Employer Disability Plans vs. Social Security Disability - FAQ

Employer-sponsored disability plans are typically created by an employer in concert with a disability insurance company for the benefit of their employees, should they become disabled. Under the Social Security Disability Insurance (SSDI) program the US government provides wage replacement income for working people who paid FICA taxes and later become disabled.

Most disability insurance plans require beneficiaries to apply for Social Security disability benefits (SSDI) as soon as they are approved for benefits under their plan. They also require the beneficiary to appeal an adverse decision.

Unfortunately, you will receive no financial benefit if the Social Security examiners determine that you are disabled. Any benefits you receive under the SSDI program are used to "offset" the liability of the disability insurance company. This means that your check from the insurance company is reduced by one dollar for every dollar you receive from Social Security, so all of the gain goes to the insurance company.

We find it reprehensible that the disability insurance companies are happy to receive the financial gains from SSDI, but they will often give no weight to a determination by Social Security examiners that a claimant is disabled, and reject the very same claim.

In most cases, as soon as possible. First, private disability often pays immediately; Social Security can take a year and a half to two years, or longer, to pay. Second, your insurance company will usually require you to apply for SSDI and will often deduct estimated SSDI benefits from your payment if you do not make the application.