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If you receive Long-Term Disability (LTD) benefits, you may one day get a letter from your insurance company claiming that you’ve been overpaid and now owe them money back. These overpayment demands can be stressful and confusing, especially if you’ve relied on those benefits to cover everyday expenses. At Cavey Law, we help clients understand and resolve LTD overpayment issues so they aren’t left facing financial hardship.
What Is a Long-Term Disability Overpayment?
Overpayment happens when your disability insurance company claims it has paid you more in benefits than you were entitled to under the terms of your policy. The insurer will then demand repayment – sometimes in a lump sum, other times by reducing or withholding your future benefits.
Why Do Overpayments Happen?
Overpayments are common in LTD claims, and they often aren’t the claimant’s fault. Common reasons include:
- Social Security Disability (SSDI) Offsets – Most LTD policies require you to apply for SSDI benefits. If you are approved, your LTD insurer may reduce your monthly benefit by the amount of SSDI you (and sometimes your dependents) receive. If you were paid full LTD benefits while waiting for SSDI approval, the insurer will claim you were “overpaid.”
- Workers’ Compensation Offsets – LTD benefits may also be reduced if you receive workers’ compensation.
- Other Income Sources – Some policies offset pensions, severance packages, or other income.
- Administrative Errors – Sometimes overpayments occur simply because of mistakes made by the insurance company.
What Happens if You Owe an Overpayment?
If your insurer claims you owe money, they may:
- Demand immediate repayment.
- Reduce or suspend your ongoing monthly LTD benefits until the overpayment is “recovered”.
- Threaten legal action if repayment isn’t made.
These tactics can feel intimidating – but you may have options.
Why You Should Consult With an Attorney for a Long-Term Disability Overpayment
Before repaying any money, it’s important to get legal advice. An experienced Long-Term Disability attorney can:
- Review Your Policy – to see whether the insurance company has the right to collect the overpayment.
- Verify the Calculation – insurers often miscalculate the amount owed, especially when SSDI dependent benefits are involved.
- Negotiate Repayment – we may be able to reduce or restructure the repayment amount.
- Protect Your Rights – if the insurer is withholding benefits unfairly or threatening action, we stand between you and the insurance company.
Our mission is simple: to protect your benefits and give you peace of mind.
Don’t Face Overpayment Demands Alone, Hire a Long-Term Disability Lawyer
Insurance companies are aggressive in pursuing overpayments – but that doesn’t mean their claims are always correct. Before you pay anything back, talk to an attorney who knows ERISA and LTD law.
At Cavey Law, we fight to ensure that tough times don’t become even harder because of an unfair overpayment claim.