Question
Long Term Disability payback (Is it legal)?
I have a Long Term Disability (LTD) claim with Unum through my work. Prior to becoming disabled, pretax money was deducted from my paycheck for this LTD insurance. They have been paying me ~$2,000 / month for two and a half years. I applied for SSI disability around the same time I submitted a claim to Unum. Unum starting paying me about 6 or 7 months after I became disable. I was recently granted SSI disability and SSI sent me a check for “back pay” (about $32,000) and started paying me about $1,200 / month. Unum just informed me that they wanted all of the back pay from SSI and they would reduce the amount they (Unum) pay me by the amount SSI pays me. Then they said I need to file for SSI benefits for my two kids. I was awarded SSI benefits for my kids and SSI sent me another check for ~$9,000 as back pay for the kids SSI benefits. Unum then informed me I needed to send them the money SSI gave me for the kids. They also said they would be reducing the amount the pay per month by the amount SSI provides for my kids as well. So, to summarize, Unum demands I give them all the back pay money that SSI gave me and my kids and they would only pay me $100 / month. The $100 / month is the difference between what Unum was paying and what SSI pays now. Is this legal? If so, that means the LTD policy I have with Unum is practically worthless. The money that was being deducted from my paycheck for 20+ years as a payment into a LTD insurance policy is nothing more than a charge just in case I need a loan until SSI works its way through the system and Unum has almost no liability. Can this be true? Someone please help me understand this seemingly mislabeled paycheck deduction that most of us pay every pay period. What can they do if I don’t send them the money? I’m still shocked by this! I don't expect to double dip and understand that part. But, I don't think the insurance company should be able to take my SSI back pay or any benefits SSI provides on behalf of my kids. What is the premium being used for? To add insult to injury, Unum is deriving the 60% base pay calculation during the last three months of employment. That was the timeframe I was unable to work a full shift due to the disability. So I’m only getting ~40% of what I made prior to the disability. Well I thought about this situation some more. But I must first say that to me, something just does not feel right about this whole issue. My intention is not to double dip or get something for nothing. The $35 / month or more that is deducted from the “common” man’s paycheck is going into an insurance fund. I just don’t buy the fact that SSI benefits (SSI insurance is also being deducted) payable to my children and the back pay issue makes this an insurance policy at all. (I’m warning my family and friends about this little hidden caveat). Maybe “buffer policy” would more accurately describe this type of insurance service. Anyway, if it’s OK for the insurance company to demand my back pay and deduct the money specifically instructed by SSI to be used in a manor that can only be spent to cover the needs of children then maybe it would be ok if I keep the back pay and allow the insurance company to withhold the money they provide until the back pay issue zeros out. Any thoughts folks?
1 month ago - 4 answers
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This is how group LTD policies work. For group policies there is a built in SSI offset which means they cover a percentage of your income (usually 60%) and if you qualify for SSI then they only cover the difference between the two. In your case the difference is $100. The reason they do things this way is because it is so hard to qualify for SSI. The Unum policy is more encompassing than the SSI which means there are situations that the Unum covers and SSI says you should go back to work. The other difference is if you had an individual DI policy. With this type of policy you might have had the choice of offsetting with SSI or not. Having the choice depends on your occupation class and it is more expensive not to offset. Let me ask you this, would you have survived financially without the Unum policy? If you hadn't been receiving $2,000 a month for 2 and a half years, would you have financially made it until you had SSI approval? As for back pay going to Unum that's what they consider double dipping. Benefits to the kids Unum considers part of your benefit and the less benefit is truthfully just because Unum doesn't offer good coverage. I'm guessing you weren't pay all that much into it though.
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1 month ago
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Not only is it legal, but it's required. You can't "double dip". You can't collect disability payments from two different sources that cover the same time. It works this way with EVERY SINGLE disability insurance - once SSDI kicks in, they get reimbursed up to 100% of what they get paid out. That means, you get whichever payment is HIGHER, not both. That's one reason why some people think long term disability is a waste of money, once you've paid in your 40 quarters to social security. But that's a different can of worms.
by mbrcatz- 1 month ago
~~State laws can vary so call your State's Insurance Commissioner to find out the facts with your particular state. In my opinion this is completely backwards. The norm is that SSI would reduce your benefit amount to compensate for what Unum is paying you. So if it were me, I would be on the phone first thing Monday morning. If my assumption is correct, they can walk you through filing a complaint against Unum as well. Best of luck!~~
by debijs- 1 month ago
This is normal. It's coordination of benefits. It sounds SO unfair, but I try to explain it from a different point of view to my clients... If there was no coordination of benefits and the insurance company could potentially be on the hook for that much more, your initial premiums would've been much higher. The potential that SSD would kick in is priced into the premium.
by primericaisbad- 1 month ago