Once you are approved for Long Term Disability (LTD) benefits, the LTD insurer will ask you to apply for Social Security (SS) benefits. LTD does this because it wants SS to share the burden of paying you, and it allows LTD to reduce your monthly benefit. Interestingly, the LTD insurer can reduce your benefit amount before you even apply or are approved for SS. They estimate what it thinks SS will pay you and will reduce your amount accordingly. This is good and bad. It is good because they are preventing an overpayment of benefits once you are approved for SS. It is bad because you could get denied SS benefits, yet you still have a reduced LTD amount.
LTD and workers’ compensation (WC) also affect one another. More times than not, your LTD Policy will have an exclusionary section that states if your disability is caused by a work-related injury, then you do not qualify for LTD benefits. This can place you between a rock and a hard place if your work-related injury is denied by the WC insurer. Essentially, LTD and WC point their fingers at one another while you sit at home without any income.
If, however, you do receive LTD benefits while disputing your WC claim, you will have to pay back the LTD benefits you received at the conclusion or resolution of your WC claim. LTD policies typically contain a section that state it is owed back any income it paid out to you if you end up receiving WC benefits.
For example, you received $10,000 in LTD benefits. You then received a lump sum of $15,000 from WC. LTD will claim it is owed back the entire $10,000. Your attorney can help you negotiate with the WC insurer the amount to pay back to LTD or negotiate directly with LTD to reduce the amount owed back.