If you’re looking to compare long term disability vs social security disability, you’ve come to the right place. These are two separate types of benefits, but they overlap in a way that can be complicated.
If you’re filing an application for long-term disability (LTD) insurance through your employer, you should know that if your application is approved, it is highly likely that you also will be required to file for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), although the former is more common. The following discusses why the two are often filed in conjunction with one another and the differences and similarities they offer. Here is long term disability vs social security disability in a nutshell.
What is the difference between LTD and SSD?
LTD and SSDI are separate and distinct types of disability benefits. Long-term disability (LTD) is a type of private insurance that is most commonly offered to an employee through his or her employer (although it can be purchased privately). Typically, the employer or the employee will pay a monthly premium amount to an insurance company. In the event that the employee becomes disabled, regardless of whether or not the disability is related to work, LTD benefits will pay a percentage of the employee’s lost wages. Usually, this percentage is approximately 60 percent.
SSDI, on the other hand, is for people who have paid into the Social Security insurance fund and incur a disability that leaves them unable to be gainfully employed. SSDI benefits are awarded in a monthly amount, which is determined by how much the employee has earned on their Social Security record.
So you can see when comparing long term disability vs social security disability that each presents a separate and distinct type of benefit.
Should I use the attorney my long term disability insurance suggested?
No. We get this question all the time and our answer is always no. Your insurance company may make it sound like you would want to use the “attorney” they suggest. They may make it sound like it’s cheaper. They may make it sound like it’s better. It’s not. It is neither of those things.
You are not required to use the “attorney” the insurance company suggests. I say “attorney” because more often than not, the person they recommend is not an attorney. It is a “non-attorney representative”. So ask yourself, why wouldn’t the insurance company suggest an attorney?
The answer is simple. If you are denied social security disability, it is easier for the long term disability insurance company to deny your claim. They can now say “well, Social Security denied you so you must not be disabled”.
Not only is the person normally not an attorney, they typically don’t handle cases at all levels. Ask them if they handle cases at the Federal District Court and whether they’d appeal your case to that level if necessary. Most will not.
Too often do we see people who are denied long term disability benefits AND social security benefits because they used the attorney suggested by the long term disability insurance company. Don’t risk it. Call us.
How are SSDI and LTD related?
How SSDI relates to LTD benefits depends on whether you have an ERISA LTD policy or an individual LTD policy. The type of policy you have will change how we analyze long term disability vs social security disability.
ERISA LTD and SSDI
If you have an ERISA LTD policy and are approved for LTD benefits, the insurance company also will require the applicant to apply for SSDI benefits. Applying for SSDI benefits will offset the amount that an insurance company is required to pay in LTD benefits.
For example, let’s say that you have an LTD policy amount of $3,000 per month. Upon becoming disabled, your policy kicks in, and the insurance company begins paying you that monthly amount. But now you apply for SSDI benefits, too. Through SSDI, you’re entitled to $1,200 a month. As such, this $1,200 can be subtracted from your LTD amount, and an insurance company now is only responsible for paying you $1,800 per month, rather than $3,000.
SSDI applications often take a least one year to complete. An insurance company cannot withhold your full LTD benefit amount until your SSDI benefits begin.
Private LTD and SSDI
In most cases, private LTD policies do not affect Social Security benefits. You can ordinarily receive both if you qualify for both. Unlike ERISA LTD policies, there is typically no offset. You receive the full amount of both benefits. That is why private LTD policies are so beneficial (if you can afford one).
With a private LTD policy, it’s not generally a question of long term disability vs social security disability, but rather, long term disability and social security disability.
Does social security affect long term disability?
If you have an ERISA LTD policy, yes. Social Security payments affect your long term disability in two ways. First, you may have to repay your long term disability carrier for any amounts received from Social Security. Second, your LTD benefits may be reduced by the amount you receive from Social Security.
On the other hand, this is not the case with individual LTD policies. Individual or private LTD policies are not typically affected by Social Security.
Thus, determining the type of LTD policy you have is crucial in analyzing long term disability vs social security disability.
Do I have to repay my long term disability benefits if I receive SSD?
If you have an ERISA LTD policy, yes. Because an application for SSDI usually takes months to complete, the Social Security Administration is obligated to reimburse back pay for the months that you were disabled, but your application had not been approved. When this happens, if you have an ERISA policy, the insurance company providing your LTD benefits will request repayment. This normally occurs in one of three ways.
Usually, it will request reimbursement for the overpay immediately. Other times, it simply will reduce your monthly benefit amount until no debt exists between the company and you. And other times, it may cease payments entirely. Back pay from SSDI benefits and how it’s allocated to an insurer can be one of the most confusing aspects of SSDI and LTD benefits.
Here too, when looking at long term disability vs social security disability, it’s important to understand the type of LTD policy you have.
Does SSI affect long term disability?
Not really. If you are receiving SSI, it may be favorable to your long term disability claim, but there is no impact on the amount you’d receive. It’s also unlikely that you would receive SSI benefits before receiving LTD benefits. The SSI process takes several months so generally, you should have some resolution on your LTD claim before that.
Long term disability vs SSI presents a different issue than long term disability vs social security disability. Because SSI is a needs-based program, it would be unusual that you would receive SSI while receiving LTD.
Does long term disability affect social security disability?
Usually, no. There is almost never an affect on social security disability with one small caveat. If you are denied long term disability, it is possible that you may have to submit any unfavorable doctor’s reports to the Social Security Administration which could theoretically hurt your case.
Does long term disability affect SSI?
Yes. Because SSI has income limitations, any amount you receive in long term disability payments will lower your SSI payments. In most cases, because SSI payments are so low, any LTD benefit could complete eliminate your SSI eligibility. This, of course, highlights the importance of hiring an SSI attorney from the beginning of the process. We can tell you from the beginning whether you will have an issue pursuing both SSI can LTD.
In most cases, LTD will be preferable to SSI. You can always apply for SSI later in life if necessary (if you lose your LTD benefits for example).
How can a disability attorney help you understand long term disability vs social security disability?
When reviewing long term disability vs social security disability, it’s important to understand that LTD benefits and SSDI benefits often go hand-in-hand. Disabled individuals often simultaneously benefit from both benefit types of benefits.
To help understand long term disability vs social security disability contact our office today. We can also discuss your obligation to apply for SSDI benefits, how your benefit amount might be affected, how dependents can change your LTD offset, and what to do with your Social Security back pay, you need an attorney. Attorneys who handle both types of disability benefit claims can tell you what you need to know about long term disability vs social security disability.
