social Security disability claims and long term disability and disability pension claims.