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Old 03-07-2011, 08:00 AM   #1
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60% LTD 40% Employer ???about SSDI PLEASE HELP!

I just recently got approved for LTD and they will be paying me 60%. My employer (I am not working anymore) has been paying me 40% to cover the difference. The LTD Laywers want me to apply for SSDI, which I tried to do online, but how do I catergorize the 40% that I am still getting? Does it automatically disqualify me for SSDI? Not sure how I should handle this and ANY help would be great!

 
Old 03-07-2011, 11:42 AM   #2
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

I don't know the answer but SpineAZ knows she will be able to help you. Good Luck keep checking back and someone will be able to help you.

 
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Old 03-07-2011, 05:37 PM   #3
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

The LTD is NOT earned income. But if your employer has been providing 40% and it's paid as salary then yes it is considered as EARNED INCOME. SSDI would not see you as disabled for any period in which your employer supplemented by EARNED INCOME even though you weren't working. On your W2 you should be able to see what portion was "sick pay" and what portion was "earned income". Your employer was doing a disservice and if the LTD company knew they'd be quite upset. LTD is only meant to provide a % of your income and the LTD company could offset your LTD by whatever the employer pays in INCOME.

If LTD requires you apply for SSDI,which many do, and you apply and are denied due to too much EARNED INCOME then LTD will evaluate what earned income you have as they can reduce your LTD by any earned income from the employer (every policy has different provisions for this). This could be problematic for your LTD.

Is there a contractual reason the employer is doing so? Was any of this vacation or sick time that was being paid out to you or did they randomly decide to supplement your LTD with 40% of your salary which is then viewed as earned income?
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Rt&Lt thumb arthroplasty 2012 ; RT TKR & Bilat CTS 2011
Fusions: L5-S1 (87), L4-S1 (93), C5-C7 ('06), L3-S1 ('10)
C5-C7 foraminotomy 08

Last edited by SpineAZ; 03-07-2011 at 05:38 PM.

 
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Old 03-08-2011, 06:36 AM   #4
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

I think the post said she has just been approved. I am on LTD with metlife. I have been receiving benefits for approx. one year. They approved me while I was still receiving STD from the company I worked for. My LTD did not start paying me until the I had exhausted all my STD and vacation. I was encouraged by my employer's HR dept. to apply b/c the process takes about 3 months to be approved and I only had about 4 months left b/f running out of STD and vacation. It is best to apply for these things as early as possible when there is a possibility that you aren't going to be able to return to work. If you recover and go back, all the better....but if you can not, you have a bit of a head start in applying for things like LTD and SSDI if you qualify. SSDI can be quite a lengthy process. I was denied initially and appealed. I have been waiting @ the reconsideration level for approx. 8 months now awaiting yet another decision. I was told by my SSDI rep. Allsup that the whole process could take 2-3 years altho some are approved a lot sooner. As long as you you apply for SSDI, your LTD will not be offset until you are approved for and starting receiving benefits from SSDI.

 
Old 03-08-2011, 06:48 AM   #5
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

If during the SSDI application process JaySue is denied and SS states denial is due to ongoing earned income then LTD may become aware of the additional 40% paid by the employer. If so they may have a provision to offset earned income though every LTD plan is different.

JaySue: be sure to get a copy of the exact LTD policy under which you are covered since every plan differs.
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Rt&Lt thumb arthroplasty 2012 ; RT TKR & Bilat CTS 2011
Fusions: L5-S1 (87), L4-S1 (93), C5-C7 ('06), L3-S1 ('10)
C5-C7 foraminotomy 08

 
Old 03-08-2011, 08:16 AM   #6
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

I think there is a misunderstanding from what jaysue posted. She needs to come back and clarify. I have never heard of anyone receiving full LTD (60%) benefits while at the same time continuing to receive payments from their employer (40%). That equals 100%. Sometimes you can opt out of the remaining STD for the LTD since the LTD payments might be tax free. I think she has just been approved for LTD, not receiving payments yet. I started receiving benefits approx. 2 months after being approved b/c my employer was still paying me STD.

 
Old 03-08-2011, 08:27 AM   #7
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

BlueSkies: Unfortunately there are employers out there that do supplement the LTD and in the end it hurts the employee in terms of SSDI or other benfeits as it's often paid as "earned income".

When I worked in Account Management (where we work with customers installing and managing their disability and life plans) we saw this happen a few times. The worst part was it wasn't universal, employers would pick and choose who to supplement, etc. That's dangerous. I even had employers pay people who had been denied LTD. Perhaps LTD had been denied and there were 6 months during which the employee appealed BUT the employer paid them 100% salary during that time. Then on appeal the employee was approved for LTD and paid retro the 6 mo. If LTD didn't know about payment during appeal there was nothing they could do and the employee basically got 150%-160% for the 6 month period in question as employers didn't ask for the supplemented amount back.
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Rt&Lt thumb arthroplasty 2012 ; RT TKR & Bilat CTS 2011
Fusions: L5-S1 (87), L4-S1 (93), C5-C7 ('06), L3-S1 ('10)
C5-C7 foraminotomy 08

 
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Old 03-08-2011, 01:25 PM   #8
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

Quote:
Originally Posted by SpineAZ View Post
BlueSkies: Unfortunately there are employers out there that do supplement the LTD and in the end it hurts the employee in terms of SSDI or other benfeits as it's often paid as "earned income".

When I worked in Account Management (where we work with customers installing and managing their disability and life plans) we saw this happen a few times. The worst part was it wasn't universal, employers would pick and choose who to supplement, etc. That's dangerous. I even had employers pay people who had been denied LTD. Perhaps LTD had been denied and there were 6 months during which the employee appealed BUT the employer paid them 100% salary during that time. Then on appeal the employee was approved for LTD and paid retro the 6 mo. If LTD didn't know about payment during appeal there was nothing they could do and the employee basically got 150%-160% for the 6 month period in question as employers didn't ask for the supplemented amount back.
Thanks Spine. Wow! I just have never heard of this. Are you talking about large organizations or medium and small ones who sometimes do this? I worked for one of the largest cooperate oil giants in the world. Perhaps this has even been done there but I have never heard of it. Why would some employers do this do you think Spine? Do they feel sorry for the employee and are just trying to help out? I also wonder why the cherry picking? IOW, why some employees and not others? I guess employees are not going to complain if the employer wants to be super generous for whatever reason. I do see what you are saying about it hurting their SSDI however.

Last edited by BlueSkies14; 03-08-2011 at 01:27 PM.

 
Old 03-08-2011, 01:56 PM   #9
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

Happens in all size companies. It's usually an employer thinking it's ok andhas had paternalistic practices. One was a huge insurance company that used to administer the STD in-house and then LTD is done by a dis ins co. They don't get that LTD is not meant to provide full compensation. Often they'd pull me aside and tell me what they were doing for a few employees and asked about the impact. This happened as they became more educated about STD and LTD and ERISA (law that governs benefits like disability, retirement, etc).
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Rt&Lt thumb arthroplasty 2012 ; RT TKR & Bilat CTS 2011
Fusions: L5-S1 (87), L4-S1 (93), C5-C7 ('06), L3-S1 ('10)
C5-C7 foraminotomy 08

 
Old 03-09-2011, 06:26 AM   #10
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

Hello there all,
First thank you for all the information! Here is the situation...approx 30 years ago, I helped a friend start this business. About 1 year ago, I became part owner (7 ways). I got sick and am unable to return to work. The money I get is more a "loyalty amongst friends" kind of deal. They were helping me financially due to no income coming in during this time. But because it comes through the company, it is still taxed. So, should I catergorize this as "earned income"? I think it will stop once (if) I get approved for SSDI. It is more than likely that I will not be able to return to work. I don't want this to adversly effect my SSDI approval or my LTD. When I filled out the paperwork for SSDI, I catergorized it as "other" because I don't know what eles to do. Any ideas as to what I should or shouldn't do? Thanks again!

 
Old 03-09-2011, 07:25 AM   #11
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

The key is how the 40% is categorized on your annual W2. That will tell the IRS, SSDI, and even LTD how the money was paid. Speak with a tax expert who can look at the W2 and clarify for you. Earned income? Sick pay?etc.

Commonly employers pay STD directly to employees (and many have ins co administer the claim) and STD is classified on W2 as sick pay. As such, though taxable since employer funded the plan, it is NOT viewed as earned income as W2 shows it as sick pay.

Obtain a copy of your exact LTD plan document and review "Other Income" which will denote if pay from the employer reduces LTD payable. LTD is often offset by extended sick pay or any other benefit paid to you as a result of disabilty

Most LTD plans require you apply for SSDI usually between 6 mo to a year after you have been fully out of work. SS being a federal program would verify your eligibility in part via proof of when you were last paid for working. SS has access to your earnings history even to present day.

FOR EXAMPLE:
Yout stop work 4/2009 due to disabling conditions
STD (if you have it) pays 26 weeks
LTD starts when STD ends
Employer pays you additional 40% as earned income per W2
6 mo after LTD starts = 1 yr out of work, LTD requires apply for SSDI
SSDI denies as haven't met mandatory 5 full mo waiting period
Technically work can continue if reduced incomeless than $1000/mo*
SSDI denial reaon required by LTD
LTD then discovers the 40% paid as earned income
LTD overpayment may exist

(*not sure if $1000 is the threshold, may be $750. Work does play against SSDI approval even with minimal earnings as SSDI defines disabled as fully unable to work at any job)

My path:
Last worked 4/2009
STD paid 26 wk
LTD started Oct 2009
W2 from employer had STD under "sick pay"
Additional W2 from LTD had LTD noted as non taxable**
SSDI full 5 waiting pd: May, Jun, July, Aug, Sep. SSDI may begin 10/2009
Summer 2010 LTD required I apply for SSDI.
LTD ins co assigned me to preferred law group they use
Applied 8/2010
SS medical examination 10/2010
SSDI denied 12/2010 as not found to be disabled
Atty filed appeal 12/2010
Still waiting for decision on request for reconsideration

(**my employer offered 50% LTD they paid premium for, so LTD is taxable OR I could buy up tp 60% tax free and it's tax free since I paid 100% of the LTD premiums post-tax. Best decision I ever made as LTD is non taxable income).
__________________
Rt&Lt thumb arthroplasty 2012 ; RT TKR & Bilat CTS 2011
Fusions: L5-S1 (87), L4-S1 (93), C5-C7 ('06), L3-S1 ('10)
C5-C7 foraminotomy 08

Last edited by SpineAZ; 03-09-2011 at 07:42 AM.

 
Old 03-09-2011, 07:30 AM   #12
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Re: 60% LTD 40% Employer ???about SSDI PLEASE HELP!

Quote:
Originally Posted by jaysue1995 View Post
Hello there all,
First thank you for all the information! Here is the situation...approx 30 years ago, I helped a friend start this business. About 1 year ago, I became part owner (7 ways). I got sick and am unable to return to work. The money I get is more a "loyalty amongst friends" kind of deal. They were helping me financially due to no income coming in during this time. But because it comes through the company, it is still taxed. So, should I catergorize this as "earned income"? I think it will stop once (if) I get approved for SSDI. It is more than likely that I will not be able to return to work. I don't want this to adversly effect my SSDI approval or my LTD. When I filled out the paperwork for SSDI, I catergorized it as "other" because I don't know what eles to do. Any ideas as to what I should or shouldn't do? Thanks again!
As Spine said, I think it would be considered earned. Question? Is your LTD being offset b/c of this? Do they plan on continuing to give you this money until you are approved for SSDI? Technically, earned income means you are working (still employed) for somebody and they are paying you for that work even tho you are not physically @ work. I think as Spine said this could adversely affect your SSDI claim. Since taxes are being taken out, how does the company categorize it? I was out sick before I went on LTD and was being paid STD by my company. It was essentially a benefit given to me by the company for being an employee there. I applied for SSDI while I was receiving this.

Last edited by BlueSkies14; 03-09-2011 at 07:33 AM.

 
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