Long-term disability insurance (LTD) is a lifeline for many American workers who become disabled in the course of their careers. However, many of these individuals see their long-term disability benefits reduced unexpectedly. Options for what to do if LTD is cut depend partly on the insurance company’s rationale for the change. The LTD benefits reduced, reasons, actions, and timelines established by the insurance company in each case will also provide the framework in which to choose the next steps. Understanding common reasons for a long-term disability payment decrease helps many people identify their options and develop a strategy for moving forward.
Long-Term Disability Reduced: Reasons, Actions
Your options for what to do if LTD is will depend partly on the reasons why you are seeing long-term disability reduced. Among the most common reasons is a determination by the insurance provider that you are receiving income from another source, even if that source is not work.
Long-Term Disability Benefits Reduced: Social Security Offset
Most long-term disability insurance policies contain provisions requiring anyone who submits a claim for benefits to also apply for Social Security Disability Insurance (SSDI). The definition of disability used by the Social Security Administration (SSA) is notoriously restrictive, so not everyone who meets the criteria for benefits under the terms set out under a private insurance company’s policy will necessarily qualify for SSDI. Those who are approved for SSDI benefits, however, will likely see their long-term disability benefits reduced by an amount equal to whatever monthly benefit amount is awarded by the SSA.
Long-Term Disability Payment Decrease: Help Understanding SSDI Offsets
The clauses that allow LTD providers to subtract an individual’s monthly SSDI from the amount they pay to that individual are known as offset provisions. In addition to the ongoing reduction in benefits, usually SSDI offsets will allow the company to seize any backpay from Social Security disability. The application process for SSDI can be lengthy, and by far the greatest number of claims are denied on their initial submission, so back payments are common in Social Security disability claims that do eventually receive approval.
Long-Term Disability Benefits Reduced: Paying Back LTD
SSDI back payments are generally just a lump-sum distribution of the benefits an individual would have received monthly after they became disabled and before they were approved by the SSA. What this often means for LTD recipients is that the long-term disability insurance company will claim that amount as a retroactive offset for the amounts the company would otherwise have been deducting from the individual’s benefit payments all along.
Long-Term Disability Benefits Reduced: Offsets for Workers’ Compensation
Most of the time, long-term disability policies will have offset provisions for workers’ compensation, just as they do for SSDI. Some differences in the way workers’ compensation disability benefits are calculated vs. how individuals qualify for SSDI can have some implications for how LTD benefits reduced reasons, actions, and options are configured.
Long-Term Disability Payment Decrease Help: How Workers’ Compensation Insurance Works
Because workers’ compensation is regulated at the state level, rather than by federal policy, there is some degree of variation in how disability benefits for workers’ compensation may be determined, depending on where you live. Generally, however, some of the most important differences between workers’ compensation disability and SSDI benefits will lie in the definition of disability itself.
How Definitions of Disability May Affect Offsets for Workers’ Compensation vs. Social Security Disability
Social Security disability coverage only applies when the individual applying for benefits is unable to maintain any substantial gainful activity (SGA). Workers’ compensation programs in most states tend to offer a wider range of options for defining disability than does the Social Security Administration.
Allowing for the fact that these definitions will, again, be worded and framed somewhat differently depending on how the rules in your own state are written, there are four main categories of disability that individuals disabled due to workplace injuries may encounter:
- Permanent total disability: This is a lifelong expectation that the individual will never be able to work again in any field. This is also the form of disability closest to the SSDI definition and the definitions used under some of the more restrictive LTD policies.
- Permanent partial disability: This disability determination applies to a lifelong impairment that may permanently limit the individual’s working ability and therefore earning potential, but does not necessarily prevent him or her from doing some work in a limited capacity. Disability accommodations in the workplace may make it easier for this person to achieve financial independence.
- Temporary total disability: The degree of disability here is the same as for permanent total disability. The difference is that the individual is expected to make at least a partial recovery. The timeline for this expectation may affect eligibility for LTD benefits, and can often overlap with short-term disability (STD) insurance.
- Temporary partial disability: Like temporary total disability, temporary partial disability is similar in degree to its permanent counterpart, but different in expected duration. Whether the timeline is measured in weeks, months, or years may impact LTD benefits. How the “partial” disability determination aligns with the definition of disability under the LTD policy can also affect your options for what to do if LTD is cut before you are able to return to full-time work.
As a rule of thumb, partial disability determinations will often have a definition of disability closer to what you may find in an “own occupation” LTD policy. Total disability determinations often rely on definitions that are more closely aligned with those found in “any occupation” LTD plans. However, it is always important to check the exact wording of your specific policy. Although workers’ compensation benefits are often subject to similar offset provisions as SSDI, the fact that workers’ compensation disability payments are calculated differently can affect the amount you see long-term disability benefits reduced.
LTD Benefits Reduced: Reasons, Actions, Return to Work
Many individuals who become unable to perform the daily obligations of their jobs are still able and eager to carry out some type of work activity on a limited basis. Even the famously restrictive Social Security disability criteria acknowledge this reality with the use of the SGA threshold.
Whether you may be able to return to work part-time while receiving disability benefits will depend in large part on the terms of your individual policy. Some policies may provide return-to-work incentives to offer disabled individuals an “on-ramp” back into the workforce. Others allow policyholders to continue receiving benefits while they take advantage of educational grants and retraining programs to facilitate career adjustments that allow better accommodations of their disabilities. Whether you might see long-term disability benefits reduced under these plans, and the options available for long-term disability payment decrease help, will depend on the terms of the policy.
Factors That Can Influence a Long-Term Disability Payment Decrease: Help for Understanding the Options
Some of the factors that most commonly play roles in whether an individual sees their long-term disability benefits reduced for attempting part-time work include:
- Whether the policy is own occupation vs. any occupation
- The number of hours worked, per week and per month
- The amounts earned, per week and per month
The specifics will always depend on the terms of your long-term disability policy. However, a general principle many people find helpful to keep in mind is that LTD plans designed to provide “own occupation” coverage typically apply less restrictive definitions of disability than those specified under “any occupation” disability plans.
Own Occupation Disability Insurance
Own occupation long-term disability insurance policies get their name from the fact that they provide disability benefits if an individual is unable to return to work or continue working in his or her chosen field. How broad this coverage actually is depends on how the insurance policy defines an individual’s “own” occupation.
Many own-occupation policies base their definition of an individual’s “own” occupation on the type of professional licensure or qualification needed to perform work in that field. Individuals working in a particular field may not necessarily feel that two distinct job positions in their industry are interchangeable, even if they require the same license or certification.
Any Occupation Disability Insurance
“Any occ” LTD policies only provide benefits when the insured person is no longer able to work in any job. Any occ policies generally use definitions of disability much closer to the criteria used for determining SSDI eligibility than own occ policies do, so individuals on any-occupation LTD may be more likely to have their long-term disability benefits reduced due to SSDI offset provisions.
Long-Term Disability Payment Decrease: Help Understanding Benefit Adjustments in Own Occ vs. Any Occ Policies
Regardless of how they define an individual’s “own” occupation, many long-term disability policies are structured to provide an initial period of own occ benefits, after which an individual must show that he or she meets the stricter criteria for any occ disability in order to continue receiving benefits. Individuals receiving benefits under an own occ policy may lose their coverage if they neglect to follow the procedures for demonstrating that they do meet this second set of requirements within the approved timeframe. What to do if LTD is cut in this situation will likely depend on the policy’s terms for appealing a termination of benefits, but in many cases you may be able to get benefits restored if you can provide medical evidence to show you meet the policy’s any occ definition.
What To Do if LTD Is Cut: First Steps and Guidelines
While the specifics will depend on individual circumstances, most strategies for long-term disability payment decrease help will develop at the intersection of LTD benefits reduced, reasons, actions, and policy requirements. Insurance companies are typically required to provide reasons when they order long-term disability benefits reduced or eliminated. The reasons provided must align with the conditions for reduction or termination of benefits under the terms of the policy. The policy terms will also outline what you may need to do to challenge the decision.
LTD Benefits Reduced Reasons: Actions To Take if You No Longer Meet Policy Criteria
Your own options for what to do if LTD is cut will depend on whether the conditions cited by the insurance adjuster actually apply. If a careful review of the terms of your policy shows that you are no longer eligible for benefits, those options may be relatively limited. States vary in the length of notice they require insurance companies to provide for this type of decision, but you will want to act promptly to ensure your strongest chances for a successful challenge and the widest range of possibilities for security alternative sources of income. Consider discussing your policy’s terms and your condition with an experienced disability attorney to get assistance, particularly if your disability has either improved to the point where negotiating for reduced benefits as you transition back to work is a realistic option.
Long-Term Disability Payment Decrease: Helping the Insurance Adjuster Understand Your Situation
If returning to work is not a viable possibility for you, and the terms of your policy do not expressly limit the benefit period for your condition, you may need to collect medical evidence to show that you still meet the policy’s standard for determining disability. Often this documentation will be similar to what you submitted when filing your initial LTD benefits claim, but if you are transitioning from own occ to any occ then more comprehensive statements from medical professionals and a more thorough review by the insurance claims office may be needed. Alternatively, if your LTD benefits reduced reasons, actions relate to offsets due to other sources of income, you might need to gather financial documents to show that your income from other sources is less than the insurance company’s calculation.
In either case, you will need to carefully follow the procedure specified in the terms of your policy for submitting the updated information. The types of documents accepted, and the manner in which they must be filed, can sometimes present complications to individuals who do not handle this type of paperwork requirement on a daily basis. A disability lawyer may be able to guide you through the process, as well as potentially negotiating with the insurance provider on your behalf.
LTD Benefits Reduced: Reasons, Actions, Hope
Having your long-term disability benefits reduced or potentially terminated can be a frightening experience. If you rely on those benefits to cover basic expenses for yourself and perhaps your family, the loss of income can come as a terrible blow. Understanding the reasons for a long-term disability payment decrease helps many people identify what to do if LTD is cut. If you see LTD benefits reduced, reasons, actions, and policy terms cited by the insurance company can be frustrating to watch, but in many cases they also provide you with crucial information about what you will need to prove in order to reverse their determination, or the information you will need in order to come up with an effective alternative strategy for managing your financial present and future. Make it a practice to familiarize yourself with the minutiae of your policy terms, prioritize staying on top of deadlines so that you can file responses promptly, and consult disability lawyers or insurance experts whenever your next steps are unclear.
