I regularly receive questions from unhappy Social Security claimants who are facing the prospect of having to send their lump sum Social Security disability checks to their LTD carriers. Many LTD policies, especially group policies, include provisions that offset LTD payments by any amount received by Social Security. In other words, if the LTD benefit is $1,800 per month and Social Security awards $1,500 per month, the LTD carrier's obligation becomes only $300 per month once SSDI is awarded.
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Social Security disability cases often interface with workers' compensation and short term or long term disability cases. I recently received a question from a lady named Helena, who asks the following:
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Earlier this week, the New York Times published an enlightening article about the practice of Long Term Disability (LTD) carriers requiring LTD beneficiaries to apply for Social Security disability. This practice is commonplace and the reason for it is simple economics. Most employer paid LTD policies provide that (1) any SSDI benefits received will offset the LTD carrier's policy obligations and (2) the claimant must "repay" the LTD carrier any lump sum received for past due SSDI benefits.
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This blog post is a little off topic but I have included it because it serves as a warning to SSDI claimants who are also collecting long term disability benefits. Thanks to Mike the gentlemen who wrote me to describe a problem he is having with his LTD carrier. Mike apparently had long term disability (LTD) coverage at the time he became unable to work. Many LTD policies, especially those provided as a benefit by your employer, contain provisions that (1) require you to apply for Social Security benefits and (2) that if you are approved and are awarded past due benefits, that you must repay the LTD carrier when you receive your lump sum back benefit check. In addition, going forward, your LTD benefit will be reduced by whatever you receive from SSDI.
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