A disability that prevents you from working and earning a living is not something that only happens to other people. About 16 million people receive monthly payments from the Social Security Disability Insurance or Supplemental Security Income programs because of disabling medical conditions. According to the Social Security Administration, one out of four 20-year-olds will be disabled before retirement age.
The sobering statistics about disability may be one of the reasons for the popularity of long-term disability insurance policies that people purchase through an insurance company or receive as part of a benefits package through an employer. If you are disabled and have a long-term disability plan, it is easy to be confused about how it works with Social Security disability benefits.
Disability plans differ, so a discussion about the specifics of your plan with an SSD lawyer at The Clauson Law Firm, PLLC, offers insight into how it will affect Social Security disability. In the meantime, the following information offers a general overview of private disability plans and what effect they have on benefits through Social Security.
What is a long-term disability plan?
A long-term disability plan is an insurance policy that you purchase from an insurance company or that you have through your employer. It is a contract between you and the insurance company, so the terms and conditions of coverage offered may differ from one policy to another.
Generally, policies promise to pay you a percentage of your earnings in the event of a disability that prevents you from working. The benefits paid under the terms of the policy continue for as long as you remain disabled, but they usually have a limit on how long payments continue. For instance, a plan may provide for payments until you qualify for retirement benefits through Social Security.
The policy includes a definition of a disability that qualifies for benefits and may include physical and mental health conditions that it excludes from coverage. Policies frequently include provisions requiring that you apply for Social Security disability benefits as a condition to receiving payments through the long-term disability plan.
Social Security disability programs
Supplemental Security Income is one of two programs administered by Social Security that pays benefits to blind or disabled adults and children. As a needs-based program, SSI places severe limits on the income and resources someone may have to qualify for benefits. For example, an individual may not have resources, including cash and money in the bank, exceeding $2,000 in value. If you need more information about qualifying SSI, speak with an SSI lawyer.
Social Security Disability Insurance is the other program that pays monthly disability benefits to people who are disabled. Two features distinguish SSDI from SSI. The first is that it is not needs-based, so you generally can have other income and there is no limit on assets or resources you may own. The second distinguishing feature is that you need a work history with payment of Social Security taxes for a long enough duration to qualify. An SSDI lawyer can answer questions that you have about Social Security disability.
Long-term disability plans and Social Security disability offsets
When you claim benefits through a long-term disability insurance policy or an employer-provided plan, the terms of your policy or plan probably include language requiring that you also apply for Social Security disability. The reason is quite simple and helps the insurance company to save money.
Insurance companies issuing long-term disability policies reduce or offset what they pay you by the amount you receive from Social Security disability after being approved for benefits. For example, if your disability policy pays you $1,200 a month and you are approved for a monthly benefit of $1,000 from Social Security, the insurance company reduces its monthly payment to $200.
Long-term disability overpayments
It can take quite some time to be approved for disability benefits through Social Security. When your claim is finally approved, you may be entitled to SSD payments retroactive to when you originally applied.
The retroactive payment from Social Security becomes an offset under the terms of a long-term disability policy. The insurance company recalculates how much it should have paid versus how much it actually paid and recovers the difference from you.
Ask a disability lawyer for help
Keep in mind that the insurance company paying benefits under a long-term disability policy has an interest in keeping the payments as low as possible to save money and may not be looking out for your best interest. A Social Security disability lawyer from The Clauson Law Firm, PLLC, is committed to working for you and looking out for your best interest. Contact them today about any matter related to Social Security disability benefits.