Social Security standards are different from the usual short term or long term disability claim, most of which either have durational requirements much less than twelve months (STD claims) or generally define disability in the context of inability to perform usual occupation for the first 2 years of eligibility (many LTD claims).
STD Benefits STD benefits are often payments from the employer for a short duration, usually no more than 3 to 6 months, and in many cases and have no specific repayment requirement. Standards of proof usually involve little more than a completed claim form signed by a doctor, and STD records often have little information helpful to establishing eligibility to Social Security or SSI benefits.
LTD Benefits Some claimants are fortunate enough to have monthly long term disability (LTD) insurance benefits through an LTD company (UNUM, Hartford, Provident, etc.). Some insurance plans are employee purchased (and thus not taxable); most are employer sponsored or employer provided as a part of an employee’s benefits package and are taxable benefits. In either event, almost all LTD plans now require a claimant who has been off work for 12 months to pursue a claim for Social Security disability insurance benefits. Thus, pursuit of the Social Security Claim is crucial to receipt of ongoing LTD benefits for your client. And, after the favorable decision, almost all LTD plans require the claimant to reimburse the LTD plan with all benefits paid by Social Security to the claimant and any dependents.
There are several other benefits to the LTD claimant pursuing a Social Security claim. First, LTD plans that are employer sponsored and paid for results in benefits to the claimant that are taxable. Social Security benefits, however, are generally not taxable or, if taxed because of a spouse’s higher earnings, result in less tax owed by the claimant.
Second, most LTD plans do not have annual cost of living inflation adjustment (COLA) provisions: The LTD benefits being paid in year one are the same in year ten. And, most LTD plans only require being repaid at the base rate initially awarded by Social Security. Social Security benefits, however, are subject to annual COLA increases. 42 USC §415(i). As a result, the Social Security benefit continues to increase annually, even during the “years” it takes for a claim to be decided by an ALJ. When the LTD benefits are repaid, the LTD carrier does not seek repayment of the COLA increases – their benefits to the claimant have remained essentially the same all along, and they seek back only the money they paid. As a result, the claimant often keeps some part of the past due disability benefits received from Social Security after repayment of the LTD carrier.
Third, almost all LTD insurance plans provide a claimant with a credit for the amount of any attorney fee paid from his or her past due Social Security benefits. The net amount repaid to the LTD carrier is thus the amount of benefits paid by Social Security less any attorney fees, and less any COLA’s. Some LTD carriers even pay expenses related to pursuit of the Social Security claim, such as report and record requests, or on occasion a consultative examination. And why not – a $200 or $300 investment in expenses could mean the difference in the recovery of thousands, or tens of thousands of dollars in LTD benefits!!
SSI Benefits SSI, as a need based program, looks to other sources of income and assets as a possible source of benefit reduction. All income and resources of the claimant and spouse will be considered and reduce the monthly SSI benefit by at least 1/3. This includes items such as workers’ compensation benefits, receipt of Social Security disability (Title II) benefits, a spouse’s income(wages, SSI, LTD, etc.), or even “gifts” or “loans” from family members or friends (loans can be excluded from countable incomeif appropriately documented at the time the loan is made and notice is given to Social Security). Not included is the now rare case where a claimant receives cash assistance through a state or county welfare system. You need to verify that the correct dates and/or benefit reductions are being used by the local office in calculating benefits.
Workers’ Compensation benefits Workers compensation benefits are a source of income that is specifically offset from both SSI and Title II disability benefits. See 20 CFR 404.408 et seq. This includes any workers’ compensation law or plan of the United States (i.e. Federal workers’ compensation, PERS), a state (i.e. BWC, SERS), a political subdivision, or a combination of two or more of these entities. 20 CFR 404.408(a)(2)(i).
For SSI benefits the amount of reduction is usually dollar for dollar; for DIB claims the reduction calculation is more complex.
VA benefits There are two main types of VA benefits: VA Pension and VA Compensation.
VA Pension Benefits: This is also sometimes referred to as a non-service connected pension or non-service connected disability. It is comparable to the SSI program in that it is both needs based and disability based. Pension benefits require proof of permanent and total disability (not just 12 months). None of the identified medical impairments need to be service connected. A veteran found eligible for DIB or SSI benefits is automatically qualified for VA pension benefits. 38 USC §1502. However, a VA pension will be reduced by the amount of Social Security Disability (DIB) benefits a claimant receives. If the claimant qualifies for SSI benefits, then the SSI will be reduced or eliminated by the amount of the VA pension. The VA pension is reduced by other sources of monthly income like DIB benefits because it is a needs-based program for disabled veterans. The VA considers the veteran’s income and assets, but does not consider other needs-based payments like SSI. So, SSI and state welfare will not reduce a VA pension, but the VA pension will reduce SSI benefits.
VA Compensation: This program is also known as the service connected disability compensation program or the service connected disability benefits. A veteran may apply for and receive VA service connected compensation and still be working at SGA levels. And, when his conditions become severe enough to preclude working any longer, a veteran may receive whatever VA compensation has been awarded – service connected disability compensation benefits – as well as full DIB benefits. SSI benefits will be reduced or eliminated by receipt of service connected disability compensation benefits.
