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Can my disability insurer offset pension or retirement benefits that I’m drawing from a previous employer?

Attorney Cesar GavidiaAuthor: Attorney Cesar Gavidia

It is common for group disability insurance policies to contain provisions “offsetting” or reducing the monthly disability benefit by other income benefits being received by the insured, such as social security disability, workers compensation benefits and state disability benefits. Also, these same “offset” provisions often reduce the monthly disability benefit by pension or retirement benefits drawn by the insured. Typically, offset provisions only allow the disability insurer to reduce the monthly disability benefit by pension or retirement benefits associated with the plan sponsor / employer, and not any pension or retirement benefits issued by any previous employer. The policy and offset provision must be read carefully in order to ensure that you could draw pension or retirement benefits associated with a previous employment.

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I am currently finishing up STD, and applying for LTD. I am voluntarily retired from the Federal GOV, and draw a monthly annuity. Can this income be counted against me? I have an elected LTD benefit with LM. Also, I am reading that 401K withdraws can be counted as income, I am confused – 90% of my Post Retirement 401K are my contributions, how can that be used against me for earnings? I was able to retire at 53 based on Federal Law Enforcement 50/20 rule. I took a “Retirement Job” which enables STD/LTD.

Attorney Cesar Gavidia:

Ken, you would need to request and carefully review your disability insurance policy’s provisions regarding “other income benefits”. Typically, retirement benefits and pension from another employer is not usually counted against your Liberty Mutual benefits, as long as both the disability policy and retirement, pension etc. are not both from the same employer. Request and review your policy is the bottom line.

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