Long-term disability (LTD) is a form of insurance offered by employers that will help protect workers who’ve become disabled and are unable to perform the requirements of their job. LTD policies typically pay a portion of your paycheck for a few years and maybe even until you hit retirement age.
However, long-term disability is a significant expense for insurance companies. Because of this, they will encourage you to return to work or find some form of gainful employment after a certain period has elapsed. Just because your insurance policy provides coverage up to a certain period does not necessarily mean you’ll be covered for that long.
In some cases, where you are unable to return to work, your insurer may request that you pursue Social Security disability. Some insurers may provide you with a Social Security attorney and in other cases, you may have to hire one yourself.
How Social Security Disability Affects Your Long-Term Disability Payments
When applying for Social Security disability, there are a few things to keep in mind.
1) It affects your LTD benefits.
SSDI can replace some or all your LTD benefits. For example, if you’re receiving $2,000 per month from long-term disability and are then approved to receive $1,200 from Social Security, your LTD benefit will be reduced to $800.
2) You’ll probably owe a back payment.
If you are approved to receive SSDI, you’ll receive a large back payment that typically is calculated based on the first day of your disability. This is often tens of thousands of dollars and you may need to pay the full amount back to your long-term disability provider.
3) Applying for Social Security is difficult.
Social Security is typically a better option than long-term disability. SSDI can be paid for the rest of your life, whereas long-term disability tends to have an expiration date. If you’re looking to secure your future, it would only make sense to prepare for Social Security Disability. It’s important to note that very few applicants are approved during the process. Be sure that you’re working with a knowledgeable SSDI lawyer for a better chance at getting approved.