Since the lump sum payment arises from months in which the claimant was also receiving long term disability, the LTD carrier contractually requires the claimant to turn over his Social Security lump sum payment to the LTD insurance company.

Not surprisingly, folks subject to this type of arrangement are not very happy about it.  Why should the LTD carrier swoop in an grab that $25,000 or $30,000 check?

As I noted in a 2007 blog post about LTD offsets to Social Security claims, the LTD carriers justify this money grab by contending that the price of the group LTD policy reflects an expectation of a Social Security offset.  In other words, the cost of group LTD insurance would, in theory, be higher if there was no offset.

Whether you believe this or not, I think it is safe to say that group LTD policy handbooks do not feature this offset obligation.  Often the first time that SSDI claimants learn that their struggle and stress of pursuing Social Security result in zero dollars is after their SSDI hearings.

Now, apparently, there is a new twist.   A gentleman named Shawn has written me to say that his LTD carrier not only wants his lump sum but they want the lump sum awarded to his kids as auxillaries.   As Shawn points out, his kids (who live with their mother) received nothing in the way of benefits from the LTD carrier – how can the insurance company now claim the lump sums awarded to his kids?

Shawn raises a very good point.  I would first look at the policy handbook, and at the policy itself to see if the auxillary benefits are included in the offset calculation.

If they are I wonder if such a provision might be ripe for  a court challenge.   Is there an enterprising class action lawyer out there who sees an opportunity?

Post from: Social Security Disability Blog

Does LTD Carrier Have a Claim on Auxillary Benefits Paid to Your Kids

My 11 year old daughter's father has just been approved for disability. I'm not sure if it is SSI or SSD. He applied 16 months ago, he is now over $4000 behind on child support. Will she be entitled to any of the back pay he will receive? How do I go about applying to see if she is eligible to draw a check off of him now that he is on disability?

***Editor's Note:  Due to the large number of questions I receive about child support and Social Security disability, I have set up a blog specifically about that topic – please visit my Child Support and Social Security Disability blog**

Jonathan's response: Auxiliary benefits are payable to the child of an SSDI claimant if:

A.  An application for child's insurance benefits is filed;
B.  The child is (or was) dependent upon the parent (see below);
C.  The child is not married;
D.  The child meets any of the following conditions:

1. is under age 18;
2. is age 18-19 and a full-time elementary or secondary school student; or
3. Is age 18 or older and under a disability (which must have begun before age 22) ; and

E.  The parent meets any of the following conditions:

1. Is entitled to disability insurance benefits;
2. Is entitled to retirement insurance benefits;
3. Died and was either fully or currently insured at the time of death.

A child is presumed "dependent" upon the worker if
A.  The child has not been legally adopted by someone other than the worker during the worker's lifetime; and
B.  The child is one of the following:

1. The legitimate child of the worker;
2. A child born out of wedlock who would have the right under applicable State law to inherit intestate property from the worker as a child;
3. The child of a void or voidable marriage;
4. The child of an invalid ceremonial marriage;

In Susan's case, she needs to find out if her child's father has been approved for SSDI or SSI.  If he is receiving SSI only, the child will not be eligible for auxiliary benefits.  If the father is drawing SSDI, then the child would be eligible assuming she is a dependent.  Susan would need to file an application for benefits on behalf of her daughter.  Note that the child's auxiliary benefits are in addition to the disabled father's benefit and do not reduce his monthly check.

With regard to past due child support, Susan may be able to garnish the back pay or on-going SSDI benefits of the father if he is delinquent in his child support.  I would suggest that Susan speak with her domestic relations lawyer if she has one, or with her case worker at the child support enforcement office to discuss the procedures for seizing this money.

Post from: Social Security Disability Blog

Will Child be Eligible for Dependent's Benefits When "Out of the Picture" Father is Approved