What's the difference between long-term disability insurance and Social Security disability?

People use the word “disability” to refer to many kinds of insurance programs. If someone says they’re “on disability,” they may mean they're collecting veteran’s disability, supplemental security income, Social Security Disability Insurance (SSDI), or private long-term disability (LTD) insurance.

These are vastly different programs that all do the same thing—provide financial assistance when the claimant cannot work due to a disabling condition. You should know which programs apply to you and how they work together.

SSDI Is a Government Program, While LTD Insurance Is Optional

If you worked and earned a paycheck in the United States, you have most likely paid into the Social Security system. The Old-Age, Survivors, and Disability Insurance tax is deducted from your paycheck each month. If you become disabled, you can apply to receive these benefits, regardless of your assets and income. You'll have to meet fairly stringent criteria, including having enough work credits and meeting the Social Security Administration's (SSA) medical standards of disability.

If you purchased long-term disability insurance through your employer, you could also claim benefits on this policy. These employee benefits are governed by the Employee Retirement Income Security Act (ERISA). An attorney who handles ERISA cases can help you understand this coverage or if your application is denied. Generally, it's easier—and faster—to get approved for private LTD benefits than it is for SSDI. 

How the Two Programs Work Together

This is the tricky part. Some LTD policies require that you also apply for SSDI within a specific timeframe and, if approved, will lower their payments to you. This is a way LTD policies shift their disability payment burden to Social Security.

Likewise, when the SSA notices that you're collecting on an LTD policy, it will consider that income and reduce payments to you. If your LTD claim is approved before your SSDI claim, but you're eventually awarded SSDI benefits, your LTD insurer may require you to reimburse them some of what you've collected so far.

Confused? Contact ERISA Attorney Jim Monast Today!

If you have long-term disability insurance through your employer and were denied—or your insurer is demanding that you pay it back after an SSDI approval—contact Monast Law Office. We handle ERISA cases and can help get the benefits to which you are entitled. To learn more about the long-term disability application process, request a free copy of our book, How Insurance Companies Sabotage Disability Claims.