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ERISA Law

How Much Does Long-Term Disability (LTD) Pay?

June 13, 2020

The amount you receive per month from Long-Term Disability (LTD) benefits depends on the terms of your policy.  However, typically under employer-provided policies, long-term disability pays 60% of your monthly pre-disability earnings. Your pre-disability earnings is the income you were earning from your employer prior to your disability. Some people privately purchase LTD policies. Most private LTD policies pay a fixed monthly benefit, regardless of what your pre-disability earnings were.

Offsets Can Reduce Your Monthly Long-Term Disability Pay

LTD policies often contain offsets for other income that you receive while you collect LTD benefits.  In other words, the insurance company will deduct your other income from your monthly LTD benefit. These offsets can include, but are not limited to, Social Security Disability Insurance (SSDI) benefits, retirement benefits, work earnings, or passive income from a business you own.  Typically, if your SSDI benefits are being offset, the insurance company will only offset the base benefit amount and will not offset any cost of living adjustments (COLAs). For more information on SSDI offsets, please read What is a Social Security Offset? Offsets are an important factor in determining what your monthly long-term disability pay benefit should be. You should examine your LTD policy carefully to determine what offsets it contains.

Typically, you will receive the minimum benefit from your insurance company if the offsets for other income you receive exceed your monthly long-term disability benefit. The minimum benefit is usually $100 or 10% of your gross LTD benefit, whichever is greater. You should read your policy carefully to make sure that you are receiving all the benefits to which you are entitled. Occasionally, insurance companies may incorrectly place an offset on your benefits or may miscalculate what the offset should be. Calculating what your benefit and offset will be could prevent you from missing out on substantial benefits you are owed.  You should contact an attorney if you think offsets are being incorrectly applied to your benefits.

Long-Term Disability Overpayments

If you receive other income during a period in which the insurance company is paying you long-term disability benefits and that income was not offset by the insurance company, there may be an overpayment on your claim. An overpayment means you must reimburse the insurance company the amount of other income that they should have been offsetting but weren’t. An overpayment can also occur when you receive a lump-sum payment of other income benefits that covers a retroactive period of time, such as when an SSDI claim is approved.

Your policy should define what forms of income will be or should be offset. To avoid an overpayment, you should report other income you are receiving to the insurance company.  Once notified of other income that is an offset under the policy, the insurance company will offset future benefits so that additional overpayments do not accrue for as long as you receive both other income and long-term disability benefits. Insurance companies offset your other income from your long-term disability pay so they can pay you less out of their own pockets. You should contact an attorney if you believe your insurance company is demanding an incorrect overpayment amount.

Contact Chisholm Chisholm & Kilpatrick LTD

At CCK, our team of experienced lawyers and professionals can help you make sure you are receiving the maximum benefit due to you. Offsets, overpayments, and benefit calculations can be confusing and time-consuming. Our team can take that burden off your shoulders so you can focus on your family and health. Contact us now at (401) 331-6300 for a FREE consultation.