There Is A Difference Between Long-Term Disability And Social Security Disability
When you have a long-term condition that prevents you from working, you need assistance making ends meet and securing treatment – but not all disability benefits are the same. The source and your entitlement to benefits may depend on who you were employed by before becoming disabled and for how long. For example, military veterans may be entitled to Veterans Disability Compensation benefits (VA compensation) or other benefits through the Veterans Benefits Administration. Primarily, however, most people with an employment history rely on two sources of financial assistance when they are experiencing a long term disability:
- Social Security Disability Insurance (SSDI) through the Social Security Administration; and
- ERISA/employer-sponsored long-term disability benefits through employer-sponsored plans or insurance policies.
The laws and processes that govern whether someone is entitled to receive SSDI benefits versus long-term disability benefits from an employer or even VA compensation benefits are complex and all very different from each other, and therefore require specialized representation.
At ERISA Law Center, we specialize in ERISA long-term disability and other employer-sponsored benefits. We assist clients from California, Nevada, Arizona, Washington and Oregon in fighting benefit denials and terminations of claims arising from their employer-sponsored plans. We do not provide representation in matters before the Social Security Administration, Veterans Affairs or other claims arising from non-ERISA/employer-sponsored plans. We may, however, be able to assist you if your long-term disability benefits were recently denied and the plan or insurance company is claiming an overpayment resulting from the award of SSDI benefits. Read below to learn about the differences between ERISA/employer-sponsored long-term disability benefits and SSDI benefits offered through the Social Security Administration and how your receipt of SSDI benefits may affect your long-term disability claim.
What Is Social Security Disability Insurance?
Unlike most employer-sponsored long-term disability benefit plans which are governed by the Employee Retirement Income Security Act (ERISA), payment of SSDI benefits is governed by the Social Security Act which provides the standards by which SSDI benefits are granted.
Anyone who has worked for a covered employer(s) or has been self-employed for a period sufficiently long enough, and recently enough, to have earned the required number of credits in the required period, is “insured” under the Social Security Act and is therefore eligible to apply for SSDI benefits. Benefits are paid to the individual and, when applicable, their dependents.
A disabled worker who submits a claim for SSDI benefits may become entitled to monthly benefits if they: (1) satisfy the “insured” requirement of the Social Security Act, (2) meet the definition of disability set forth in the Social Security Act, (3) complete a five-month waiting period during which they remain disabled under the Act; (4) and has not attained normal Social Security retirement age.
Denials of SSDI claims are common, and the Social Security Administration maintains an internal review process. Though anyone can represent themself or another before the Social Security Administration, as long as the requisite forms are submitted, many applicants seek assistance from a licensed attorney.
The process of obtaining SSDI benefits through the SSA can take anywhere from a couple of months, to several years if more than one appeal or request for reconsideration is necessary. If the claim is denied after the first Request for Reconsideration, the matter is heard by an administrative law judge. If the claim is denied in full or in part, the claimant has the option of requesting review by the Appeals Council. If the Appeals Council decides not to review, or otherwise denies the claim, the claimant may proceed to file a lawsuit against the commissioner of the Social Security Administration in the federal court of the district where the claim arose. If the claimant decides to pursue a lawsuit in federal court, they must be represented by a licensed attorney or proceed in pro per (representing themself).
There are strict deadlines that apply and vary throughout the SSDI process. Therefore, if your claim for SSDI benefits has been denied or terminated – at any stage of the process – it is important that you contact an attorney as soon as possible to ensure you do not waive your right to an appeal.
While we are empathetic toward those in need of SSDI or government-sponsored benefits, we do not provide representation in claims for SSDI benefits or other claims for government-sponsored benefits before the Social Security Administration or any other government agency.
How Does My Claim For SSDI Benefits Affect My Claim For ERISA/Employer-Sponsored Disability Benefits?
Entitlement to long-term disability benefits under an employer-sponsored plan is governed by the terms of the specific plan (or where benefits are insured, the specific insurance policy). Long-term disability plans or policies are in turn governed by the Employee Retirement Income Security Act (ERISA), with exception to employer-sponsored plans or policies issued by public/government employers or churches, though church plans (but not government plans) may “opt-in” to ERISA coverage. ERISA is one of the most complex pieces of federal legislation, and our experience in this area is vital to our clients. We also specialize in claims arising from long-term disability plans or policies issued by public/government employers or church employers who have not “opted-in” to ERISA coverage. (Visit this page for more information about bad faith denial of long-term disability claims not governed by ERISA).
If you are eligible to apply for long-term disability benefits through an employer-sponsored long-term disability plan and are receiving SSDI benefits or are also eligible to apply for SSDI benefits, you need to understand how your receipt of SSDI benefits will affect your claim for long-term disability benefits through your employer-sponsored plan.
Your SSDI benefits will likely offset (reduce) your claim for long-term disability benefits.
Most long-term disability plans or policies include provisions that allow the plan or insurance company to reduce the value of the monthly long-term disability benefit you are entitled to receive by the monthly amount you receive or are eligible to receive in SSDI benefits during the same period. This means if you receive, or are possibly entitled to receive, both employer-sponsored long-term disability benefits and SSDI benefits for the same period, the amount you receive or are eligible to receive in SSDI benefits for that period, will be subtracted from your long-term disability benefit for the same period.
Most long-term disability plans or policies include provisions requiring you to apply for SSDI benefits. Some long-term disability plans or policies will simply include provisions allowing them to offset or reduce your long-term disability benefit by the amount you are estimated to be eligible to receive in SSDI benefits if you do not apply for SSDI benefits. Some plans or policies reserve the right to terminate long-term disability benefits if you do not apply for them or if you are not granted SSDI benefits by the Social Security Administration.
Depending on the provisions of the specific plan or policy, if you are receiving employer-sponsored long-term disability benefits that are subject to ERISA, and are later retroactively awarded SSDI benefits for the same period you receive long-term disability benefits, the plan or insurance company likely is be entitled to an overpayment that may be deducted from future long-term disability benefits, as long as you continue to receive long-term disability benefits.
Some plans or policies may require that you sign reimbursement agreements, or otherwise provide that “an equitable lien by agreement” exists between you and the plan administrator and that you are required to repay SSDI overpayments to the plan, regardless of whether you continue to receive benefits under the long-term disability plan or policy. Such provisions are illegal if the plan or policy is subject to ERISA.
In Bilyeu v. Morgan Stanley Long-Term Disability Plan, the 9th Circuit held that although a plan may secure an equitable lien by agreement in an ERISA action by meeting certain criteria, SSDI benefits cannot be assigned or attached as a matter of law, and therefore provisions within plans or policies assigning such benefits are illegal as a matter of law. We won this very issue in Wong v. Aetna Life Insurance Company.
If you have questions about offsets or reduction of your employer-sponsored long-term disability benefit, or if your long-term disability benefits have been terminated and you have been sued or sent to collections by an employer-sponsored plan or insurance company because of a claimed overpayment resulting from an award of SSDI benefits, you need expert advice from an attorney familiar with these issues.
35 Years Of Fighting For Our Clients
We have over three decades of experience fighting self-funded plans and insurance companies that deny or terminate long-term disability claims. We provide our extensive legal experience and personal attention to the service of people who must contend with disability insurance carriers putting profit before the health of their claimants.