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Is My Insurance Company Allowed to Take An Offset of My Monthly LTD Benefit for Social Security Benefits My Kids Receive As A Result of My Disability?

Attorney Rachel AltersAuthor: Attorney Rachel Alters

It is common practice for insurance companies to find ways to limit the amount of money they have to pay to claimants. If you are receiving long-term disability benefits from a policy governed by ERISA, you have most likely been required to also file for Social Security Disability Income benefits. Insurance companies write this requirement into their policies so they can reap the benefits of any past money awarded to you by SSDI as well as reduce the amount of monthly benefit the insurance company is required to pay you. One frequently asked question is:

Whether the insurance company is permitted to not only take a offset for the SSDI benefits received by the disabled insured, but whether it is also permitted to take a offset for benefits the insured’s dependents are receiving (DSSD) as a result of the insured’s disability?

According to a New York Court in the case of Brutvan v. Cigna Life Insurance Company of New York, depending on the specific language in your policy, the answer to that question may be “No.”

Cigna’s Position that Offset is Proper

In Brutvan, Cigna argued that its Plan provides for an offset of DSSD benefits received for the Plaintiffs minor children as well as it does for the Plaintiff. Specifically, Cigna argued that the Plan clearly states that Cigna may offset “Social Security disability benefits the Employee or any third party receives… on the Employee’s behalf.

Since the Plaintiff’s daughter receives the DSSD benefits only because her father was found to be disabled by the Social Security Administration, Cigna claimed it would also be entitled to take an offset for those benefits. Furthermore, Cigna argued another reason it was entitled to the offset is that the Plaintiff signed a reimbursement agreement obligating the Plaintiff to reimburse Cigna for any benefits received by his dependents.

New York Court Says No Setoff for DSSD Benefits

The Court in Brutvan held, as a matter of law, the Plan language at issue manifests a plain and unambiguous intent to provide LTD benefits without offsets for DSSD. The Plan specifically states that a offset may be taken for SSDI benefits the Employee or any third party receives… on the Employee’s behalf. The Court refused to look outside the Plan for evidence of intent of Plan terms, stating that “if Cigna had intended for DSSD benefits to be offset against LTD benefits it could have made specific reference to “family, spouse, children or dependents in the Plan,” however, it did not.

This ruling is a definite windfall for policyholders who have ambiguous policy language regarding what the insurance company is permitted to take as a offset. This case is an example of why it’s important to read your policy carefully prior to agreeing to allow your insurance company to improperly take an offset of your monthly benefits. If you have questions or concerns regarding your disability benefits and would like to speak with one of our experienced attorneys, please feel free to contact Dell & Schaefer.

There are 29 opinions so far. Add your comment now.

Tony:

Just so you are aware a lot of times the employee doesn’t get to see any provisions or exclusions of any plan. The employer picks everything. If these insurance companies are going to include all these other income provisions they should have the spouses sign off on the plan as well. It’s misrepresentation by the employer and the insurance companies. The insurance companies make you apply for social security early so they get all their money back. (when you don’t sign their agreement to pay SS back they stop paying you.)

Maybe social security wouldn’t be in so much distress if the insurance companies stopped forcing people into it.

They also take your spouse’s $$ without their permission.

Attorney Stephen Jessup:

Tony,

I would agree 100% with you that the Social Security system is further overburdened by private insurance companies forcing insureds to apply for any and all benefits. However, there seems to be little in the way of any indication that this will change.

Tammy:

I’m in the same boat here. We don’t receive our long term policy so we have no idea what it says. My husband became disabled and MetLife has made us pay back anything Social Security has paid for our son in addition to including his benefit in the reduction of MetLife’s responsibilty. I have felt it was wrong all along but my husband doesn’t understand all of the technical stuff and hasn’t said anything.

Attorney Stephen Jessup:

Tammy,

You can request a copy of the policy from your husband’s former employer. Under the law they are required to give it to him. Each policy writes the set off for DSSDI differently. In the case at hand the court argued that Cigna was not specific enough with the language it utilized. If your husband’s MetLife policy specifically states “family, spouse, children or dependents” then the argument and analysis utilized by the court would not be applicable.

Tony:

I recently was awarded SSDI – my ex wife found out that she could file for an award for our 8 year old daughter and was granted. My LTD carrier is not only planning to reduce my monthly amount by the amount I will receive personally, but the amount my ex wife claimed. I currently try to save a little money for my kids future each month, but if my carrier is allowed to offset my payment by the amount awarded to my child then I won’t be able to continue to plan for her future. I do not claim her as a dependent, my ex wife has full custody and cloaks in her taxes.

It would seem very wrong that the LTD carrier can profit at the department’s expense, and reduce my payment for money that I have zero control over!

Is there any way to resolve? What if my ex wife agreed to tell the department to cease the payment if I give her some of my monthly payment – she has a very good job and doesn’t need the money. She is also a ‘spender’ and I doubt any of the money is going to my kid’s future.

Attorney Stephen Jessup:

Tony,

Unfortunately you have found yourself in a situation that is quite common. Under the terms of most policies the carrier is allowed to offset for the amount received by a dependent on account of your disability. As such, you may have to explore other avenues to minimize your financial expenditure on account of the fact your carrier is reducing your benefit by money you never receive.

Tony:

If my ex-wife advises that she no longer wishes to receive the amount my daughter is eligible for, can the LTD carrier still offset my payment even if no monies are being received from SSDI by my daughter?

I would like to think that would be theft if the department is not paying, yet they are offsetting?

Attorney Stephen Jessup:

Tony,

If your policy states they can reduce your benefit by sources of other income you receive or are eligible to receive, then voluntary surrendering of the DSSDI benefit could allow the carrier to argue you are eligible to receive the benefit and therefore continue to reduce your benefit by same.

Frustrated:

I just think this is a lot of misrepresentation going on. Insurance regulators constantly fine healthcare companies for not disclosing policies to policy holders all the time. Why is it that employers and insurance companies can write a policy for employees and not let them see what they are buying? I currently have the US DOL investigating my policies and I refuse to pay them anything back at this time. My enrollment forms don’t match my policy book.

Another interesting thing is the insurance company can put pages in book and supplement the policy and nothing is signed. They can change up the policy and you wouldn’t even know it.

We are not attorneys, these policies are written for attorneys not regular people.

As far as I’m concerned, I didn’t sign anything, I did not agree to any provisions or exclusions of any said policy… and there is no signature in policy book of the employer either. Just saying…

Also, no where does it say I bought a policy in another state either… Thought I was buying a policy in the state I lived in.

Terry:

I have an LTD policy & have become disabled. I was forced to apply for Social Security Disability as well, not to benefit myself, but so they could offset what they agreed to pay me. There was no mention of any offset when I took the coverage out through my employment. I don’t think my employer paid any part of the LTD on our behalf. It was just offered to us if we wanted to purchase it. My gripe is I paid in to social security & should be able to benefit from it. I also paid the LTD insurance premiums every 2 weeks to provide 80% of my income, in the event I became disabled. They even took all the backtime, including an overpayment which social security had already deducted from the backtime. My insurance company took that amount out of my checking account (I also had to give them permission to access my bank account).

I think it should be illegal for them to offset with social security benefits. I paid for both & I should be able to receive both, without using one to offset the other. I paid my LTD premiums for them to pay me 80% of my income & that is what they should be paying me.

Attorney Stephen Jessup:

Terry,

Unfortunately, offset provisions for sources of Other Income are enforceable regardless of whether you were are aware of this policy language when enrolling for the policy through your employer.

Bob:

Do insurance companies have legal access to an individual’s SS Master Benefit Record? SS says no, however an insurance company has claimed they received benefit information directly from SSA. The insurer is trying to determine if an individual is receiving family benefits. A number of requests for permission were sent by the insurer, stating “You’ll never have to bother with us asking for information again, just sign all these consent forms and we’ll take care of it all for you.” Nothing was signed, yet an official SSA letter was sent to the insurer with the member benefit amounts and dates. There are no written or otherwise communicated permissions to query an individual’s SS account.

Attorney Stephen Jessup:

Bob,

If you previously signed a release at any point during the claims process then they could have access. However, as you state you didn’t sign anything then I am not sure how they received it. It sounds like it would be more of an issue with the SSA releasing information without authorization. You could contact your local SSA office to find what was sent and under what authority.

Bill:

My wife is disabled and has been receiving Social Security benefits for my 13 year old daughter of $280. Aetna has forced the application for Social Security Benefits for my daughter under my disability. I have been awarded the social security benefits of $1100, which will stop any payments under my wife because I receive more than she was. Aetna will “offset” my LTD by the amount I receive for my daughter, $1100. Because the $280 is now gone from my wife and Aetna offsets the total amount from my LTD we will have a reduced monthly income by $280. How can Aetna legally reduce our total monthly income? I understand the “offset” amounts they take but because they force me to get benefits for my daughter we lose income!

Joe:

I, too, just received my first LTD payment from Anthem and was informed that whatever SSDI I receive is to be turned over to them. I got a copy of the Policy Handbook from HR and it is consistent with this premise. My problem is that I discussed this with HR as far back as last year, and the verbal information he gave me was that I would receive both. When I found out otherwise and called HR, not only was he not aware that this was a provision contained within our policy, but he was as surprised as me having never even heard of the concept. I had to bring him up to speed. I would like to sue the company for having someone so inept directing HR. Had I been furnished with accurate information, I could have acted and made better provisions for me and my family. Is the Company at all responsible for my dilemma?

Attorney Stephen Jessup:

Joe,

I do not see where you would have an actionable claim against your employer as ultimately the policy would have been available to you upon request for review. Unfortunately, most employers do not understand how LTD policies work.

Joe:

Thanks in advance. Approved for both SSI and LTD benefits in 2004. Had a child in 2008. I’ve been receiving dependent care benefits from SSDI since and now supposedly owe LTD insurer 7 years of back offsets. Wuestion is since my child was born 4 years after being approved for LTD and SSDI, is there an argument that benefit calculation should only be made at time of disability?

In other words 60 percent of my pay in 2004 less any offsets for SSDI and Family benefits. My policy does not state family that may exist in the future.

Attorney Stephen Jessup:

Joe,

The policy language is likely along the lines that any money received by a dependent on account of your disability is an offset – it doesn’t matter or distinguish as to when the child is eligible, just that the dependent is. If so, the argument is one that can certainly be made, it may just not result in any positive end result.

Joy M.:

My husband has been receiving long term disability benefits for the last 2 years and is entitled to another year. He had been getting disability social security and since he has turned 65 in June of 2015 it is now regular social security. The question that i have is the disability insurance company is threatening to stop his benefits for this next year unless i allow access to his social security records. I do not want to allow them access and told them so. I said i will send anything they need from social security but it has to go through me. I also said they can have all the medical records needed with out a problem. They said it was “company policy” to get access to his social security records. We have been victims of identity theft in the past and am very careful about allowing information to the “public”.

Attorney Stephen Jessup:

Joy, if you do not want to allow them access I would suggest you obtain his complete Social Security file and provide to them.

Becca:

I have requested the complete long term disability policy from my past employer but was just given a handbook which has no to little information in regards to the LTD.. there is no mention of offsets .. my issue is that my children are now adults and therefore all of the back pay a mounts go directly to them according to SS.. they would not even give me amounts or talk to them .. but now I have LTD stating I have to give them all the back pay .. This is a substantial amount that I don’t have access to . I have researched the website but cannot find the specific language regarding offsets of Dependent SS benefits .. would the LTD company be required to give specific info of this before they can request the money ? I am already going to have a heavy burden this year because I have to pay taxes on the lump sum they made me pay them from my SS back pay ( although I already paid taxes on this and don’t even get the money ) .. seems like the disabled is really getting ripped here ..

Attorney Stephen Jessup:

Becca, your employer has obviously failed to give you a complete copy of your actual policy. You can make your written request to them more specific that you are requesting a complete copy of your disability plan through [Insurance Company Name], Policy ####. Additionally, the insurance carrier may give you a copy of the policy upon request. At the very least they should provide you with the applicable plan language relating to the offset being applied. Offsets for dependent SSDI are almost universal in policies, though some do limit the extent by which the carrier can apply dependent SSDI benefits as an offset.

Elizabeth:

What happens. I was awarded LTD In 2013 approved thru 2025. My husband was drawing SS for our son but went back to work in 2016. I was awarded SS in 2015 which I had to give all backpay to Metlife. After my husband went back to work I then applied for SS for my son. Will his SS be considered income if so I might as well close my claim to avoid the hassle this doesn’t help my health issues. So tired. I paid for this policy through my job. Why is this so unfair as I paid in my Social Security. What is the benefit of LTD if you just have to pay it back. And why do you have to claim the backpay as income on your taxes. Should I close my claim to prevent stress??

Jeanette:

I’m being forced to apply for social security disability benefits. I plan on going back to work in the next few months. Even so Cigna will terminate my LTD (which just started last month) benefits if I do not apply. Im told this process takes 5 – 6 months. So if I’m declared disabled any LTD benefit paid to me from June 7(LTD start date) to the time I’m approved will be paid back to Cigna. Reading other posts I understand this is legal. My question is not about that. My questions, how did the insurance companies arrange to be basically paid twice, once by my premium payments and once by social security?

Also how do we go about having this practice reviewed and or changed? I know if I charged the contractor I work for and the DOE for my service this would not be allowed. But the insurance companies are doing just that. Who do I contact to express my disapproval and even go about changing this ridiculous practice. No wonder social security is in “trouble”. I’m going back to work! Social Security has just spent, who knows how much, processing my claim for absolutely no good reason. Another unnecessary cost the U.S. gov’t has incurred! The insurance companies make ridiculous amounts of money and I guess its practices like this that do it.

I really want to challenge this, who would I write to?

Attorney Stephen Jessup:

Jeanette, you can write to your congressional representatives as it would take a change to federal statute to change the law regarding ERISA disability insurance plans and application of offsets for SSDI. The offset has been deemed legal and enforceable. Employer provided policies come at very low premiums compared to privately purchased individual disability policies, and with that comes policy language and laws very favorable to the insurance companies. The only way to avoid having a disability policy that does not contain such language is to purchase private coverage through an agent.

Patti:

I am on LTD and recently approved for SSDI. The plan states they can take mine, my spouse and my children’s benefits I/they receive based on my disability. Before I became disabled, my husband retired about 7 years ago and we have 3 children. One child is now adult. He is disabled and receiving his own disability benefit based on his father’s retirement and the other two are still under 18 and receiving a child’s benefit off their father’s retirement SSA benefit. My husband was/is collecting retirement benefits on his earnings record w/SSA.

Because I was recently approved for SSDI, the SSA does a combined family maximum, recalculates the benefits to the children based on both of our earnings records and now the children will receive about double what they were getting on my husbands retirement benefit.

I do not believe the LTD co. should get the whole amount of the children’s recalculated benefit because if I wasn’t disabled, they would still receive a child’s benefit on their father’s record until they age out of the benefit. Have you heard of this before and how can I ensure they will only take the difference between the amount based on their father’s retirement and the new amount based on both parent’s records? My husband will not get a spousal benefit because his amount is higher on his own record than what he would get on my SSDI.

Thank you for your time.

Attorney Stephen Jessup:

Patti, yours is a very unique situation that I honestly have never dealt with in computing a SSDI overpayment. I would agree though that any offset should only be computed as a result of the increase from the benefit already being received. I recommend you provide the carrier with all of the information you can from the SSA as to how the DSSDI benefits are now being computed in addition to the information relating to the benefits on account of your husband’s retirement. I would also be very interested to hear what they have to say when presented with the information so please keep us informed.

Greg:

I have been on LTD for the past year and was required by my insurance company to apply for social security disability benefits. I was told that if I was awarded social security benefits I would need to pay that amount back to the insurance company.

I was recently approved and awarded the social security disability benefit. I was prepared to pay back the amount that social security paid me which was approximately $30K. However my insurance company said that I owed them approximately $47K. Seventeen thousand dollars more than I was paid by social security.

I am divorced and have a 17 year old daughter who lives with her mother. I don’t understand how they can recalculate my benefit and ask me to pay back more than I received from social security. I didn’t receive any disability benefits for my daughter.

I struggle day to day just to make ends meet. From my insurance disability check each month I pay my ex-wife $1700 in child support and I live on the other $1700. Now that I have been awarded social security disability by monthly income or benefit is exactly half of what my insurance company provided and they are asking me to pay back $17K more than I received from social security. The amount I provide in child support will be reduced to about $1000 a month and I will live on the other $1000 a month and am being asked to pay back $17,000 that I don’t have. They willing to take payments which will literally eliminate my ability to pay any child support and leave me with $0 each month until this is paid off.

I not only struggle financially by with my disability I have limited ability to understand this situation and my disability is worsening as a result of the added stress from this. Are there any options for me or places I can look for assistance with this?

Attorney Stephen Jessup:

Greg, your situation is unfortunately not uncommon. With respect to the DSSDI benefit – first review your policy to ensure they have a right to offset for the DSSDI. Some policies will not offset if the dependent does not live with you. As you do not receive the money paid to your dependent you can look to potentially have a child support order adjusted to account for the DSSDI benefit being received if you have such an order from a Court.

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