Long Term Disability Insurance Benefits May Be Offset By Social Security Disability (SSD)

If you become disabled and go out of work, you may have a disability insurance policy from which you expect to collect benefits. Many people in this position discover the disability insurance policy does not pay exactly the way they expected.   Instead of simply calculating their benefits as the percentage of what they used to make that their policy states it will pay, the long-term disability insurance policy contains a clause that lists other forms of income that will be deducted from this amount that many policies refer to as “other income offsets.”  The most common other income offset by light years is social security disability (SSD) benefits – meaning that that the monthly amount you receive for being disabled from the disability insurance company is reduced by the monthly amount you receive from the Social Security Administration for being disabled. 

What is an Other Income Offset in a Long-Term Disability Insurance Plan?

Most policies define other income offsets as any money that you receive for being disabled.  Therefore, monies received from Worker’s Compensation claims, Social Security Disability (SSD), Personal Injury claims, etc. will count against what you receive from the long-term disability benefits.  The most common offset that we see however, is social security disability.  The main reason for this is that not everyone has the other type of claims, but most people who have been working should qualify for some type of SSD benefit.  In addition to that, your long-term disability insurance policy probably has another clause in there that actually requires you to file for social security disability once you have been out of work for 6 months.  And if you don’t apply for SSD benefits, the disability insurance company can deny or terminate your benefits.  So the question becomes, “If I start receiving social security disability, how much will I get from my LTD?”  In order to do that, you need to calculate your SSD offset.

Calculating Your SSD Offset

Did you know there’s an easy way to figure out how much your LTD policy would be worth after a social security disability offset?  We can walk you through a way to figure out how much your net LTD would be after calculating any social security disability money you may receive if you are approved for SSD.  This generally works if you haven’t already applied/filed for SSD.

How do I find out what my SSD offset would be?

Log in to the social security website at ssa.gov (that’s ending in GOV, not com) and log in if you have created an account.  If you have never created an account, complete the registration process.  Once you are logged in, you will have access to your social security statement.  In your social security statement, there is a section that says “Disability Benefits” and will list an approximate number of what your social security monthly payment would be if you were to become disabled right now.  Once you know this number, simply subtract it from your long-term disability benefit and that would approximately be the net amount.

(Please note: the steps above may not work for you if you have already filed your SSD application)

What is an SSD offset?

Your disability insurance policy most likely contains a section discussing “other income offsets”.  In other words, any other money you receive for being disabled.  This especially applies to social security disability benefits.  The insurance company generally gets a dollar for dollar offset for that money.  For the sake of easy math, if your disability insurance would normally pay $2,000, but you receive $1,000 from social security disability, the insurance company likely would only owe you the difference of $1,000.  This is one of the reasons that your policy will require you to file for social security disability and one of the reasons that a lot of disability insurance companies will even provide you with assistance in obtaining SSD.

I was contacted by a company that says they work for the insurance company to help me get social security disability.

Did you receive a call from a company that told you they were hired by the insurance company to help you apply for social security disability?  This is a rather normal occurrence.  The disability insurance company wants to see you get awarded social security disability because that’s automatically less money they have to pay you due to the offset.  Therefore, insurance companies often hire 3rd party companies to help you apply for and obtain social security disability benefits.  We’ve often heard the names Allsup and Advantage 2000, although there may be other companies that your carrier may use.  Keep in mind, while you may be obligated to apply for SSD, you are not obligated or required to use the 3rd party that the insurance company has offered.  We often refer our clients to a quality social security disability attorney rather than using the services of a 3rd party who is working for the disability insurance company.  If you need a referral to a social security disability attorney, that is something we can usually provide, as we have working relationships with quite a few social security disability attorneys across the state of Florida.

What happens if I get denied on my social security disability application?

The policies typically won’t state that you must obtain social security disability, but rather that you are simply required to apply for them.  Therefore, as long as you can show proof that you applied for SSD and were denied benefits, that will meet the satisfaction of the policy requirements.  If you are denied SSD, then the offset wouldn’t apply to your benefits.  However, keep in mind that if you are later awarded SSD benefits on appeal, and the Social Security Administration backpays your benefits, the disability insurance company may want you to pay them back for money they paid you in full when you were not receiving SSD benefits.  It’s also important to note that someone who is denied disability by social security may also get denied by the disability insurance company.  Your insurance company may take the mentality of “Why should we pay you and find you disabled if SSD didn’t think you were disabled”.  Isn’t it ironic then, that we have clients who have been awarded SSD, but denied by the disability insurance company?  The point is that they may use a denial by SSD as a reason to not pay you themselves, but there is a double standard where if SSD approves your claim and finds you disabled, the insurance company will suddenly say that they operate on a different set of standards and may not necessarily approve your claim or find you disabled.

We are a Florida Disability Insurance Law Firm

Our law firm strictly handles disability insurance.  If you have been denied disability insurance, give our office a call to see if we can help you get the disability benefits you deserve.  However, if you have been denied social security disability and need assistance with that, we may be able to provide you with a referral to a social security disability attorney in your area as well.  Either way, give us a call to see if we can help you — 813-839-2000 (813-839-2000)!  We help people across the state of Florida with disability insurance claims.