Long term disability (LTD) is private insurance offered through an employer (governed by ERISA law) or purchased by individuals to replace a percentage of income when they are unable to work, lasting for a period specified by the policy. Social security disability (SSDI) is a federal government program based on work history/credits, where benefits are paid as long as the individual remains disabled, converting to retirement benefits at full retirement age.
Most long term disability policies include an offset clause for other income benefits. For example, if there is an SSDI benefit paid, the LTD insurer will reduce the monthly payment by the amount an individual receives from SSDI, often dollar for dollar. Say, for example, LTD pays a disabled claimant 60% of pre disability pay in the amount of $3,000/month and he or she is approved for $1,500/month from SSDI. The LTD insurer will drop the 3k LTD benefit to $1,500 for a total of roughly $3,000 in combined LTD and SSDI benefits. It follows that the many LTD policies require an individual to apply for SSDI as a condition for continuing to receive benefits, or face a reduction in the amount of estimated SSDI benefits.
It is important to note that because SSDI has a substantial waiting period, an individual may receive retroactive payments/back pay from the application date, which when received will likely have to be reimbursed to the LTD insurer for the overlapping period when full LTD benefits were paid. This can run into the tens of thousands depending on the delay in SSDI benefits payment so it is important to review the insurance policy to understand what reimbursement obligation exists.
Comparing Long Term Disability and Social Security Disability
- LTD offsets keep replacement income at the policy percentage, but having both LTD and SSDI provides a safety net so that if LTD is terminated or denied, SSDI continues
- SSDI has a built in cost of living COLA increase whereas LTD policies lack inflation protections
- SSDI are taxable depending on income as are LTD benefits if the employer paid the premiums
- Both SSDI and LTD have rules limiting work where exceeding limits can end benefits for either
- Depending on whether it is a group or individual policy, offsets may vary so it is important to review the policy for details
- LTD is typically fixed to a specified period whereas SSDI continues subject to periodic medical reviews
Denial of Long Term Disability Claims
It is not uncommon for LTD insurers to deny LTD claims (often employer sponsored) due to insufficient medical evidence that must show how a condition prevents an individual from working whether it is in their own occupation or any occupation. When there is a preexisting condition exclusion in the policy, the insurer may deny a claim if it is in the look back period. Failure to follow the procedural requirements or missing a deadline can result in a denial of an LTD claim as can failing to adhere to the prescribed care.
When an individual is denied LTD benefits, it is highly recommended to seek professional help from an experienced LTD denial attorney who will file an appeal with additional medical records, doctor’s statements, and vocational evidence of how the disability prevents the claimant’s ability to perform in their own occupation or any occupation depending on the circumstances. The attorney can also request an independent medical exam or functional capacity evaluation to support the appeals claim. The odds of a successful appeal vary, but an experienced ERISA attorney can often reverse a substantial portion of denials through evidence quality and expert representation.
Denied SSDI
Roughly 60 to 70 percent of initial SSDI applications are denied, most commonly for insufficient medical evidence of a severe, long lasting impairment; earning above the SSDI threshold or not following prescribed treatment. Many that are denied ultimately succeed on appeal with expert representation, the lack of which can reduce the odds of success significantly.
Contact an Experienced Long Term Disability Denial Lawyer for Answers
It is helpful to consult an ERISA/disability attorney when applying for benefits, appealing a denial, or if a policy holder is receiving a lump sum to ensure compliance with the long term disability policy. When you have questions regarding Social security disability (SSDI) and long term disability, or your disability claim has been denied, working with an experienced employment law attorney will help you navigate the process successfully to get the benefits you are owed. Contact the employee rights attorneys at Alan C. Olson & Associates for immediate assistance at 262-785-9606.
