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.

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.   Read more on Does LTD Carrier Have a Claim on Auxillary Benefits Paid to Your Kids…

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:

Read more on Should I File for Social Security if I Also Have a Pending Workers' Comp and LTD Claim…

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.

Read more on Long Term Disability Insurance Carriers Faulted for Forcing Claimants to Apply for SSDI…

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.

Read more on LTD Carrier Misleads Claimant About Repayment Obligation – What Next?…