A disability insurance carrier can offset the amount it pays if you receive payments of Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits. This is called a “Right of Offset.”
Your eligibility for Social Security disability is not affected by whether or not you are insured under a private disability insurance plan. So, the United States Social Security Administration will not reduce the amount it pays you if you also receive a private disability insurance payment. However, private disability insurance carriers will reduce the amount they pay you by the amount of benefits that you receive from Social Security.
An Overview of Benefits You Could Recover for Your Disability
When you become disabled, you may be forced to deal with a patchwork of benefits, including SSDI, SSI, short-term disability insurance, and long-term disability insurance. Short-term disability insurance and long-term disability insurance are nearly always worth pursuing.
An award of disability benefits from the United States Social Security Administration (SSA) depends on many factors like your age, education, work history, physical and mental health. It is also critical that you are not engaged in any “Substantial Gainful Activity.”
To be eligible for SSDI benefits, you must have been employed for a certain amount of time in jobs that were covered by Social Security and have a medical condition that the SSA considers a disability. To qualify for SSI benefits, you must be either 65 years of age or older or have a medical condition that does not allow you to work and will last one year or result in death.
When SSDI and SSI Benefits Reduce Private Disability Insurance Payouts
Historically, many private disability insurance plans did not have offset rights. Nowadays, nearly all private long-term disability insurance plans contain provisions allowing the disability insurance company to offset the amount it pays by the amount of money a claimant receives from other sources.
This Right of Offset allows a disability insurance company to reduce the amount that it pays to you by the amount that you receive from Social Security. Many times, the private disability insurance carrier’s payment will be reduced to as low as $100 per month.
You may ask: “Why did I pay those disability insurance premiums for all those years if it only has to pay me $100 per month?” To make matters worse, the disability insurer may also have a right under the plan to recover any overpayment that has been made to you. They recover overpayments by reducing the monthly disability insurance benefit that you are depending on to an even lower amount.
Policies That Favor the Insurance Company Could Affect Your Benefits
A right to offset is created in favor of the disability insurance company by its use of language in the insurance plan document. Most disability insurance policies will have a section buried in the fine print of the policy that is titled “Other Income Benefits.” It’s very often an unfair clause. It usually reads something like this CIGNA Disability Insurance policy:
“We reduce this plan’s benefits by an amount equal to any Social Security retirement and/or disability benefits payable to you, your dependents, or a qualified third party on behalf of you or your dependents.”
Insurers are not on Your Side
Many disability insurers will even require covered individuals to apply for SSDI while receiving private benefits. Some wrongly try to make the insured use a Social Security Claim Representative firm recommended by the insurance company.
No law currently prohibits private insurers from implementing offsets and collecting overpayments from the monthly payment it makes to you.
Unfortunately, if the right to offset, or the right to recover overpayments, are in the plan, the disability insurance carrier is allowed to reduce the amount it pays you.
What About Disability Insurance Offsets and the Employee Retirement Income Security Act?
A federal law known as the Employee Retirement Income Security Act provides strict governance for a variety of employee benefits—including disability. Under ERISA, employers must provide workers access to plan documents, like Summary Plan Descriptions. These state each participant’s rights and responsibilities, including the right of offset and the right to collect overpayments.
However, ERISA provides virtually no protection to the consumer when it comes to an insurance company’s right to offset and right to collect overpayments. In short, if it is in the plan document, the insurer, like CIGNA, UNUM, or Lincoln Financial, is allowed to do it. It may help to hire one of our ERISA claims attorneys in this situation.
Our Team is Here to Help You Obtain Fair Benefits That Meet Your Needs
If you have questions about a private disability carrier’s right to offset its benefit payment, or its right to collect overpayments from you, a disability attorney who understands the plan documents can assist you. You don’t need to do the research when you have us to make sense of it all and fight for what you are entitled to.
Our Social Security disability lawyers want to ensure you are receiving a fair amount from your private disability insurance when you also receive Social Security disability.
Call Underwood Law Office Now to Discuss Your Disability Benefits Options
Call the Underwood Law Office at (972) 480-6337 now to speak with a team member about your situation. You will learn how one of our disability lawyers can help. If you choose to work with us, know that we charge you nothing up front and you never pay out of pocket.