If you have a long-term disability policy through your employer, you might think you’re doubly protected if you also apply for Social Security Disability Insurance (SSDI) benefits. In a perfect world, that would be true. But in the world of private insurance, these two programs often have a “frenemy” relationship.
At Schneider Law Firm, one of the most common surprises for our clients in Minnesota and North Dakota is finding out that their private insurance company actually requires them to apply for government disability. It sounds helpful—until you realize the insurance company isn’t doing it for your benefit. They’re doing it to lower their own bill.
The “Offset” Clause: The Disappearing Check
Most people don’t read the fine print of their LTD policy until they need it. If you did, you’d likely find an “offset” or “deductible income” clause.
Here is how it plays out in real life: If your private policy is supposed to pay you $3,000 a month, and you eventually get approved for $1,200 a month from Social Security, the private insurance company doesn’t just let you keep both. They subtract the $1,200 from their own payment. Suddenly, your private check drops to $1,800.
The insurance company gets to keep that $1,200 in their pocket every single month. This is why they often provide “free” (but not always helpful) advocates to help you with your SSDI claim—they are literally working to save themselves money.
The Back-Pay Trap
The conflict gets even stickier when it comes to back-pay. Because SSDI can take two years to approve, the government often sends a large lump-sum check for the months you were waiting.
If you’ve been receiving your full LTD check during that time, your private insurance company will likely view that lump sum as an “overpayment.” They will send you a letter demanding that you hand over nearly the entire check from the government. If you’ve already spent that money on debt or medical bills, you could find yourself in a financial hole. We help our clients navigate this “overpayment” phase so they aren’t caught off guard by a massive bill from their own insurance company.
Different Definitions of “Disabled”
Perhaps the most frustrating part of having both claims is that the rules aren’t the same. The Social Security Administration has one set of technical rules (the “Blue Book”), while your private policy has another (the “Plan Document”).
It is entirely possible—and common—to be found “disabled” by the government but “not disabled” by your private insurance company. Private insurers often use a “sedentary work” loophole, claiming that if you can sit in a chair and answer a phone, you aren’t disabled, even if you are in excruciating pain or require hourly breaks that no real-world employer would allow.
Why You Need a Unified Strategy
Because these two claims are so intertwined, you can’t treat them as separate battles. What you say in your SSDI hearing might be used against you by your LTD carrier, and vice versa.
We look at the “whole picture.” If we are representing you for both, we make sure your medical evidence is consistent and that your private carrier isn’t cherry-picking data to deny your claim just as the government is about to approve it. At Schneider Law Firm, we’ve been coordinating these “double claims” for decades across the Upper Midwest. We know the tricks the carriers use to avoid their responsibilities.
Protecting Your Total Income
The goal isn’t just to “win” a claim; it’s to maximize the actual dollars that end up in your bank account. Whether that means fighting an unfair offset or challenging a private insurer’s definition of “any occupation,” we stand between you and the companies that are looking for a reason to pay you less.
If you’re being pressured by your insurance company to apply for SSDI, or if they’re trying to take back your retroactive pay, contact Schneider Law Firm today. Let’s make sure you keep what you’ve earned.