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Old 07-27-2011, 09:25 AM   #1
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Short term disability/severance pay

I have secondary progressive multiple sclerosis. I have been on short term disability since 05/11/11. My company is having a RIF and I have volunteered for the lay off. I will be eligible for 24 weeks severance and it will be effective 09/01/11. My short term disability doesn't run out until 11/08/11. My HR rep said that she was told that I can still continue receiving my STD while receiving my severance. How is this possible?

 
Old 07-27-2011, 09:14 PM   #2
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Re: Short term disability/severance pay

Get a copy of the STD plan and read it carefully, especially "Other Income Benefits". Many STD plans offset (deduct) from STD anything you receive that is paid as regular income. The plan/policy will define what is deductible/offsetable.

If it is to be offset, there is no advantage for you taking the severance money.

For example, if STD is $800/wk but severance is paid at equivalent of $1000/wk. $800-$1000 = 0

You are still eligible for LTD, if your company has it, as it is based on your date of disability. So if STD is based on disability starting 5/12/11, your LTD is based on that date as well.
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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; 07-27-2011 at 09:15 PM.

 
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Old 07-28-2011, 06:19 AM   #3
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Re: Short term disability/severance pay

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Originally Posted by SpineAZ View Post
Get a copy of the STD plan and read it carefully, especially "Other Income Benefits". Many STD plans offset (deduct) from STD anything you receive that is paid as regular income. The plan/policy will define what is deductible/offsetable.

If it is to be offset, there is no advantage for you taking the severance money.

For example, if STD is $800/wk but severance is paid at equivalent of $1000/wk. $800-$1000 = 0

You are still eligible for LTD, if your company has it, as it is based on your date of disability. So if STD is based on disability starting 5/12/11, your LTD is based on that date as well.
There apparantly isn't a copy of the STD plan. I looked everywhere for it (found the LTD plan), and apparantly HR doesn't have it either as she had to call and ask Metlife. STD pays 60% of my salary and STD pays my hourly salary/40 hrs week. Even though my doctor wrote me out until 11/08, Metlife has only approved me through 08/26, as of now. Since severance is not effective until 09/01, I guess I can just not extend my STD out past 08/26 and take the severance starting 09/01. I wonder how that would effect my LTD?

 
Old 07-28-2011, 07:02 AM   #4
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Re: Short term disability/severance pay

If HR can't find the STD plan they can ask MetLife for a copy. MetLife has to be using some type of plan to administer STD benefits (as every employer has different plan provisions, benefit amounts, etc).

Ask for a copy of the LTD policy and check that as well for any area regarding "Other Income" "Offsets", etc.

You can also call Met and say "I've heard of company lay offs, not sure if I'd be affected, but please let me know under STD and LTD the effect of any severance pay".

Part of the issue is how severance is paid. For example, many employers have a structured severance plan. Such as...."1 month of severance for each year of service to employer to a max of 6 mo. 10 yr of employment then means severance equal to max of 6 mo. Under some STD/LTD plans the provisions and method would to be to apply the offset for 6 mo of STD/LTD. In these cases you don't loose.

Like the prior example:
*STD $800/wk from salary that was $1000/wk (80% benefit).
*In that case $800 - $1000 = $0.
*BUT you benefit as you get $1000/wk instead of $800 in STD.
*Sometimes STD has a minimum benefit, for example $50/wk. So you get equivalent of $1000/wk severance plus $50/wk STD = $1050 instead of $800. LTD can be similar.

Best scenario is that STD and LTD have no provision to offset severance. Then you get to keep the disability benefit and the severance.

STD/LTD plans vary widely so it's Met's application of plan provisions specific to your plan document. Your STD/LTD and mine are likely vastly different as plans are customized. When I worked in Sales/Service (in disability benefits for employers) I realized how much HR/Benefits DON'T understand about the STD and LTD because they have so much they have to handle that they often don't have detailed knowledge. So the ins co is the better source for some info.
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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; 07-28-2011 at 07:39 AM.

 
Old 07-28-2011, 07:46 AM   #5
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Re: Short term disability/severance pay

I just found my STD plan and it says under "Coordination with Other Benefits" that

The STD benefits that you receive will be reduced by other disability income payments you are eligible to receive such as......Salary Continuation or severance pay

In that provision there were other things that STD was reduced by including WC, SSDI, SSI, state disability, no fault benefits from auto accident, and unemployment compensation.

The same goes for my LTD policy/plan as well.
__________________
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 07-28-2011, 09:35 AM   #6
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Re: Short term disability/severance pay

That's what I thought. So if my severance is equal to what I was making when working, STD probably won't pay anything. I think the best thing for me to do is take the severance and not pursue STD any further after 08/26. I am still waiting to here back about LTD eligibility though, so we will see. Thanks for your help.

 
Old 07-28-2011, 10:03 AM   #7
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Re: Short term disability/severance pay

DON'T end your STD claim. If you accept the severance just let STD continue at $0 for as long as the severance is offset. You must keep the STD approved to transition into LTD. Ending STD is of no benefit to you.

If severance is more than STD your claim continues but paid at $0 (example $800 - $1000 = $0). So you get more with severance than with STD in this example, but if you remain disabled your STD claim must continue, or else you may be deemed not disabled as you asked for claim to end.
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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 07-28-2011, 10:36 AM   #8
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Re: Short term disability/severance pay

Ok. That's what I was worried about. Thanks.

 
Old 09-22-2011, 04:56 AM   #9
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Re: Short term disability/severance pay

I have finally gotten everything worked out with the STD/LTD and severance payments. I just found out the other day that I was approved for SSDI. Does anyone know how it will be affected by my severance pay?

 
Old 09-22-2011, 12:31 PM   #10
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Re: Short term disability/severance pay

If you severance payment did not extend your employment, it's usually not relevant to SSDI (it would be relevant to SSI as that has income restrictions).

BUT, should they ask, Make sure you have a letter from the employer denoting the date of severance payment, how it was calculated, payment amount, and specifying this payment was a lump sum for severance.

STD/LTD can offset Severance but only IF it is denoted as an offset in the STD and LTD plan document. Be sure you have a copy of your STD and LTD plan documents, meaning the EXACT plan documents in effect on the date you became disabled.

I last worked 4/2009 so I want to be sure my LTD plan document doesn't have an effective date after that. For example, if an employer is going to make a change often it's done effective 1/1 (dependent on your specific plan, some plans start 6/1 or 9/1). So if my employer changed the plan effective 1/1/2010 I need the one in effect 4/2009. Sometimes just calling Benefits and asking for the plan document they send you the current one. So say "I need the STD and LTD plan documents that were in effect on xx/xx/xxxx as that's the first day out of work due to disability"
__________________
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 09-22-2011, 12:42 PM   #11
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Re: Short term disability/severance pay

I am still on STD right now and it is being offset by the severance. I was just approved for LTD, which is not effective until 11/08/11. My severance is not a lump sum. It is for 24 weeks, paid every other week. My SSDI is effective 11/01/11 and my severance payments don't stop until mid February 2012.

 
Old 09-22-2011, 12:46 PM   #12
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Re: Short term disability/severance pay

In that case, SSDI may "offset" it as well (deduct it from payment) OR may find that you did not cease earned income until 2012 and adjust SS payment begin date. Was there no way to have it paid in a lump sum?

If you used an attorney for SSDI contact the attorney's office to ask for assistance in this matter. If you did not, ask STD if they have any SS resources you can be connected with so that SS doesn't misunderstand the money being paid out.

Be sure to have a letter from your employer denoting the severance agreement details (as mentioned in prior note).

Be sure to get and keep STD and LTD plan documents. I have mine and made spare copies so I have it for the next 20 yr should I remain on LTD permanently.

In most cases, like yours, severance is of little or no benefit since it's offset from STD and LTD.
__________________
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; 09-22-2011 at 12:49 PM.

 
Old 09-22-2011, 01:16 PM   #13
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Re: Short term disability/severance pay

Quote:
Originally Posted by miinsc View Post
I am still on STD right now and it is being offset by the severance. I was just approved for LTD, which is not effective until 11/08/11. My severance is not a lump sum. It is for 24 weeks, paid every other week. My SSDI is effective 11/01/11 and my severance payments don't stop until mid February 2012.
Spine gave you some excellent advice. Since you are now disabled and have been approved for LTD, I encourage you sit down and read from start to finish both plan documents and re-read multiple times until you fully understand. I have both hard and soft copies of my STD/LTD SPD's>>>> altho STD is not really an issue for me now. You got approved for SSDI relatively quickly, didn't you? How long will your LTD policy pay you? You should really familiarize yourself with anything that offsets LTD/STD payments and min. benefit amounts even after offsetting. You now depend on this money since you can no longer work due to your disability so you must do whatever is necessary to protect this benefit now and in the future. Many ppl think once approved for LTD, it is a piece of cake from that point forward and the nice insurance company will pay them a monthly benefit until the end of max. benefit duration. Nothing could be further from the truth. You must be able to continually show proof of disability as long as you remain on claim or your claim will end. SpineAZ is an excellent resource and can answer most of your questions but the most important thing you can do IMO is educate yourself about your particular policy.

 
Old 09-22-2011, 01:17 PM   #14
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Re: Short term disability/severance pay

I am not using a lawyer, but I did use a private company to help me with my SSDI approval. I have emailed them and am waiting for a reply. The offset is not hurting my severance at all. My severance is at my full hourly wage/40 hr work week pay. My STD is at 60% of my (former) salary, so I just won't get a STD check because of the offset. I also get to keep my health/dental insurance until the end of the 24 weeks.

 
Old 09-22-2011, 01:35 PM   #15
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Re: Short term disability/severance pay

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Originally Posted by BlueSkies14 View Post
Spine gave you some excellent advice. Since you are now disabled and have been approved for LTD, I encourage you sit down and read from start to finish both plan documents and re-read multiple times until you fully understand. I have both hard and soft copies of my STD/LTD SPD's>>>> altho STD is not really an issue for me now. You got approved for SSDI relatively quickly, didn't you? How long will your LTD policy pay you? You should really familiarize yourself with anything that offsets LTD/STD payments and min. benefit amounts even after offsetting. You now depend on this money since you can no longer work due to your disability so you must do whatever is necessary to protect this benefit now and in the future. Many ppl think once approved for LTD, it is a piece of cake from that point forward and the nice insurance company will pay them a monthly benefit until the end of max. benefit duration. Nothing could be further from the truth. You must be able to continually show proof of disability as long as you remain on claim or your claim will end. SpineAZ is an excellent resource and can answer most of your questions but the most important thing you can do IMO is educate yourself about your particular policy.
Oh, I know it's not a piece of cake... I have (and still am) proving myself for STD! It doesn't end until 11/08 and right now I am only approved through 10/07. I just got my approval for LTD. I don't have the policy handy right now, but I think it pays until age 65.
I have MS and worked until I absolutely couldn't anymore, which was 05/10/11. I filed for SSDI in July. Like I said earlier, I had a Social Security Representation Service fill out the paperwork and get all of my medical records. It is well worth the fee they charge, because if I did it alone, I would still be filling out the paperwork!

 
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