Can Other Income Reduce Your Florida Long-Term Disability Benefits?

If you are receiving employer-provided long-term disability (LTD) benefits, you may assume that any additional income you receive on top of those payments is yours to keep. Unfortunately, that assumption can be costly.

Most LTD policies contain offset provisions that allow the insurer to reduce your monthly benefit dollar-for-dollar based on income from other sources. Our experienced Jacksonville long-term disability lawyer explains how offsets work and how to prevent your insurer from taking more than it is entitled to.

How Florida Long-Term Disability Insurance Offsets Work

Offsets allow LTD insurers to deduct other disability-related income from your benefit amount. While the proposed purpose is to prevent your total income from exceeding your pre-disability earnings, in practice, offsets can dramatically reduce what you receive each month, sometimes to a fraction of what you expected.

Most employer-provided LTD plans are governed by the Employee Retirement Income Security Act. Known as ERISA, it does not limit which income sources an insurer may use as offsets. What ERISA does require is clear disclosure of offset provisions in the Summary Plan Description your employer provides. Common sources of income that LTD insurers typically offset include:

• Social Security disability benefits.
• Workers’ compensation payments for the same disabling condition.
• State disability insurance benefits.
• Pension or retirement income triggered by your disability.
• Income earned from part-time or reduced-capacity work while receiving LTD benefits.

For example, if your LTD policy pays $3,000 per month and you get approved for $1,000 per month in other benefits, your insurer may reduce your LTD payment to $2,000. The total income you receive stays the same while the insurer’s obligation drops significantly.

When LTD Offsets Lead to Overpayment Demands

The offset issue becomes particularly complicated when Social Security benefits are involved. Because these claims often take months or years to resolve, a retroactive award may cover a period when your LTD insurer was already paying your full benefit.

When that happens, many insurers demand repayment of what they characterize as an overpayment. Steps that can help you avoid unexpected reductions or overpayment demands include:

• Read your policy’s offset or “other income benefits” section carefully before accepting any additional benefits.
• Ask your insurer in writing to explain how benefits are calculated if you receive or are pursuing other income sources.
• Request your full claims file to verify the insurer’s offset calculations.
• Consulting an experienced Florida long-term disability lawyer before responding to any overpayment demand, since ERISA may limit the insurer’s right to recover past payments.

Offset calculations are among the most common areas for insurers to make errors or apply provisions more broadly than the policy language allows.

Consult Our Experienced Florida Long-Term Disability Lawyer

If your Florida LTD benefits get reduced or you receive an overpayment demand, you have the right to challenge the insurer’s calculation. At Farrell Disability Law, our experienced Jacksonville long-term disability lawyer can thoroughly review your policy terms and take the steps needed to protect your rights to benefits. Request a consultation at our Orlando or Jacksonville office today.

Source:

dol.gov/agencies/ebsa/laws-and-regulations/laws/erisa