If you are wondering whether your LTD (long-term disability) insurer can compel you to pursue SSDI (Social Security Disability Insurance) benefits, the answer is definitely yes. SSDI and LTD insurance are two distinct programs with varying application processes, benefit amounts, and eligibility criteria.
However, many LTD policies include a provision mandating that claimants pursue SSDI benefits to continue receiving LTD benefits. Should you fail to pursue your SSDI benefits, your insurer can stop your LTD benefits payments. You might not comprehend why your insurer forces you to pursue SSDI in addition to your LTD. This blog explains.
The Difference Between SSDI and LTD Benefits
Many LTD claimants are confused about the link between SSDI and LTD benefits. These are 2 distinct disability benefit programs. They are both meant to provide monetary aid but are managed via separate systems and serve distinct roles.
The LTD insurance policy is generally provided either through the employer or purchased individually. Specific insurance policy regulations govern it. It provides claimants with a percentage of their income if they develop a disability and are unable to continue working.
Qualifying for LTD benefits is based on how the insurance policy defines disability. The policy's description of disability usually changes after two years from an “own occupation” standard to an “any occupation” standard. You must be under policy coverage before your disability starts to qualify for benefits. Your specific policy determines the terms, including the benefit amounts and how long you must wait before you can begin receiving benefits.
SSDI is a federal benefit program overseen by the Social Security Administration (SSA). You usually pay into this benefit via payroll Social Security taxes when still actively working. To be eligible, you must prove you can no longer engage in significant gainful activity because of a medically determined impairment anticipated to last a minimum of twelve months or lead to death. SSA operates under federal regulations. A 5-step assessment process is also used to establish eligibility.
The primary relationship between SSDI and LTD concerns the offset provision in many long-term disability insurance policies. The provision necessitates that the benefit amounts a claimant receives from Social Security Disability Insurance be subtracted from the LTD benefit amount they receive. That means that if you can obtain SSDI and LTD simultaneously, your LTD insurance provider will decrease its payment by a value equal to the amount you are paid from SSDI, thereby lowering its monetary obligation towards you.
Also, almost all employer-sponsored LTD policies require claimants to apply for SSDI to offset the costs to the insurance provider.
Why Your LTD Insurer Would Need You to File for SSDI
Most LTD insurance policies have terms that enable the insurer to offset a claimant's LTD benefits against other income the claimant receives. SSDI is one of the income sources that can generally be offset from a claimant's LTD benefits. For example, say you receive $4,000 monthly in LTD benefits, and you are later approved to receive SSDI benefits, which are $2,000 monthly. If that is the case, your LTD benefits will be reduced to $2,000 monthly. This is why LTD insurers strongly want, and sometimes force, claimants to file for SSDI.
Among the biggest monetary surprises claimants encounter is the demand for repayment of overpayment. It is not unusual for an applicant to recover full long-term disability benefits for several months, then be approved to receive SSDI and awarded a significant back pay check. Since the back pay would overlap with the period the applicant was receiving long-term benefits, the insurance provider would assert an overpayment interest and might request a large repayment amount.
It is essential to know this dynamic from the beginning and avoid spending any Social Security Disability Insurance backpay you recover until your LTD insurance company has provided their overpayment amount estimates.
Another reason why your LTD insurers would want you to file for SSDI benefits is that another entity will review your medical record, plus other pieces of evidence supporting your disability. That can help ensure the correctness of insurance claim determinations, lowering claim review expenses for the insurance provider.
By forcing you to file for SSDI benefits, your LTD insurance provider manages its financial risk.
What Will Happen Should I Refuse to File for SSDI
If you decline to file for your SSDI benefits despite your LTD policy requiring it, you may be subject to various consequences. One of those consequences is a reduction in LTD benefits.
If your LTD insurance policy contains a provision that permits the insurance provider to decrease your LTD benefits by the value you would obtain from SSDI, your insurer may lower your LTD benefits by an approximate amount of SSDI. That will be the case even when you have yet to file for or have been granted SSDI benefits. That approximated deduction can substantially lower your monthly LTD benefits.
Many applicants are surprised to learn that their insurance policy permits the insurer to estimate their SSDI benefits and deduct that amount from their LTD benefits, even before they have pursued SSDI. Generally, you can keep on receiving your complete LTD benefits while your Social Security Disability Insurance claim is still pending, provided you sign an agreement on reimbursement for the insurance company and prove you are still pursuing your SSDI benefits.
Before you file for SSDI benefits, it is essential to know what your insurance policy stipulates regarding the insurance company's capability to do an approximate offset should you fail or refuse to file for other benefits you might be eligible for.
Other consequences you may face if you refuse to pursue SSDI benefits, if there is a provision in your LTD policy, include the following:
- Termination or suspension of benefit payment. Some LTD insurance policies mention that failing to adhere to any policy requirement, including seeking SSDI benefits, can cause the termination or suspension of your LTD benefits. That means you may lose your benefits entirely should you opt not to pursue SSDI benefits.
- Financial or legal complications. Should you later choose to apply for SSDI benefits, your delayed application may complicate your financial situation. SSDI benefits processing periods can be extended, and any delays in filing may mean a longer period without receiving your benefits. During this period, your long-term disability benefits may already be suspended or reduced.
- Breach of insurance policy terms. By failing to file SSDI benefits, your insurer may consider you to be in breach of your LTD policy's terms. The insurer can use the breach as grounds to deny you future benefits or discontinue the current ones.
The following tips can help you navigate these possible outcomes:
- Reviewing your policy. Study carefully the particular provisions and requirements concerning SSDI benefits under your LTD insurance policy.
- Consulting with an experienced LTD lawyer. Consider talking to a disability lawyer capable of providing legal counsel tailored to your specific needs and who can guide you through the possible implications of failing to apply for SSDI.
- Weighing the risks and benefits. Consider the risks and benefits of filing for SSDI, whether long-term or short-term, including the likelihood of increased financial support vs. the uncertainty and effort involved in the filing process.
Why Being Granted SSDI Benefits Can Assist You
Filing for SSDI benefits is not only advantageous to the LTD insurance company. It will also benefit you once you are approved, and here is how:
Retirement Benefits Protection
Many people consider taking Social Security retirement early rather than applying for SSDI. But retiring early permanently lowers your retirement benefits. Conversely, if the SSA approves you for Social Security Disability Insurance benefits, you will receive disability benefits immediately. Then, once you hit your age of retirement, your SSDI will automatically convert to retirement benefits without the penalty usually imposed on an early retirement benefits claim.
Eligibility for Medicare
If the SSA approves your benefits, you typically become qualified for Medicare after 2 years of entitlement to SSDI, irrespective of how old you are. This could be extremely essential if the following is true:
- You are still too young to receive traditional Medicare
- You require stable, long-lasting access to ongoing treatment or specialists
- You lose employer-sponsored health insurance
More Evidence in Favor of Your Long-Term Disability Claim
Being approved for your SSDI can, in turn, strengthen your long-term disability claim, particularly if your insurer later attempts to cancel your benefits. Even though LTD and SSDI apply varying legal standards, any finding in a federal case can serve as convincing evidence.
In most cases, courts expect insurance providers to meaningfully address favorable SSDI decisions whenever terminating or reviewing long-term disability benefits. Should the insurance provider deny your benefits claim and fail to consider your SSDI benefits sufficiently, you might have a compelling argument before a judge or on appeal that the insurance provider's decision was not reasonable.
Diversifying Income
If you have been receiving LTD insurance benefits for any period, you understand that insurance providers periodically assess claims and might abruptly cancel benefits should they believe that the medical evidence available no longer supports disability under the policy's definition. Recovering benefits from various sources can provide an additional layer of financial stability. So, if your insurer terminated your long-term disability benefits later, SSDI benefits would provide some continuous income as you litigate or appeal your long-term disability claim.
Should I Allow the Insurer’s Vendor to Help with My SSDI Benefits Application?
Many long-term disability insurance companies offer to help claimants with their SSDI benefit claims via representation from another party. It is essential to know you are under no obligation to go with the insurer's suggested representative and have the right to retain or consult with a lawyer of your choice or pursue the claim yourself.
Some applicants are comfortable utilizing the insurance company’s referral program, while others prefer independent counsel. Sometimes, a lawyer can handle SSDI and LTD matters simultaneously, allowing coordination of information across the two claims.
For many LTD policies, a reasonable lawyer's fee paid to acquire SSDI benefits is deducted from the long-term disability insurance company’s overpayment calculations. Therefore, you will not incur extra expenses if you use a private lawyer. An independent lawyer can provide tailored attention and service to your claim. They can personalize their approach contingent on your work history, personal circumstances, and medical condition, which can strengthen your application.
Hiring a private lawyer ensures there is no conflict of interest. That might not be true for a 3rd-party vendor that has a connection to your insurance company. Your lawyer's primary objective is to obtain the best outcome possible for your case and not to reduce costs for the insurer. Also, your private lawyer can help you handle appeals. If the SSA denies your SSDI claim, a skilled SSDI lawyer can effectively help you with the appeal process. They will help you prepare for the hearing, collect additional evidence, represent you at the proceedings, and present compelling arguments in front of a judge.
You want to carefully decide how you would like to pursue your SSDI benefits (by yourself, via a vendor recommended by your LTD insurer, or by hiring a private lawyer) and review your particular repayment agreement and plan language before deciding.
Find a Skilled Disability Claims Attorney Near Me
When your long-term disability insurance company requires you to file for SSDI benefits, it is often about cost savings and offsets. However, being approved for SSDI benefits can also significantly help support your long-term disability claim in addition to helping you in other ways. Should you have any questions regarding your LTD policy, a demand for overpayment, or if your claim has been denied, consulting with a lawyer experienced in LTD cases can assist you in protecting your benefits.
At Leland Law, we can help. We understand the intricacies of pursuing disability benefits and are devoted to navigating them to ensure our clients receive the benefits they deserve. We provide comprehensive legal support to ensure that all aspects of our clients' disability claims are handled effectively and professionally, maximizing their chances of favorable outcomes. Regardless of where in California you live, we will strive to ensure you receive the disability benefits you deserve, be they long-term or short-term. Call us at 866-449-6476 for a free consultation.
