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. 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?
I actually challenged this as my children were born after I started receiving Social security.The LTD insurance wanted me to pay back any benefits I had received for my children as there was a year or two they didn’t know I had children after they were born.The contract was clear about children already living when I started receiving SS and LTD but not clear about future children.
We filed a lawsuit and settled out of court through mediation.I was basically told there was no way the insurance would let me win as it would be precedent setting.
I have found in the regulations that if wrong doing by ssa employee is why you were denied they will go back to date of wrong .
i am currently on a disability policy that the company i worked for gave us . The lump sum for 28 yrs back plus three children , two of which are now over 18 and one was over 18 before i got this policy , it comes to a very large amount of money surely they could only take the amount from when they began paying me ?
My question is regarding my 11 year-old duaghter is collecting approx.$700/per month based on her father’s age(67). Now I am now permantly disable and collecting SSDI approx.$2000. for close to 4 years. My question is would she be better off collecting under my SSDI?If so, can I get retro for her?
thank you,
Maureen
just wnting to know . my exhusband gets ssi but how do i get it off of him my my son.. he has him two weekends out of the month i now its diff. than child support but i feel like i still have the right tro some of his monye times are hard on a single mom .. pls help me
Me and my daughter’s father had joint custody when I started receiving ssdi benefits for me and my daughter. I was not ordered to pay child support and he made over $5000 a month so I used the check I got for her to support her when she was with me 6 out of 7 days every other week. Her father now says I owe him for all the years I received her check. I now have custody and the judge is trying to give him a credit towards his child support obligation but doesn’t social security have to pay him if they find that I was overpayed and I would have to pay back social security? What is the process that occurs when something like this happens!