When people play into a long-term disability insurance plan through their work, they expect that this will help them remain financially stable in the event of a serious injury or illness that renders them unable to work for extended periods. They may also understand that they are entitled to collect benefits through other avenues, such as workers’ compensation and Social Security Disability Insurance (SSDI). What may be less obvious is the way in which these benefits can counteract one another.
Recently, a news station in Nebraska outlined what can happen when people try to stack coverage from other sources.
According to WOWT NBC-6, the couple in question were both happy and seemingly healthy for years. Married for 27 years, they both worked full-time. But then, the 53-year-old husband suffered a stroke. Suddenly, he was unable to walk or talk or complete basic tasks. He’s learning now to feed and bathe himself and how to communicate. His wife had no choice but to quit her job to care for him 24-7.
“I can’t go to work because he needs me the whole time,” she told the reporter.
He too was obviously no longer able to work. But as a long-time manager at a large chain restaurant, he had secured a long-term disability insurance plan.
While the couple waited for their SSDI benefits claim to be approved, he long-term disability benefits kicked in, $2,700 a month. The couple was still strapped, but they were could scrape by.
Then, they received word that they’d been approved for SSDI payments. Great news. Except they soon found out that the private insurer deducted the government amounts from their monthly payments. So they were receiving the exact same amount as before, which totally caught them off-guard. They wonder why they paid for private insurance if it was going to pay them just as much as they would receive through the federal government SSDI program.
This is not uncommon. In fact, many recipients don’t understand that they may not be entitled to the full amount of their private insurance if they receive funding from a secondary source. Often, it comes down to the fine print in the policy, and that’s why it’s important to consult with an experienced SSDI attorney.
In some cases, as happened here, back-pay from SSDI benefits will create a long-term disability over-payment. It could be substantial because sometimes it goes back to twelve months or longer. In this case, it was just $300, but the couple had to pay that back. The offset provision of your long-term disability policy could mean that your insurer is entitled to all or most of your back pay. This is why it’s important to consult with an attorney before pursuing either type of insurance.
Other types of insurance, such as workers’ compensation benefits, third-party settlements/ personal injury awards and state short-term disability benefits could also result in an offset. Benefits that are not supposed to end in an offset include 401(k) plans, severance packages, individual retirement accounts, stock options and profit-sharing plans.
If you have questions about your SSDI benefits, we can help.
If you or a loved one is seeking Social Security Disability Insurance in Boston, call for a free and confidential appointment at (617) 777-7777.
Stroke victim suffers disability insurance set back, July 6, 2016, WOWT, NBC-6
More Blog Entries:
Who is Getting the Most from Social Security Disability? July 2, 2016, Boston SSDI Lawyer Blog