How do LTD benefits work with SSDI?

On Behalf of | Mar 4, 2023 | ERISA Disability Benefits

If you’re dealing with a long-term medical condition that’s going to prevent you from working for many months, if not longer, you’ve likely learned something about the various types of disability benefits you can receive to help offset that loss of income. For example, your long-term disability (LTD) insurance provider may require that you also apply for Social Security Disability Insurance (SSDI) benefits.

The approval process for SSDI is usually more challenging than that for LTD coverage provided by an employer-sponsored plan. It also takes considerably longer to get an approval (or denial) since you’re dealing with a federal program that deals with millions of people.

Since private insurers don’t want to pay benefits to people also getting government disability benefits, you’re required to notify your LTD insurer if and when you’re approved for SSDI benefits and begin receiving payments. There’s likely an “offset provision” in your LTD policy that requires you to repay any benefits you receive from SSDI that cover the period you were receiving LTD benefits.

Understanding the SSDI “catch-up” payment

As noted, SSDI payments take a lot longer to begin for those approved than LTD payments do. You may have begun receiving LTD payments within weeks after you reported your disability. It could easily be over a year before you receive SSDI benefits if you’re approved.

However, SSDI does pay you for the period during which your application was being reviewed and processed. Therefore, your first payment will be a large “catch-up” amount. Depending on how your offset provision is written, you’ll need to repay at least part of the LTD benefits you received during that time to your insurer.

After your SSDI benefits begin, if they aren’t as much as your LTD policy provides, you can continue to receive the difference between the two amounts for as long as your LTD benefits last (or until you no longer need them). 

It’s a lot to worry about on top of your medical condition. If you have questions or concerns about your coverage, it can help to have legal guidance.