Long Term Disability

There are two very important things to know about long term disability (LTD) policies. The first is that they are usually purchased or obtained through employment and are governed by a set of federal laws known as ERISA. These laws tend to protect insurance companies that sell long term disability policies from lawsuits. ERISA applies to long term disability policies that are purchased or obtained through employment.

ERISA protections for insurance companies do not apply for policies that are for government employees, employees of churches or policies that are purchased independently of employment. These cases of long term disability are much easier to litigate successfully although it certainly is not impossible to win under ERISA.

The first thing to note with long term disability claims is that you have a limited time frame to respond to a notice of termination under federal law. You have 180 days to contest termination of your benefits under ERISA. Most people are given a long term disability policy booklet when they first buy or obtain a long term disability plan and that policy booklet explains in detail the administrative steps(letters you have to write) to protect your ability to contest and win a decision terminating your long term disability benefits.

One surprise that we see repeatedly is that almost all long term disability policies have a social security payment offset. If your social security pays you $2100 a month and your long term disability benefit is $2200 a month, all you get is $100 a month because the $2100 that social security pays offsets the long term disability benefit almost entirely. The surprise is when a person obtains social security after a year or two of being disabled but long term disability payments were paid during that time they then have to pay back the $15,000 or $20,000 that their long term disability paid out of their social security back pay. Often people are not aware of that provision in a long term disability policy and they get their back pay, spend it only to learn that they have to repay the long term disability plan.

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