Many employees who have long-term disability insurance (LTD) through their former employers have questions about whether they are required to also file an application for Social Security Disability Insurance (SSDI) benefits with the federal government. Generally speaking, most employer-sponsored plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) do require claimants to file SSDI claims, but the SSDI approval impact on ERISA LTD can vary depending on the specific terms of the policy provided through your employer. Among the most common effects is the LTD offset by Social Security disability, which allows insurance providers in some situations to reduce the amounts paid under ERISA long-term disability insurance policies when the policyholder is also receiving SSDI benefits.
ERISA Basics
The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law that governs minimum requirements for most retirement and insurance plans offered by employers in the United States. Compliance requirements for insurers providing employer-sponsored plans also include specifications regarding the maximum allowable time for responding to a filed claim, according to the United States Department of Labor (DOL).
Employers are not required by federal law to offer their employees disability insurance coverage. When employers do offer disability insurance plans, however, those plans, whether for short-term disability or long-term disability, are generally subject to federal rules and guidance. These guidelines establish certain parameters for the plans, and also mandate requirements regarding the timelines for processing claims, and procedures for filing appeals to claim denials.
Social Security Basics
Social Security Disability Insurance (SSDI) is a federal program, funded primarily by tax revenue. SSDI is not contingent on work with any particular employer, although the applicant’s work history will generally have an effect on whether he or she is eligible for benefits and the total amount of the benefits they may receive. As the United States Social Security Administration (SSA) explains, most individuals applying for SSDI will need to have worked in some capacity for at least five of the 10 years preceding the filing date of the application in order to be eligible to receive SSDI benefits.
Work History vs. Work With an Employer
For the purposes of determining SSDI eligibility, “work history” can usually be any form of “gainful” activity (i.e., work for pay) that results in the payment of Social Security taxes. Funds from someone’s work history is used to fund Social Security programs, including not only the familiar Social Security retirement income system but also the two Social Security assistance programs for individuals who are unable to work for reasons other than advanced age). The work history requirement for SSDI is based essentially on the logic that the program is intended to support individuals who have paid into Social Security funds via taxes if those individuals become unable to continue working to support themselves.
ERISA long-term disability insurance plans are not based on any particular period of time worked. That said, many of them may have pre-eligibility periods immediately following the initial enrollment. They may also have “lookback” periods that exclude illnesses or injuries from a few months to a few years immediately prior to the employee’s enrollment in the plan. Individuals struggling with ERISA disability and SSDI coordination may find it helpful to keep the eligibility dates of their ERISA plans, which can be different from those that apply under Social Security disability rules, in mind.
Long-Term Disability Insurance Exclusions for Pre-Existing Conditions vs. SSDI Qualifying Criteria
Employer long-term disability plans subject to ERISA also very commonly exclude from coverage any disabilities associated with pre-existing conditions, usually defined as conditions that were known and diagnosed prior to the employee’s enrollment in the employer-sponsored long-term disability insurance plan. These exclusions can diminish the attractiveness of long-term disability insurance for some employees, particularly those who already suffer from progressive, or potentially progressive, conditions at the time they are eligible to enroll in long-term disability insurance plans through their employers.
There are no exclusions for pre-existing conditions in applying for SSDI benefits, because there is no process, other than earning income and paying Social Security taxes on the earnings, an individual must go through to “enroll” in Social Security in order to be eligible for benefits later on. Therefore, there is no effective starting point for a condition to “pre-exist” in the way that there is for private long-term disability insurance coverage, whether obtained through an employer-sponsored ERISA plan or purchased individually on the consumer market.
Considerations for SSDI Approval in LTD Benefits
Some long-term disability insurance plans use the same definition as, or a definition substantially similar to, that used by the SSA in determining SSDI eligibility. This definition is predicated on the applicant’s inability to engage in “substantial gainful activity” (SGA), which is work for pay that rises above a certain monthly threshold. Please note: for non-blind individuals, in 2025 the rate was set to $1620 per month. Additionally, this cannot apply to employer-sponsored own occupation long-term disability insurance plans, even though it may be used for any occupation long-term disability insurance plans subject to ERISA guidelines. To some extent, therefore, SSDI approval impact on ERISA LTD may depend on the type of long-term disability plan your employer provided.
Any Occupation Long-Term Disability Insurance
Some long-term disability policies offered under ERISA as employer-sponsored group plans, as well as many of those sold to individuals via the direct consumer market, offer disability insurance coverage to replace a portion of lost income only if the individual filing the claim is no longer able to maintain employment in any capacity. Although these “any occupation” policies may not necessarily use language identical to that used by the SSA in describing eligibility criteria for SSDI benefits, they rely on the same basic principle.
Showing proof of SSDI application is a very common requirement among long-term disability policies generally. In many cases, “any occupation” LTD plans, including those offered under ERISA, may also consider whether a claimant has been approved to receive Social Security disability benefits in issuing their own determination.
Own Occupation Long-Term Disability Insurance
More robust long-term disability insurance plans, whether purchased individually or provided as part of an employee benefits package, may offer replacement for a portion of the income a policy holder was earning prior to becoming disabled if they are no longer able to work in the same field or position in which they earned that income. This is true even if the disability does not prevent the person from engaging in what the Social Security Administration considers “substantial gainful activity.” Because SGA is not dependent on career field or company position, SSDI benefits are inherently provided on an “any occupation,” rather than “own occupation” basis.
ERISA long-term disability insurance plans, even those offering own-occupation disability coverage, are not necessarily prohibited from considering SSDI approvals in determining whether to approve claims. However, the relative impact of SSDI benefits approval or denial is likely, for practical reasons, to be somewhat different in the insurance company decision made on a claim filed for an own-occupation plan vs. a claim filed for benefits on a policy that only offers any-occupation insurance coverage.
SSDI Offset
A major reason why many ERISA long-term disability insurance plans require policy holders filing LTD claims to also file applications is that, in many cases, the LTD policy will contain an “offset” provision. An offset provision essentially allows the long-term disability insurance plan to reduce the amount the insurer pays for a claim by the amount the claimant is receiving via SSDI. While some individually purchased plans not subject to ERISA do also establish an LTD offset by Social Security disability payments, SSDI offset clauses are so common among employer-sponsored LTD plans that if you have a long-term disability policy under ERISA guidelines, the presence of an offset provision should be among the first things most people filing ERISA long-term disability claims should check.
If the ERISA disability insurance plan requires you to file for Social Security disability prior to submitting your long-term disability insurance claim, you likely will not be able to decline SSDI in order to avoid the offset, so in that sense the offset provision may not “matter” in terms of your total benefits eligibility. However, some LTD “offset by Social Security” provisions may also require repayment of offset amounts if initially denied SSDI benefits are later approved and made retroactive to the date of your disability. ERISA disability and SSDI coordination may often be complex, but knowing the precise terms of your policy is an important step forward in your long-term disability financial planning and can be especially helpful when dealing with plans that pay a modest percentage of your former wages.
SSDI Approval and ERISA Long-Term Disability
Navigating the relationship between SSDI approval and ERISA long-term disability benefits can be complex, with important financial implications for claimants. From mandatory SSDI applications and offset provisions that reduce LTD payments, to differing definitions of disability and varying eligibility rules, understanding how these programs interact is essential.
Because every policy has unique terms, it is critical to review your LTD plan carefully and be aware of how SSDI approval, denial, or retroactive benefits could affect your coverage. If you are considering filing for disability benefits or coordinating SSDI and LTD claims, consulting with an experienced professional can help you protect your rights, avoid unexpected repayment obligations, and make informed decisions about securing the income you need during a difficult time.
