Can You Be Denied Long-Term Disability After a Social Security Disability Award?

Social Security Disability Is Different But Important

As a long term disability attorney, I am often asked how Social Security disability benefits will impact an award long term disability (LTD) benefits. Sometimes, people are confused and think that an award of Social Security disability means you will be automatically approved for LTD benefits.  

They may ask: "Can I be denied LTD benefits if I was approved Social Security Disability?"

The answer is: Yes, you can be denied LTD benefits after an award of Social Security disability.  Unfortunately, many are. An award of Social Security disability benefits does not guarantee that you qualify for or will be awarded long-term disability benefits. The reason is that the language of long-term disability insurance policies and the requirements for receiving LTD benefits are different than those in the laws governing Social Security disability.

However, this does not mean that an award of Social Security disability is insignificant. By being awarded Social Security disability benefits, your status as a disabled individual has been validated by a governmental entity, even if the definition of disability or the requirements in that law are different.

Long-term disability insurance companies still may deny your benefits, but the law usually prevents your LTD insurer from completely ignoring this fact.

Most LTD Policies Contain an Off-Setting Provision

While an award of Social Security disability can have an immediate positive financial impact, most long-term disability insurance policies have a "offsetting provision." This provision states that income received from other sources can be used to offset what your long-term disability insurer will pay you. Social Security disability income is always included as one of those other sources of payment.

The way this works is as follows:

Assume that your long-term disability insurance company (Hartford, Unum, Aetna, Etc.) are paying you $3,000 per month before you are awarded Social Security disability benefits. Later, you receive a letter from Social Security saying that you have been awarded back benefits (also called a "retroactive award") in the amount of $1,000 per month for the last six (6) months. As a result, you receive a check from Social Security in the amount of $6,000 for the past six months, and you begin to receive a monthly check from Social Security in the amount of $1,000.

Under most LTD policies, the off-setting provision will kick in and reduce the amount of the LTD benefits by the amount of the new Social Security disability benefits.  As a result, you will now only receive $2,000 per month from your long-term disability policy. This is because the original $3,000 is reduced by the $1,000 you are now receiving from Social Security.  Your net income remains at $3,000.

This is not a bad thing because your income is now diversified and coming from two independent sources. As a result, if your long-term disability insurance cuts off payments in the future, you will still be able to receive Social Security disability income.

Be Careful With Retroactive Payments

What about the $6,000 in back benefits?  Should you spend this money?  

The answer almost always is:  No!

However, you should be very careful with the back benefits payment that you receive from Social Security. The off-setting reduction in your LTD policy will likely also apply to any LTD benefits you previously received during the retroactive award period.  

In simple terms, the award of back benefits from Social Security means that your insurer should have been paying you less each month for the last six months. Your long-term disability insurer will likely send you a bill for that amount, and you will owe that money back to your long-term disability insurance company.

So, if you receive an award of Social Security disability back benefits, do not spend that check. It is very likely you will owe most, if not all of it, to your long-term disability insurer.

Still Have Questions?  Call Our Kansas City Long Term Disability Attorney

The issues surrounding denials and appeals of long-term disability and the impact of an award of Social Security disability can be complicated, but an experienced long-term disability attorney can help.  If you have a long-term disability denial, here’s what you should do right now:

1.  Call our office today and get the information you need so you can be prepared to fight for your disability benefits. We will review your denial letter for free and give you a strategy to get back on claim.  

2.  Download our free guidebook for long-term disability appeals, Danger: Proceed at Your Own Risk, which is packed with helpful tips and concrete steps on how to file an appeal.

3.  Call us at 816-203-0143 or fill out the form below.  But don't wait until after you file your appeal. If you already filed your appeal, we can only be able to help if your policy allows a second appeal.  Most policies don’t allow for that so don't risk it -- contact our Kansas City long-term disability insurance lawyer today.