Re: SSDI Award and LTD reimbursement. Getting Screwed?
[QUOTE=SpineAZ;4801531]Not all LTD plans offset individual and family SSDI, some plans only offset individual. Anyone covered by STD and/or LTD should request from HR/Benefits a copy of the exact plan under which they are covered. The lucky few have LTD, many employees don't.
If LTD were not offset by SSDI benefits the cost of LTD would increase exponentially and many employers would cease offering the benefit. The premium cost for LTD is calculated by underwriters with a variety of factors, one of which is the actuarial estimate of the potential SSDI awards which reduce what LTD will pay out.
SS is aware that SSDI is deducted from group employer LTD. The government has no say/impact in how LTD plans are written.
Anyone who has LTD is very fortunate, we see many here who loose homes and cars, etc, as they don't have LTD to hold them over until SSDI is approved. LTD is not a public or government benefit. An option, before ill or injured, is to take out a personal individual disability policy as the benefit is NOT deducted from LTD. The extra $800/mo I get from my indiv policy I paid $400/yr for is so worth what I spent on the 15 yr of premiums.
The federal government doesn't see the offset of SSDI from LTD to be any type of scam. If people who had LTD also got their full SSDI they'd often be making more per month by not working and that would be a scam. Then the amount of people going out of work and claiming SSDI and LTD would be huge, therefore slowing down SS processing times and significantly increase LTD premiums. Another factor in premium calculation is the amount of LTD $ being paid out vs premium $ coming in.[/It's not really a problem that there is an offset of SSDI from LTD because obviously people would never return to work if they collected 2 checks. The problem is with the TAXES. When paying extra to receive a tax free benefit; one expects to receive the same amount of money on LTD or on SSDI with offset LTD. In our particular case we went from receiving $2500 a month tax free to receiving a total of $1838 from SSDI and LTD combined. That is a loss of $662 a month. How is that fair? I believe the LTD company should pay the balance to make the person whole for what they were receiving. My wife would have been better off filling out here SSDi application in such a way they she got rejected, and therefor would collect LTD for life tax free. This is not to mention the $5000 in taxes we had to come up with to pay taxes on the SSDI money that just got sent to LTD. LTD did not loose a penny, but we had to come up with $5000. My accountant said ***? because the payment went from tax free to taxable and there was no way around it. It's just wrong.