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Understanding Long-Term Disability Insurance vs. Social Security Disability

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If you become unable to work because of an accident or because of medical conditions, there is help available. You probably know that there are different programs that offer benefits, but you may not be aware of the differences or how they work. In short, there are long term disability benefits as well as Social Security disability benefits. You may be able to collect long term disability and Social Security disability at the same time.

Long-Term Disability and SSDI

Social Security Disability Insurance (SSDI) is very different than long-term disability insurance. If you are permanently disabled or if you are suffering from a long-term disability, you may not understand how these two programs differ. You need to understand the differences and how they can affect you.

Having long-term disability insurance can be beneficial because being approved for SSDI benefits can be a long process. It is usually easier to get approved for long-term disability benefits than it is to gain SSDI approval. You can be receiving long-term disability benefits while your SSDI claim is being processed.

The average SSDI claim can take five months to get approval. The first six months that you are disabled are not eligible for SSDI benefits. The length of time that you must be disabled before you can receive long-term disability benefits are dependent upon your insurance policy’s terms.

Having long-term disability insurance is a wise decision since the claims process for SSDI can take a while and there is a six-month waiting period during which you are not eligible to receive Social Security disability benefits. Long-term disability insurance can help you financially during the time as you are transitioning because you are unable to work.

You may need the financial support to help you with your living expenses, and to take care of your family’s needs. Therefore, you should be aware of the different kinds of disability benefits available so you can get the assistance that you need.

Long-Term Disability Insurance

An insurance policy that your buy to protect yourself and your family if you become unable to work for a long time, long-term disability insurance is usually purchased through your employer. If your employer does not offer disability insurance, you can purchase it yourself through an insurance agent. Sometimes you may purchase short-term and long-term disability insurance.

If that is the case, the long-term disability policy will take over after your short-term disability plan has maxed out, which is usually from three to six months. This is dependent upon your policy and if you have both, short-term and long-term disability insurance coverage.

Most often, a long-term disability insurance plan will pay you about half of your working salary. You can purchase a plan that will pay as much as 60-65% of your working salary, but that varies on the insurer and your work duties. When you purchase long-term disability insurance, it is important that you understand the terms, including the premiums, the length of time that it will pay, and how it handles pre-existing conditions. Long-term disability can pay out anywhere from a year until you reach retirement age, as this is dependent upon the policy. You need to make sure you are aware of all these terms when you purchase a disability insurance policy.

Social Security Disability Insurance

SSDI is a disability program that is government funded. You pay Social Security taxes, which pays into this program. If you become unable to work because of a medical condition and you meet the requirements set by the SSA, you can start receiving monthly disability benefits after the six-month waiting period, which is based on the date you are determined to have become disabled.

To be eligible to receive SSDI, you must have worked enough to earn sufficient work credits. The amount of your monthly benefits is dependent upon the work credits you earned and the amount of your earnings from employment.

In order for you to be approved for monthly SSDI benefits, you have to meet the strict criteria set forth by the SSA to be disabled per the government agency’s guidelines. This means you must be able to prove that your condition prevents you from being able to perform any kind of work in the national economy’s current state.

This can be much more complicated that proving you are disabled to receive long-term disability insurance benefits. For SSDI benefits, you must be fully disabled, which means you cannot perform any kind of work duties at all because of your medical condition. There are specific criteria set for different disabling conditions in the Blue Book, which is the SSA medical guide that is used for disability determination.

How Social Security Disability Benefits Impact Long-Term Disability Benefits

It is possible to receive long-term disability insurance benefits and SSDI at the same time. Some long-term disability insurance policies even require that you apply for SSDI benefits after a specific timeframe so you may be able to continue receiving benefits. After you have been approved to receive SSDI benefits, your long-term disability insurance provider will pay you the difference between your SSDI benefits and your insurance policy amount. The amount of the offset depends on your specific long-term disability plan’s terms and the amount of SSDI benefits that you receive each month.

If you have long-term disability insurance coverage and you are receiving benefits because you are disabled, you should consult with a disability attorney or advocate before you apply for SSDI. An attorney can help you understand how SSDI will impact your long-term disability benefits. Your attorney will also let you know if your long-term disability carrier will offset any back payment of benefits that you may be entitled to through the SSA for your disability benefits. An attorney can help you through the claims process and help you get all your documentation so you can properly and adequately support your disability benefits claim.

Comments

Just read your article re: Understanding Long-term Disability Insurance vs. Social Security Disability.

Inderstand when SSDI kicks in the back pay should be sent back to the Long-term Disability Insurance co and The monthly benefit received from private insurance will decrease by SSDI monthly amount.

But what happens if you also receive monthly child's benefits from Social security (because of my disability)? Does that back pay and monthly amount go back to the Long-term disability Insurance co as well?

Thank you.

Hi Pat,
That may depend on your long-term disability policy, however those benefits may not be affected by your LTD policy.

So if I draw long term disability insurance through my employers insurance program once SSDI is approved I will have to repay the long term disability through employer.

Hi Patti,
That would depend on what your long term disability policy says, I really could not say if you would be obligated to do so as I would not have any information about your long term disability policy.

I think it's a rip off and out right fraudulent for my long term disability insurance that I paid premiums on every single month while I worked for over 20 years to take my back pay and lower my payment when I receive ssdi which I paid into while I was able. Sounds like a scam that's gone on to long.

If you paid the premium and not your employer, you are not required to do so is my understanding. Only if employer paid

My question is can i get medicaid while I'm in long-term disability if i don't have any medical insurance

Hi Luis,
You may be able to do so if you meet your state's requirements for Medicaid.

My employer LTD ended their portion of payment based on their criterial for disabilitt status, does or should ss pick up the portion no longer distrbuted by employer LTD i.e. total $3100, LTD 1052 SS 2048, LTD end should i inform ss to recirve my full benefit of $3100,, immediately repaid the LTD lump 3 years ago -( skin cancer)

Hi Tracy,
The SSA is not obligated to pick up the rest of your LTD benefits.

I received ssd for a back issue, at the time I was off work for a mental health issue. Will I have to pay back long term disability company if it not for the same disability?

HI Cindy,
You may want to contact the company that services your LTD policy about this.

I got long term from my work till ssdi kicked in then my long term paid me 305 each month and ssdi payed 1067 but my long term was lost so how do I know if my ssdi should go up because I think it should have

Hi Kristina,
SSDI benefits are not adjusted for long term disability, but your LTD may offset what they pay you due to receiving SSDI.

Once I have been approved by SSDI what will happen to my health insurance from my employer. I am currently paying a small amount of my insurance every 2 weeks. I was told I can apply for Medicare after 2 years.

Hi Jamie,
You would need to contact your employer's insurance regarding your ability to keep coverage during this time.

I have been receiving LTD for 6 months now. The LTD company said that if I was off 2 years, they will request I apply for SSDI.
If SSDI denies me because under their guidelines I’m not disabled, can LTD stop benefits based on the same guidelines or based on their ruling?

Hi there,
You would need to contact your LTD company regarding this as they can give you the needed information about your policy with them.

If a 100%disabled vet has been working, but is now on short term disability from the job for PTSD treatment, and it looks like he will need to stay out

Do VA benefits count against the LTD the same way SSDI can?

Hi Sherry,
You would need to contact the people who administer the LTD policy, as they would have detailed information about the LTD policy.

My ex husband has been on LTD (The Standard) for almost 3 years. He recently has been approved for SSDI and has received a large back pay sum. The LTD (The Standard)is saying he will need to pay back the LTD (The Standard) money he received during the 3 years. How much will he have to pay back? He received over 30k in back pay and his monthly LTD is 1668.01. New SSDI payment is 1110.50 (988.00 after medicare). He is very concerned because he was unaware of pay back being required and spent most of the 30k on unpaid doctor visits from the 3 years without SSDI and Medicare.

Hi there,
I really could not say, you may want to consult your ex's long term disability policy regarding this as they would have the information about how much he would be liable for.

Your ex-husbands LTD insurance company should have informed him he would owe them the back pay. Really doesn’t matter unfortunately he he knew or not. This is how it works. Ltd insurance pays you for lost income after being approved disabled. They require you to file for SSDI to offset their cost of payments. Example, Ltd paid $2000 a month (60% of pay) and your SSDI was a $1000 a month based off your income over the years and credits. Without the LTD payment originally and if he had only received a SSDI approval immediately he would have only been receiving the $1000 per month income. His LTD payed him in advance for that income because he was approved and his payment was larger based of his salary at the time of disability. Even if he has spent the $30k he will still be responsible to pay back LTD because of the offset in income. Every month he won the SSDI payment (basically his entire back pay) he will owe that back to his LTD because they already paid him. If LTD has never been in place he wouldn’t have any income and all back pay would be his. But that’s not the case. Hope this explanation will help.

I have read that any LTD benefit payments could be offset by any SS benefits and retirement plan benefits. I understand the SS offset, but I do not understand how they could use my retirement benefits. Any thoughts?

Hi Tim,
You may want to consult your LTD policy regarding this as they would have information as to their rationale regarding this.

I paid my LTD (Linoln Financial) premiums through payroll deductions for over 30 years. I have been disabled since April 2015. My SSDI was finally approved 2 weeks ago. Am I liable to pay back any insurance benefits received for the time in between my LTD disability and SSDI lump sum?

Hi Mille,
You may want to contact Lincoln Financial regarding this as they would have detailed information about your LTD policy and any obligation to repay that you may have.

Most likely yes. I was awarded SSDI in 2017 and had to pay the LTD company back....so don’t go spending that check.

I I'm on long term disability insurance since March 2017 and applied for disability the same month. In the beginning of this year 2018 I received a lump sum but have not received any notification yet that I was approved from Social Security however the lump sum was there in my account. I know I am to report if I get approved however I still have not received a letter and it's been 5 days since the lump sum. Am I entitled to this lump sum? I was initially approved up to 24 months on my long term disability claim.

Hi Gracie,
Generally the SSA would send you your lump sum about four months after you start monthly benefits, you may want to find out where the lump sum originated.

Thank you for clarifying some of this, I and my husband are very new to this kind of stuff. My husband was disabled due to a major health issue since last year, he started with STD and then his LTD rolled in while he was waiting for his SSI, around November his SSI approved, his LTD cut down to only $300 something, he called his LTD, his case-manager told him, they pays only the difference, wow. After all these years he pays his LTD through his employer, we did not know this will ended up like this. We thought the LTD is totally a separate Insurance and can help us in such time, and SSI is a different source of help. But I guess they connected together. Very disappointed!

HI Margaret,
Thanks for sharing! It's important to check what your Long-term disability insurance covers.

My husband has been receiving Long Term Disability through the government. He turned 65 last year and was told that he is not eligible for SSI because he receives LTD. Why is he not able to receive both?

Hi Stacey,

I am sorry to hear that. I can't say for sure, I would recommend speaking with a SSA rep regarding that.

I purchased LTD through my employer on an after-tax basis. I was later approved for SSDI. Due to the fact that my wife has income, it has made my SSDI benefits taxable. Shouldn't the provide be paying any taxes due as my benefit should be considered tax free given that I paid with after-tax dollars? After all, if SSDI was denied, the carrier would be paying the full amount and it would not show up as income.

LTD will show as income if it is considered “sick pay” rather than disability pay in that status section of your W2, and will be taxable. I disagree too. My LTD is taxable, they took the backpay, which is also taxable due to the LTD in the following year. They say they will give me a tax credit in 2018 for what they received in 2018 as backpay for 2017. We’ll see.

I finally won my SSD but they are not going to pay the 2 years back pay, I have been getting LTD most of those 2 years. They are likely going to make me appeal to SSD for back pay, I am happy with the SSD decision. If I don't appeal will LTD stop paying there percentage of my pay, wich will be about $120 a month?

According to my union local 14 in Las Vegas the long-term disability through Prudential has no right to take my Social Security disability or my child’s Social Security or my Teamsters retirement pension fund it also does not specify in our union contract that they can take that away from me but my long-term disability is taken right at $1700 a month out of my pocket and send me threatening letters on continuous basis Prudential keep saying according to my contract sorry union contract but what they are specifying in the contract is specifying are two different things

Hi David,

I really could not say for sure, my apologies. You may want to speak with a representative from your union to see if they could shed some light on this.

I was wondering if after long term disability doesn't pay anymore and you have been receiving LTD and social security disability payment can you apply with social security again to make up for the slack that LTD has left?

Hi Patti,

I cannot say for sure. You can call the SSA at 1-800-772-1213 and see about the possibility of increased payments.

Was approved for long term but on my first check they took out over 6 thousand dollars for ssdi which I had not applied for and said that I would receive that money back

Hi Don,

I would contact the SSA to find out the details as I am unsure. Their number is 1-800-772-1213.