If I have two different disability insurance policies and I am approved for Social Security Disability, can both disability companies deduct my monthly benefit by the amount of the SSDI payment?

The answer unfortunately is: depending on the language of the insurance policy, mostly likely yes, each disability insurance company can deduct the full amount of the SSDI payment from each of the disability benefit payments.

Unless there is substantial ambiguity in the language of the policy provision that permits the SSDI offset, the courts will more often rule in favor of enforcing the provisions of the disability insurance policy, regardless of whether such an application seems harsh or unfair.

In a California case brought against Unum, the claimant had two separate disability insurance policies that were provided by two separate employers, but both policies were administered by Unum. The claimant was approved for disability benefits that were paid out by both of the Unum policies. However, when the claimant was approved for Social Security Disability benefits, Unum offset each of the disability benefit payments by the full amount of the SSDI payment – essentially applying a “double” offset.

The trial court found in favor of Unum and upheld the “double” offset of the SSDI payment. The claimant appealed and the appellate court also found in favor of Unum. The appellate court held that the plain language of both of the disability insurance policies expressly permitted Unum to reduce the monthly disability benefit by “deductible sources of income” which included the amount the claimant was entitled to receive under Social Security Disability. Because neither policy contained language that made an exception for a case where a claimant was covered by two separate disability insurance policies, Unum was permitted under the policies to apply the SSDI offset to each disability benefit payment individually.

In another case out of Michigan, the claimant was covered by two separate disability insurance policies. However, the policies were administered by two different disability insurance companies. When the claimant was awarded SSDI benefits, each disability insurance company offset the full amount of the SSDI payment from the disability benefit. The court held there was nothing in ERISA (the federal law that governs employee welfare benefit plans such as long term disability) or in the claimant’s disability insurance policies that precluded a double offset of the claimant’s SSDI benefit. Further, the court held that it was within each plan administrator’s authority to determine whether the claimant’s benefits under the policy were to be offset by the SSDI benefit.

Therefore, if each of the disability insurance policies contain provisions which allow an award of Social Security Disability benefits to be offset/deducted from the benefit amount paid under the disability policy, then the courts will likely enforce this policy provision, even if it means that the full SSDI benefit amount is, in reality, deducted twice.

Attorneys Dell & Schaefer did not represent either the California or Michigan claimants in their claims for disability benefits or in their lawsuits.

Comments (11)

  • I am currently receiving benefits from a long term disability insurance company for a work related injury. Now, I’m working for another company which offers both short and long term disability insurance to their employees. I was recently diagnosed with a personality disorder which can qualify as a disability. How will that affect the long term disability benefits that I’m currently receiving if I apply for disability with the new company? Or should I inform the LTD insurance company providing me benefits about the mental health issues that I was recently diagnosed for.

    Chelsea Mar 8, 2021  #11

  • Brad, you can get both but if it’s a policy from work the total of both cannot exceed 60%. Your carrier likely requires you apply for Ssdi.

    Rachel Alters Feb 24, 2021  #10

  • I have long term disability from work and it only pays 60%. I can’t live on that. I want to get SSDI as well. Can you get BOTH?

    Brad Feb 23, 2021  #9

  • Kimber, Cigna does not typically offer lump sum buyouts on the total value of a critical care policy.

    Stephen Jessup Oct 10, 2017  #8

  • How long after claim is filed do you receive your lump sum on a critical care policy through Cigna?

    Kimber Oct 6, 2017  #7

  • CubsFan, if there is an overlapping period of time in which the STD benefit was paid and the SSA sends a SSDI payment then there would be a right to recovery under the policy. However, the chances of Aetna finding out about the SSDI or seeking recovery is likely minimal due to how much time has passed. On a side note, did you note have LTD coverage with your employer?

    Stephen Jessup Jun 13, 2017  #6

  • I received short-term disability (STD) from my employer for two approved medical leaves in 2015-16. The STD application and approval process were administered through Aetna. I no longer work for the company, as I was terminated when my FMLA and extended non-paid medical leave time ran out. I have since applied for Social Security Disability (SSDI) and will be awarded retroactive pay and back pay. Am I required to reimburse Aetna for STD benefits received 1-2 years ago while I was still employed? If so, what date is used as the disability onset–the actual date or the start of benefits date (6 month of disability) as recognized by the Social Security Administration? Am I required to inform my former employer that I will be receiving retroactive SSDI payments, or will they be informed by the Social Security Administration? If I need to reimburse, how do I go about it so that Aetna doesn’t come after me months from now wanting reimbursement? I don’t have a copy of the STD policy from my former employer and I don’t recall ever signing anything that said I would need to reimburse if I got SSDI later on. Thanks.

    CubsFan Jun 9, 2017  #5

  • Kim, both your SSDI an DSSDI would be offsets under an employer provided disability insurance policy. If you do not advise them of receipt of same and they discover the award they will seek to recover and amounts due to them.

    Stephen Jessup Feb 13, 2017  #4

  • Dear Attorney at Law,

    I’m having LTD’s monthly payment, Social Security just announced that they will pay me monthly with a certain amount and my children’s different separate amounts.

    The question is do I have to tell them my SSDI monthly payment?
    Do I have to tell my children’s monthly payments too since my SS case manager told me the payments apply for my children only and I am their representative to collect the money?

    Sincerely,

    Kim

    Kim P. Feb 9, 2017  #3

  • Gary, most policies have a minimum benefit provision- typically $100 that they will pay regardless of the offset amount. If any applicable overpayment has been satisfied the carrier may very well be interested in buying out the policy (if there is a minimum benefit). Please feel free to contact our office to discuss in greater detail.

    Stephen Jessup Oct 13, 2016  #2

  • Will my LTD stop, if my SSD is greater or will LTD offer me a buyout.

    Gary W. Oct 5, 2016  #1

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