How Does Long-Term Disability Work With Social Security Disability?

Published on January 4th, 2021

A disability that prevents you from working may make you eligible for long-term disability payments through an employer-sponsored or private insurance company’s long-term disability plans. You may also be eligible to receive Social Security Disability benefits, but you need to be careful about the effect they may have on your long-term disability payments. Reading this article gives you a better understanding of how to make disability work with SSD and highlights issues you may wish to discuss with a disability lawyer.

What is a long-term disability?

A physical or mental disability that prevents you from continuing to work and earn a living creates a serious financial hardship. A few states, including New Jersey, have temporary disability programs to provide payments, but they are short-term programs designed to provide financial assistance only until you return to work. These programs are not intended for someone whose physical or mental condition makes it unlikely they will return to work.

Individuals with health issues that prevent them from recovering to the point of being able to return to gainful employment have two options available to them: A disability insurance policy they purchase on their own or that is provided by an employer and Social Security Disability, which is a program through the Social Security Administration.

Assuming that you meet the definition of “disabled” contained in the disability insurance policy, which is a contract between you and the insurance company, you will receive payments. The amount you receive and how long you receive it depends upon the terms of the policy. Think of a long-term disability policy as similar to a life insurance policy where you pay a premium in exchange for the insurer agreeing to make payments.

Social Security Disability

Social Security Disability is a federal program administered by the Social Security Administration that grants benefits to qualifying individuals with a medical condition expected to last more than 12 months or one that is expected to cause the person to die. It does not pay benefits for conditions that result only in disability expected to last for a short duration or conditions resulting in only partial disability. You must be unable to work in any type of job to be eligible.

You must have a work history that is long enough and recent enough for you to have acquired work credits with Social Security to qualify for SSD. As a general rule, a person needs 40 credits with 20 of them acquired within 10 years of the date of the disability. The number of credits required to receive SSD may be less than 40 depending upon how old you were at the onset of the disability.

As with long-term disability policies that define “disabled,” eligibility for benefits under SSD requires that you meet the Social Security definition of “disabled,” which involves a five-step process based on the following

  • Your earnings, if any, for the current year.
  • The severity of your condition.
  • The presence of a medical condition preventing you from performing substantial gainful activity.
  • Past work you engaged in and whether the condition prevents you from engaging in it.
  • Any other type of work you could engage in, given your medical condition.

Qualifying for SSD benefits can be a difficult and complex process. If you are eligible for benefits keep in mind that SSD may affect payments received through long-term disability.

How does long-term disability work with SSD?

If you receive long-term disability and apply for disability through Social Security, you need to become familiar with the term “offset.” As mentioned earlier in this article, your long-term disability payments are part of an agreement or contract between you and the company paying them each month.

Terms and conditions for the payment of benefits may differ from one plan to another. A common provision is that you agree to apply for SSD benefits and further agree that your long-term disability payments will be offset by payments received from SSD. In other words, the long-term disability payments are reduced by the payments you receive from Social Security.

For example, if you receive monthly payments of $1,200 from long-term disability the terms of the plan authorize the company to reduce those payments by whatever you receive each month once your SSD application is approved. Monthly payments of $1,000 from SSD would allow the company to reduce its monthly long-term disability payment to $200. This is only an illustration as the actual SSD you may be entitled to receive depends upon your lifetime average of earnings subject to Social Security.

Another factor to consider regarding the interaction between SSD and long-term disability is retroactive benefits. You may be entitled to benefits going back to the date you applied for SSD, but the company paying long-term disability may be entitled to all or part of it.

A disability lawyer can help

The interaction between long-term disability claims and SSD can be confusing without the help of an experienced disability lawyer. The assistance of a lawyer who understands the SSD process and has the ability to review long-term disability policies and plans gives you the reassurance of knowing your rights are protected.


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