If you are insured under or receiving disability benefits from an employer provided Group Disability Insurance Policy governed by ERISA your benefit is or will be subject to reduction for sources of “Other Income” benefits you receive while on claim. Of these sources of Other Income Benefits, Social Security Disability (SSDI) benefits are the most common. These provisions are legal and enforceable, but what happens when Reliance Standard, for its own financial benefit, misapplies the SSDI offset to the detriment of the insured?
Misapplying offsets for sources of Other Income
When our client first contacted our Office his claim for long term disability benefits had been approved for a period of several months and denied beyond that time. In the denial letter from Reliance Standard our client was advised that his claim would be subject to offset due to sources of other income- specifically referencing SSDI benefits. However, Reliance Standard had determined that it was unlikely that our client would receive benefits for more than 12 months due to his illness (evidenced by the denial) and as such Reliance Standard would not estimate the SSDI benefit to offset his monthly benefit when computing his past due benefits and current monthly benefit.
As the claim for long term disability benefits had been denied, Attorney Stephen Jessup filed a successful administrative appeal of the denial of our client’s claim, the details of which can be found here. Initially, upon overturning the denial Reliance Standard forwarded a back benefit check representing the full monthly benefit, which in accordance with the policy language, represented 60% of our client’s pre-disability earnings. However, after only several months after the claim was reinstated Reliance Standard began withholding what it deemed to be an estimated “Social Security Disability” benefit- depriving our client of nearly $2,000 a month in benefits Reliance Standard was contractually obligated to pay under the terms and conditions of the policy.
Reliance Standard provided no warning to our client that it intended to reduce his monthly disability benefit by the estimated SSDI benefit. In fact, it was two months later that Reliance Standard indicated in writing that it required proof of application for SSDI benefits or it would reduce the monthly disability benefit! This despite the fact proof of application for SSDI benefits had already been submitted to Reliance Standard.
Challenging the Offset
Attorney Jessup contacted Reliance Standard in order to get the offset lifted and our client reimbursed the benefits that were wrongly being withheld. It should be noted that most insurance carriers will not apply an estimated SSDI offset unless the insured fails to, or refuses to apply for SSDI benefits; and those that do will quickly lift the offset upon proof of filing for same. This is NOT the case with Reliance Standard. Instead of apologizing for violating the terms and conditions of the policy, Reliance Standard actually had the audacity to require a written request to have the offset lifted and explanation as to why our client wanted the full monthly benefit amount! Considering our client is not receiving SSDI benefits, the loss of the $2,000.00 in monthly income has resulted in severe financial hardship as the monthly benefits are relied upon to not only pay monthly expenses but also to be able to afford medication and medical care.
It was pointed out to Reliance Standard that our client’s claim for long term disability benefits was being administered under an “own occupation” definition of disability and not the much more stringent “any occupation” definition used by the Social Security Administration. Additionally, for purposes of determining SSDI benefits, our client is considered young, which adds to the likelihood that the SSDI claim will be denied, requiring appeals and a potential hearing – all of which could take several years to be completed. Attorney Jessup reminded Reliance Standard that our client had satisfied the requirements under the policy to apply for SSDI; that our client was aware of the obligation to repay any overpayment resulting in receipt of SSDI; and that in light of the preceding Reliance Standard was in breach of the policy requirement to issue a benefit representing 60% of our client’s pre-disability earnings in accordance with the policy language.
Regardless of these facts, Reliance Standard has taken it upon itself to only lift the offset for months going forward and refuses to reimburse our client the benefits it has withheld. Attorney Jessup is still fighting this issue with Reliance Standard and stands prepared to file suit under ERISA should this matter not be resolved.
Is Reliance Standard paying you the full benefit you are owed?
If Reliance Standard is attempting to reduce or is reducing your benefit by an estimated SSDI amount know that you are not alone. If this is happening to you, and you have complied with all policy requirements as it relates to applying for SSDI benefits please feel free to contact any of our disability insurance lawyers to discuss how we can assist you in securing what is rightfully yours.