Transcript: Social Security Benefits and Long-Term Disability
How benefits interact
Hi, my name is Ben Burnside. I’m one of our Social Security Disability attorneys here at the Deuterman Law Group. I’m a Board Certified Specialist in Social Security Disability by the North Carolina State Bar. I wanted to talk a little bit about the interaction between Social Security Disability benefits and Long-Term Disability benefits. And I’ll also just briefly talk about Short-Term Disability benefits. We get a lot of questions from our clients about how these two types of benefits that you may be entitled to interact. The first answer, how these two interact, is—it depends, which is the answer to all legal questions. But it depends on the short-term and/or long-term disability policy itself. Now Social Security Disability is set in law. The way that that program works is dependent on law and regulations. It’s always the same, but a short-term or long-term disability policy is a private contract, and those policies can be very different.
Policy provisions
How the long-term disability benefits interact with Social Security Disability depends on how the policy is written and what provisions the policies contain. So there’s no right answer all of the time, but I’ll talk a little bit about common provisions in long-term disability policies and how they affect Social Security Disability. So first, when thinking about Social Security Disability benefits, if you are approved and you start receiving Social Security benefits, Social Security Disability benefits will not be reduced because of any long-term disability benefits you’re getting. So if your Social Security benefit is, you know, $1,500 a month and you’re getting no long-term disability, it’ll be $1,500 a month. Or if you’re getting $3,000 in long-term disability benefits, your Social Security benefit will still be $1,500. So the amount of your Social Security benefit doesn’t change based on short-term or long-term disability policies.
When long-term disability is offset
The question where it typically changes though, is the amount of your long-term disability benefit is often reduced or even eliminated, based on the receipt of Social Security benefits. And again, this goes back to what provisions are in the policy, but many long-term disability policies have language in them that say they get an offset, or reduction, for the amount of Social Security benefits that you get. Not all policies contain these, but many do. And so what that means is, let’s say you’re getting (we’re just going to use round numbers here) $2,000 a month in long-term disability benefits. And let’s say your long-term policy contains a provision saying they get an offset—a one-to-one offset for your Social Security benefits. Let’s say you are then approved for Social Security benefits of $1,000 a month. So you’re getting $2,000 from your long-term. You get approved for $1,000 from Social Security. Long-term disability is going to say, we are going to offset that $1,000 from your long-term benefits. And they will reduce the amount that you get to $1,000 from long-term disability and $1,000 from Social Security Disability. So the long-term policy gets to subtract from how much they pay you, however much you’re getting from Social Security. That’s typically how it works. With short-term disability benefits, because they typically only apply for a couple of months, there usually is not an offset for Social Security benefits, but there can be. Again, it’s a policy-specific question.
Social Security denial scenario
One other thing about this issue I want to mention—it gets a little more complicated when the common scenario you have, which is you’re receiving long-term disability benefits. You apply for Social Security benefits. You’re denied. You have to wait a long time, because the system is not efficient, but you’re eventually approved for Social Security benefits. And you’ve been getting the long-term disability benefits the whole time. Then the question is going to be, do you have to pay the long-term disability benefits back? It’s a bit of a more complicated question. But if there is that offset in the long-term policy, then typically the answer is you are contractually obligated to pay back the long-term insurance company from any months in which you got paid Social Security and also got paid long-term for that. They will typically subtract the amount of any attorney’s fee that you paid, or were subtracted from your benefits, from an attorney that helped you get the Social Security benefits.
Policies with no offset
There are also long-term disability policies in which there is no offset. So it is possible to have a policy where you get your two grand from long-term, you get your one grand from Social Security, let’s say, and you’re getting three grand total because the policy itself does not have an offset. In my experience, these policies without offsets are usually more expensive. They’re often long-term disability policies that you may have purchased yourself. It seems like long-term disability policies that you get through an employer, or where an employer pays some or all of the premiums for them, typically do contain the offset provisions, because it can make the long-term policies less expensive for the employers. I hope you found this helpful, keep tuned, and let us know if you have any other topics that you’d like us to make videos about.