If you’re unable to work due to a physical or mental disability, you may be eligible for both Long-Term Disability (LTD) benefits and Social Security Disability Insurance (SSDI). However, the rules surrounding these benefits can be complex. Let’s explore the key differences between LTD and SSDI, how they interact, and under what circumstances you can collect both simultaneously.
What Are Long-Term Disability Benefits?
Long-Term Disability benefits are typically provided through private insurance plans, either individual or employer sponsored. If you have this coverage, these benefits generally replace a percentage of your income if you become disabled and cannot work for an extended period. The specifics of your plan—such as the percentage of income covered, the duration of benefits, and qualifying conditions—will vary depending on the individual policy.
What Is Social Security Disability Insurance?
Social Security Disability Insurance is a federal program designed to provide financial support to individuals who are unable to work due to a qualifying disability that lasts at least one year or is expected to result in death. To qualify for SSDI, you must demonstrate that you cannot engage in any substantial gainful activity due to your disability. You must also have a significant work history (required length varies based on age) and have paid into the Social Security system through FICA taxes.
Key Differences Between LTD and SSDI
1. Source of Benefits:
LTD: Private insurance companies.
SSDI: Federal government.
2. Eligibility Requirements
LTD: Varies by policy; often requires proof of disability as defined by the insurer.
SSDI: Must meet the Social Security Administration’s criteria for being found disabled.
3. Benefit Amount
LTD: Typically a percentage of your pre-disability earnings (e.g., 60-80%).
SSDI: Based on your past earnings and FICA contributions.
4. Duration
LTD: Benefits may be payable for a set period or until retirement age, depending on the policy.
SSDI: Benefits can continue as long as you remain disabled, with potential Medicare coverage after two years.
Can You Collect Both LTD and SSDI Benefits?
Yes, it is possible to collect both Long-Term Disability benefits and Social Security Disability Insurance simultaneously. However, the interaction between the two can affect the amount of benefits you receive.
Most LTD policies include an offset provision, which means that your LTD benefits may be reduced by the amount you receive from SSDI. For instance, if your LTD policy pays $1,500 per month and you receive $1,000 in SSDI, your LTD benefits might be reduced to $500, resulting in a total of $1,500 ($1,000 from SSDI and $500 from LTD). This offset is designed to keep the overall benefits in check, ensuring you don’t receive more than your policy’s stated amount.
Social Security Backpay and Overpayments
When you finally receive your SSDI benefits, you might be awarded backpay for the months you were waiting for approval. However, this lump sum can often lead to complications:
Overpayment to LTD: If you received both LTD and SSDI during the backpay period, your LTD provider may claim that they overpaid you and require you to reimburse them. They will calculate this overpayment based on your backpay amount minus any attorneys’ fees you may have incurred while applying for SSDI.
Reimbursement Agreement: Most LTD providers require you to sign a Social Security Reimbursement Agreement stating that you will pay back any overpaid amounts, typically within a short timeframe after receiving your back pay.
If you fail to repay the LTD insurer for any overpayment, they can stop your LTD benefits until the debt is settled. While it’s rare for insurers to take legal action, they can pursue this route if necessary.
Disability Attorneys of Michigan Are On Your Side
Long-Term and Social Security Disability benefits can provide essential financial support during difficult times. Understanding how these benefits interact, especially regarding offsets and potential overpayments, is crucial for a secure financial future.
While going through the process of obtaining disability benefits can be overwhelming and frustrating, we’re here to help. At Disability Attorneys of Michigan, you can trust us to help you at any point in the Social Security Disability benefits claim process, whether you’re considering applying or facing a denial.
Contact us today by submitting a form online or calling our office at 800-949-2900 for a free legal consultation.
