If you have a Long Term Disability claim (LTD), you know that the disability insurer’s investigation never ends. And you may not understand why your LTD claims examiner is so interested in your other sources of income such as Social Security Benefits or workers’ compensation income. What do those benefits have to do with your Long Term Disability claim? Some “nice” Long Term disability carriers even offer to hire lawyers for “free” to help you get Social Security benefits.
Here’s what’s going on. Most LTD policies contain terms allowing the LTD insurance company to reduce what it has to pay you by what you get from other sources of income such as, you guessed, Social Security Benefits or workers’ compensation income.
So why not just refuse to apply for social security? Because LTD policies usually contain some term requiring you to apply and even appeal social security denials. If you don’t comply with the LTD terms requiring you to apply for Social Security, you risk a denial for non-cooperation with policy terms OR, the insurance company may try to “estimate” what you would have received in Social Security benefits had you applied. Of course, the insurers’ estimates frequently give the insurer the benefit of the doubt.
Suppose you apply for Social Security and you are denied. Yippe! No reduction of LTD benefits. But, if that happens the LTD insurer will argue, perhaps in a denial letter, that even Social Security did not find you disabled. So why should we?
Suppose you apply for Social Security and hear nothing….for a year or more? You have to live right? So you use your LTD benefits to do so. Then two years later social security finally approves your claim. Finally, you have money to buy things you have put off. So you do.
Then, a nasty letter arrives from the LTD company alleging that you owe the LTD Company a large sum of money for the Social Security benefits you spent AND the LTD Company is not paying any more benefits until you pay them back. Eventually, you may even get sued by the LTD Company for this so called “Social Security” offset.
You can endless LTD investigations and possible overpayment lawsuits by attempting to resolve your LTD claim when you are the sickest and before you are approved Social Security benefits. But you are sick or injured and not an expert on any of this.