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.
The Difference Between LTD and SSDI
LTD and SSDI are distinct. The former 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.
How SSDI and LTD Are Related
If an applicant is 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.
Reimbursement of Overpay
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, the insurance company providing your LTD benefits will typically react 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.
How an Attorney Can Help You Understand the Relationship Between LTD & SSDI
LTD benefits and SSDI benefits often go hand-in-hand, and disabled individuals often simultaneously benefit from both benefit types. To help understand 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.
The attorneys at ARM Lawyers, can also help you apply for both LTD and SSDI benefits and help you to appeal a denied claim. If you’re ready to learn more about the types of disability benefits that may be available to you, call us now at 570-257-4509.