Long Term Disability and SSDI Benefits
Understanding the Intersection of Long Term Disability and SSDI Benefits
by Erik S. Nilson
National Account Executive, Social Security Law Group
At the 2010 Southeastern Parkinson Disease Conference and Young Onset Parkinson Conference in Atlanta, GA, the Social Security Law Group held a panel discussion covering the Social Security Disability Insurance (SSDI) process. We quickly discovered that many participants were already deemed "disabled" by their Long Term Disability (LTD) insurers. Many assumed that their insurer's finding of disability automatically entitled them to SSDI benefits, and were concerned to find out that this was simply not so. My colleagues and I want to help young people with Parkinson's appreciate the separately administered yet interdependent relationship between LTD and SSDI. We're confident this knowledge can lead you to make the best choices for you and your family.
A Group LTD policy is always a private contract between you and your insurer. While these agreements are similar across the insurance industry, their terms can vary. Group LTD policies are offered by slightly more than 30% of all employers. The coverage is typically offered upon the commencement of employment, and employees are usually not required to accept it. On the contrary, SSDI can be thought of as a national public insurance policy that the Social Security Administration (SSA) makes available to all citizens, provided they meet a distinct definition of "disability" and have paid into the system long enough to qualify.
Most conference participants had only been approved for LTD. This means their insurers made a determination that their medical condition was disabling in accord with the terms of their private contracts. A person may be found "LTD disabled" if the insurer is convinced that returning to one of their former occupations is not an option. In contrast, SSA's definition of "statutory disability" requires a showing that a person can no longer do any work they performed in the last fifteen years, and that no appropriate full-time work exists for them in the national economy.
When you filed your LTD claim, your insurer may have given you the option of receiving monthly cash benefits or an estimated reduced benefit based on your projected SSDI benefit. At the point you are approved for SSDI, the federal government will send you a lump sum representing any past due benefits to which you are entitled from the date you were determined to be disabled. If you received an unreduced LTD benefit, your insurer will refer to this sum as an "overpayment" that you are obligated to pay back for any month you received both benefits.
You might be wondering what incentive there is to apply for SSDI if you are already receiving LTD payments. Most importantly, once 29 months have passed from the date you are found statutorily disabled, SSDI beneficiaries can enroll in Medicare. This is significant because, with very few exceptions, the federal government only permits Medicare access to retirees and SSDI beneficiaries. In addition, pursuant to the terms of your LTD policy, your insurer may suggest that you apply for SSDI after making a determination that you are an appropriate.