If You Don’t Plan for Your ERISA Long Term Disability Benefits to be Reduced by the Receipt of Social Security Benefits, You’ll Hate Yourself Later
A long term disability policy is supposed to provide you with peace of mind. Unfortunately, many long term disability insurance policies have a clause in the policy which allows the long term disability carrier to reduce your long term disability benefits by the receipt of Social Security Disability benefits and even other income such as workers compensation.
If, for example, you make $24,000 before you became disabled, your pre-disability income was $2,000 per month.
Long term disability benefits normally pay 60% of the pre-disability income and in this case, the gross monthly LTD benefits would be $1,200. That sounds okay but if you win your Social Security case and get $900 per month in Social Security Disability benefits, you net long term disability benefits are only $300 per month.
Before you apply for short and long term disability benefits, carefully review your policy to see whether or not there is a reduction in your disability benefits as a result of Social Security offset.
Nancy Cavey, Florida long term disability attorney, has written a go to book Robbed of Your Peace of Mind which reveals the clauses that you don’t want to see in your long term disability insurance policy.