Many long term disability insurance policies contain set-off provisions for Social Security benefits. These provisions, when valid, provide that the insured notify the insurance company of any payments being received by Social Security. Those benefits are then deducted from the contractual benefits owed by the disability insurer.
Set-off provisions like this often require the insured to apply for Social Security benefits. They also often require the insured to appeal adverse decisions by the Social Security administration. Insureds are often required to pay any expenses associated with such applications and appeals. It is important to note the difference between the definition of disability used by the social security administration versus the definition that is applicable under most private long term disability policies.
The Social Security definition is an ANY occupation definition. In other words, it requires that the applicant be totally disabled from performing any occupation for which he or she is qualified by reason of education, training, or experience. This is a very different standard than the OWN occupation disability definition contained in most individual disability policies and under California law. California law defines totally disabled as the inability to perform the substantial and material duties of one’s OWN specific occupation “in the usual and customary manner with reasonable continuity.”
If you have a Social Security set-off provision in your long term individual disability insurance policy, you need to be aware of how all of this works. If you have additional questions, are preparing to file a claim, or have a claim that is currently in dispute or pending appeal, please contact our office for assistance.
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