Posted on Wednesday, May 1st, 2024 at 9:00 am
If you’re unable to work due to a disability, you may be wondering if you can collect both long-term disability (LTD) benefits and Social Security disability benefits simultaneously. The answer is yes; you can receive both types of benefits at the same time. However, it’s essential to understand how these two programs interact and the potential impact of collecting both on your overall disability income.
Understanding Long-Term Disability Insurance and Social Security Disability Benefits
Long-term disability insurance is private insurance that provides income replacement if you cannot work due to a disability. LTD benefits are typically a percentage of your pre-disability earnings and can last for a specified period or until you reach retirement age, depending on your policy.
On the other hand, Social Security disability benefits are provided through two main programs:
- Social Security Disability Insurance (SSDI): SSDI is a federal insurance program for workers who have paid into the Social Security system through payroll taxes and have earned sufficient work credits. To qualify, you must have a disability that meets the Social Security Administration’s (SSA) strict definition.
- Supplemental Security Income (SSI): SSI is a means-tested public assistance program for people with disabilities who have limited income and resources. You do not need to have a work history to qualify for SSI.
Do I Have to Apply for SSDI to Get LTD Benefits?
Most LTD policies mandate that eligible individuals apply for SSDI benefits. This requirement stems from LTD insurers typically offsetting LTD benefits by the amount of SSDI awards. In other words, if you receive SSDI benefits, your LTD benefits decrease by the SSDI payment amount.
Your LTD insurer may even assist with the SSDI application process, as it is in their financial interest for you to qualify for SSDI. However, it’s important to note that even if you are required to apply for SSDI, your LTD benefits are not contingent upon being approved for SSDI.
If I Qualify for LTD, Will I Qualify for SSDI?
Qualifying for LTD benefits does not guarantee eligibility for SSDI. While both programs benefit individuals with disabilities, the eligibility criteria can differ.
LTD policies often have a more lenient definition of disability, particularly in the early stages of a claim. For example, your LTD policy may consider you disabled if you cannot perform the material duties of your occupation, even if you could work in another capacity.
In contrast, SSDI maintains a stricter definition of disability. To qualify for SSDI, you must possess a medically determinable impairment that hinders your ability to engage in substantial gainful activity (SGA), with your doctor expecting it to endure for at least 12 months or result in death.
Eligibility Requirements for SSDI
To qualify for SSDI, you must:
- Possess a medical condition meeting the SSA’s definition of disability
- Accumulate adequate work credits through payment of Social Security taxes
- Be incapable of engaging in substantial gainful activity (SGA) due to your disability
- Sustain a disability lasting or expected to last for at least 12 months or resulting in death
Meeting each of these requirements does not guarantee approval for SSDI, as the SSA follows a strict five-step sequential evaluation process to determine eligibility.
How Does an Offset Work?
An offset is a provision in your LTD policy that allows your insurer to reduce your LTD benefits by the amount of other income you receive, such as SSDI benefits. The purpose of an offset is to ensure that your combined disability income does not exceed a certain percentage of your pre-disability earnings, typically 60-80%.
For example, if your pre-disability income was $5,000 monthly and your LTD policy pays 60%, your LTD benefit would be $3,000 monthly. If you then qualify for SSDI and receive $1,500 per month, your LTD benefit would be reduced to $1,500, so your total disability income remains at $3,000.
What Happens to My Benefits When I Reach Retirement Age?
Once you reach your full retirement age (FRA) as defined by the SSA, your SSDI benefits will automatically transform into Social Security retirement benefits. The SSA determines the amount of your Social Security retirement benefit based on your earnings history and your age when the conversion occurs.
Your LTD benefits, however, may be affected differently. Most LTD policies have a maximum benefit period that ends when you reach your FRA. At this point, your LTD benefits will typically cease, and you will rely on your Social Security retirement benefits and any other retirement income you may have.
Some LTD policies, particularly those provided by employers, may offer a reduced benefit period for disabilities that begin at or near retirement age. Reviewing your LTD policy documents or consulting with your insurer to understand how your benefits will be impacted when you reach retirement age is essential.
Protecting Your Financial Well-being With Long-term Disability Insurance and Social Security Disability Benefits
Don’t let a disability derail your financial future. Contact Capitan Law today at (267) 419-7888 or contact us online for a free consultation with one of our knowledgeable disability attorneys. We’ll review your situation, answer your questions, and help you understand your rights and options under long-term disability insurance and Social Security disability programs. With Capitan Law on your side, you can have peace of mind knowing that you have a dedicated advocate fighting for your financial well-being.
