Does the COVID-19 Stimulus Count as an Offset to LTD Benefits?

Lately we have had a common question continually arise from our clients and even potential clients. As everyone on claim and receiving disability insurance benefits knows (or has unfortunately learned while on claim), insurance companies reduce the amount of money they pay each month if the claimant is receiving certain other source of income. Most often, insurance companies are able to reduce the amount of money they pay due to the claimant receiving Social Security Disability Income Benefits.

Due to the COVID-19 pandemic that is affecting the United States and World and its great impact on the economy, Congress has responded with a $2 trillion dollar stimulus package, which is formally known as the Coronavirus Aid, Relief and Economy Security (CARES) Act.

With this Act, the federal government will pay $1,200 to individual taxpayers ($2,400 for co-filing married couples), with an additional $500 per qualifying child under the age of 17, with certain limitations or reductions depending on your income (For more specific information regarding the amounts to be paid, see recent news articles on the subject or contact your local government representative).

It has been stated that those receiving disability insurance benefits are eligible to receive Stimulus Funds. As such, many individuals currently on claim will be receiving additional monies from the Federal Government in the near future.

This has left many people asking: Will the Stimulus Funds be an Offset to my Disability Insurance Claim?

In all likelihood, the answer is NO.

Over the course of the last few weeks, we have reviewed multiple policies with multiple insurance companies. Most policies require that the other income benefits you receive must be as a result of your Disability or the Sickness or Injury that caused your Disability. In policies with this or similar language, the argument can be made that the Stimulus Money is not being paid due to your Disability and thus cannot be an offset.

Meanwhile, other policies are written with vague language whereby an insurance company could potentially make the argument that the Stimulus Money could be considered “other income benefits.”

For instance, Hartford’s policies often state that other income benefits include “The Amount of any temporary and permanent benefits to which you are entitled under any:

• workers’ compensation law;
• occupational disease law;
• unemployment compensation law;
• compulsory benefit act or law;
• other act or law of like intent.”

While an argument could be made that the Stimulus Money could fall under some of those subsections, we do not believe that any insurance company will attempt to make the argument that this Stimulus Money should be an offset.

The main reason we are fairly confident that the Stimulus Money will not be an offset (if they could even make the argument that it should be) is that the insurance companies would be creating a Public Relations Nightmare.  It would look terrible if insurance companies attempted this as they would then in effect be the beneficiaries of this Congressional Act. Insurance companies would essentially be stealing money out of the pockets of those who Congress intended to receive money.

Once word leaked that this was occurring (and you can be assured that Dell & Schaefer would get this to every major news outlets as well as Congressional Representatives), Congress, the Media and our Firm would then come down hard on the industry which would impact its business and stock value. Thankfully, we believe that the insurance companies do not have any intent to offset this money and claimants should be assured that they should be able to keep every Stimulus dollar received.

However, should your disability insurance provider attempt to offset your Stimulus Funds, please contact us immediately as we would love to fight each and every insurance company that attempts to do so.