Can a disability insurance company claim an overpayment for social security disability benefits payable to a child as result of the parent’s disability?
Our disability lawyers are contacted on a weekly basis with this exact question. The short answer is that most disability insurance policies contain language that allows a disability company to setoff your monthly disability insurance check by the amount both you and your children receive from Social Security as a result of your disability. Most disability insurance companies have drafted policy language in a manner that makes it very difficult to exclude child disability benefits from your monthly disability benefit check. There have been a few cases around the country in which courts have found that a disability carrier could not seek an overpayment for child social security disability benefits. In these rare cases, the policy language giving the disability company the right to seek an overpayment was not drafted clearly.
For example, you may want to review a Court Order in the case of Carstens v. United States Shoe Corporation’s Long-Term Benefits Disability Plan, (N.D. Calif., Oct. 31). While this case did not allow the disability company to offset child benefits, the policy language was different than the majority of group disability insurance policies. The Cartsens case also discusses many of the other disability cases around the country that dealt with the same issue.
In addition to Carstens, a similar ruling was issued by the Illinois Appellate Court. In Meeks v. Mutual of Omaha Insurance Co., 70 Ill.App.3d 800, 802, 388 N.E.2d 1362, 1363 (3d Dist. 1979), the court disallowed an insurer’s deduction of benefits awarded to the dependent of a Social Security disability benefits recipient.
There are unfortunately numerous cases which establish that a disability carrier can seek overpayment for all social security disability benefits payable. Two of the most quoted United States Federal Court Of Appeals cases are Anweiler v. Aetna and Godwin v. Sunlife. Neither of these cases specifically discussed child disability benefits.
In any disability claim, a disability claimant should retain a disability insurance lawyer to specifically review the applicable policy language regarding an offset for child social security dependent benefits.
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I was receiving LTD through Metlife as well ass SSD. At the two year mark, (2009) I was cut off from LTD because my illness (mental) had a two year cap in the LTD contract. All other illnesses are covered until age 65. I have checked with several local attorneys, who had all said that this was common practice and perfectly legal, so I know this isn’t going to change for me. My question is, in these enlightened times with so much focus on equity in the workplace, how can this still be a legal practice. It saddens me on so many levels, it seems so totally 19th century, is burning the mentally ill at the stake next? I might also add that my income was cut in half, which has of course added a major additional strain to my already fragile condition. Any thoughts or advice?
Wendee,
It is sad that many disability companies limit mental nervous claims to two years. The companies that write these disability policies are in business to make a money and based upon the number of mental nervous claims they receive each year, they have determined that a 2 year limitation is necessary in order to limit their financial risk. The government and department of insurance have not done anything to regulate this issue as they don’t really have the power to disturb the terms of the contract. When your employer purchased the MetLife policy, they could have paid more money and asked MetLife to exclude the 2 year mental nervous limitation.
If you are not the PR for your child’s benefits they receive from you, can your LTD require you to reimburse the retro and deduct your childs from your retro?
Mary,
I am assuming by PR, you mean Personal Representative. If you are the guardian or have legal custody of your child, then there would still be an SSDI setoff for SSDI benefits that are paid as a result of your disability.
Like many others on this site, I have a question regarding a LTD company seeking to collect over payment of “Family Benefits” received by children of a parent with a disability.
From the very beginning, the benefits received were in the name of my children and they filed taxes each year along with my wife serving as the Personnel Representative. I do not include the amount in my filed taxes. Now, I presented each LTD company with this scenario each time they inquired about the income reported and in all cases the offset was not applied thinking the particular scenario trumped what was in the policy. The individuals I spoke to told that their children were exempt since my wife was the Personnel Representative. I have even documented the name of the person I spoke to at UNUM and have documentation sent to the company.
Is it legal for them to collect because I did the right thing on several occasions? How far back can they collect as I have been on disability since 2005? Thanks.
Brian,
They may be able to only go back as far as the statute of limitations in your state. You can also attempt to negotiate with them if you think they are entitled to an overpayment.
My brother is on disability for lymphoma and he is very sick. He is supposed to have a bone marrow transplant this month. He has a young daughter, 11, that lives with an ex-wife in a different state. He only sees her once a year and cannot claim her tax deductions. His ex-wife filed for SSDI for the child because of his illness and the money goes to the ex-wife for the child. Reliance has decided that that they are going to do an SSDI offset on his disability, and now say they overpaid him by nearly $20K. Yesterday, they notified him that they want their money by the end of the month. If they don’t get it, they say they will stop his payments until the money is paid back. He has no other income. He is canceling his transplant because he had no income now to even pay his medical deductible. He is severely immuno-supressed and is not supposed to be out in public with germs. This company, Reliance, is forcing him back to work, which will kill him. Are there any options? Thanks.
Mary,
If the daughter is not his dependent, then he may be able to avoid the offset. He can also try to work out a payment plan with Reliance.
I am Mary’s brother from the previous comment, fighting cancer and standing by for a 2nd bone marrow transplant. Reliance Standard has started deducting $700/month from my LTD payments and now wants $20k for “overpayment” of SSDI for my daughter within the next 10 days (14 days from date of letter). Although my daughter has not lived with me, nor have I claimed her as a dependent since 2002, when she was 2 years old, Reliance Standard defines her as my dependent by being my “biological child”… which, of course, she is. I have never been involved in any of the SSDI process, that having been initiated and administered by her mother, both my daughter and her mother live in Texas. It was always out of my hands. I have never had any contact with any of the SSDI money associated with my daughter, those payments go straight to her mom. Reliance Standard is going to reduce my monthly LTD to a minimum (they can go as low as $100/month) to recoup the “overpayment”, which puts my transplant clearly out of reach and this also requires me now to seek some kind of employment in spite of my critical health (critical blood counts with an ANC of 0!).
This is all very wrong. How can an insurance company hand down a death sentence to someone who paid their policies in good faith for many years?
Please help me fight these people. And win.
Best regards,
Chris
Thank you for making this forum available. This is Mary’s (from above) brother again with an update – I hope to read your comments on the matter.
Reliance Standard, my LTD insurance company, is now going to reduce my LTD payment each month to the legal minimum (I believe under these circumstances they can go as low as $0) until the $20k they claim they overpaid me is recouped. This will take well over a year and reduces our income to well below our overhead. Of course, this effectively cancels my upcoming required bone marrow transplant as we could not possibly absorb any of the usual lingering medical costs. This also now also forces me to find some kind of employment just to survive and to try and keep our home.
Reliance Standard knows very well my medical condition – that the bone marrow transplant is a necessity and that my blood counts are critical (my absolute neutraphil count – these are the white blood cells that protect against infection – is an alarming “0″). My proximity to any sick persons – even the common cold – is cause for extreme alarm. When I get a cold it turns into Pneumonia within days as well as several awful days in the hospital. A critical infection will simply be a matter of time in the workplace. Never mind my ability to physically actually do the work at hand. How can an insurance company force a customer into harm’s way like this? Are there no laws to protect people in my situation?
So what should I do? What is the best course of action for relief from Reliance Standard? And, if I can pull it off physically, can I earn money without jeapordiing my SSD payments and those separate SSDI payments that go to my daughter in Texas?
BTW – I am in Denver – I think it’s the 10th District Court. I hope to hear from you soon – and thank you in advance.
Chris
Chris,
If you earn any money then you will lose your SSDI benefits and no longer be eligible for Reliance Standard Benefits once the overpayment is completed. Reliance Standard has the ability to negotiate a repayment plan with you should they want to.
I just got approved for my SSDI. I had waited two years. I got approved 4/2012, but I started short term in 2010, until the term was up for short term and I started long term in 8/2010 until today. If I don’t repay Hartford back, can they garnish my benefits fromm SSD? Also, if I put my retro-pay into my minor child’s name, can they withdraw the money out of my child’s account?
Candy,
Hartford cannot garnish your SSDI payment, but Hartford can stop paying you until they recover their overpayment. Hartford can also sue you to recover the overpayment. Hartford cannot touch your child’s money.