Long-term disability (LTD) insurance policies commonly contain provisions regarding “offsets.” These provisions are usually called “Deductible Sources of Income.” The purpose of the provision is to allow the insurance company to reduce the amount of payable benefits, based on other disability-related benefits or income a policyholder is receiving.
To clarify just how and when offsets can impact LTD benefits, below we have answered some of the most frequently asked questions about offset provisions in LTD policies.
While the following information provides some important insights, don’t hesitate to contact Denver Disability Lawyer Shawn E. McDermottwhen you are ready for specific answers pertaining to your situation – as well as for experienced, effective advocacy moving forward.
Q – When can offsets come into play for LTD benefits?
A – It depends on the specific language in your LTD policy. Commonly, however, offset provisions for LTD benefits can be applicable when policyholders also receive benefits like (but not necessarily limited to):
- Social Security disability benefits
- Workers’ compensation benefits
- Pension or retirement benefits from the same employer
- A state disability program ( a few states have these)
In some cases (again, depending on the specifics of the policy), offsets may also be applicable when policyholders receive other compensation, such as personal injury awards.
Q – How can I find out what types of offsets are associated with my LTD insurance policy?
A – Carefully read the details of your policy and, in particular, the provision(s) related to offsets. If you still have questions after reviewing your policy, you are invited to contact Denver Disability Lawyer Shawn E. McDermott.
Q – Do ERISA laws limit the types of offsets that can be applied to LTD policies and benefits?
A – No, at this time, ERISA laws do not restrict the nature of the offsets that can be included in LTD insurance policies. That said, however, individual states may have specific regulations that could limit offset deductions for LTD benefits.
Q – Can I do anything to eliminate the offsets associated with my LTD policy?
A – No, if your LTD policy has already issued, and the language exists, you may be stuck with it.
It may be possible, though, to negotiate with insurance providers to alter the terms of offsets. If you are purchasing your own policy, you can ask your agent about removing the offset language, which often means purchasing a “rider” and then having your premium increased. If you are insured under a group policy purchased by your employer, you likely have little input into the terms or conditions of your long-term disability coverage. Your employer would have to raise the issue with the insurance company. As we always see offset provisions in group policies, it is difficult to say if your employer could be successful in having the provision removed.
Q – Can offsets be used by insurers to avoid paying out LTD benefits entirely?
A – It depends on the specifics of a policy. In most cases, LTD insurance policies may provide for a “minimum” monthly benefit amount, even if the offset income is greater than the LTD benefit payable under the policy. Of course, each policy is different and must be read to answer the question. The monthly minimum is usually $100 or $200 per month or sometimes calculated as 10% of the gross benefit. Insurers are not, however, required to provide a guaranteed minimum benefit. So, be sure to carefully review the details of your policy to determine whether you may be entitled to a minimum monthly benefit payment if or when offset deductions are applied.
Ready for More Answers? Contact Denver Disability Lawyer Shawn E. McDermott
If you are fighting with an insurer over LTD benefits, it’s time to contact Denver Disability Lawyer Shawn E. McDermott. Dedicated and experienced, Shawn McDermott has a record of success when it comes to helping people stand up to insurance companies, protect their rights and secure the full amount of LTD benefits to which they are entitled.
To learn more about how McDermott Law, LLC can help you, set up a complimentary consult with our office today by calling us at (303) 964-1800 or by emailing us using the contact form on this screen.
From our offices in Denver, we provide the highest quality legal services to disabled people throughout the state of Colorado, the surrounding states and nationwide.