SSDI and Long-Term Disability Offsets: How Private Benefits and Social Security Interact

Some people who cannot work have two sources of potential help at once: a private long-term disability (LTD) policy, often through an employer, and Social Security Disability Insurance (SSDI). The two are separate, but they do not always stack neatly. Many LTD policies reduce your monthly benefit by the amount of SSDI you receive. This guide explains how that works and what to ask. It is general information, not legal advice, and your policy language controls.

Two Separate Programs

SSDI is a federal program decided by the Social Security Administration (SSA). LTD insurance is a contract with an insurance company, with its own definition of disability, waiting period, and rules. A decision by one does not bind the other. An LTD insurer can approve a claim while the SSA denies yours, and the reverse is also possible.

What Is an Offset?

An offset, sometimes called an "other income benefit" in policy language, is a reduction in your LTD benefit based on other income you receive. SSDI is the most common offset. For example, if your policy pays $3,000 a month and you are awarded $1,800 a month in SSDI, the LTD insurer may reduce its payment to $1,200. Your total stays near $3,000, but more of it comes from Social Security.

Policies vary. Some offset the full SSDI amount, some only part of it, and some also count family benefits paid to dependents or other income such as workers' compensation. Read the section of your policy on "other income" or "deductible sources."

Why Insurers Often Require You to Apply for SSDI

Many LTD policies require you to apply for SSDI and to appeal a denial, because an SSDI award reduces what the insurer pays. Some insurers pay for or connect you with a service that helps with the application. If your policy requires it, missing the requirement can affect your LTD benefits, so ask how your policy handles it.

Overpayments When SSDI Is Awarded Retroactively

SSDI often takes months or longer to decide, and an award can include back pay. During that time your LTD insurer may be paying you the full amount. When the SSDI award arrives, the insurer may treat the overlap as an overpayment and ask you to repay it from the back pay.

• Ask the insurer whether it will wait for the SSA decision or seek repayment, and when.
• Plan for the possibility that part of any lump sum may need to go back to the insurer.
• Keep records of every payment you receive and from whom.

Does LTD Reduce My SSDI?

Private LTD benefits generally do not reduce SSDI. But some other benefits can, such as certain workers' compensation or public disability benefits. Ask the SSA how other income affects your benefit.

Questions to Ask Your LTD Insurer

1. What is the definition of disability in my policy, and how does it differ from the SSA's?
2. Which payments count as offsets, and how much is deducted?
3. Am I required to apply for SSDI, and by when?
4. What happens to my benefit if my SSDI claim is denied or approved?
5. How are overpayments handled, and when do they have to be repaid?
6. What are my deadlines if I need to appeal an LTD denial? Employer plans are often covered by federal rules (ERISA) that set a limited time to appeal, so confirm yours.

If Your SSDI Claim Is Denied

A denial does not always end the process, and your LTD policy may still require you to appeal. Our guide on what to do after an SSDI denial and our overview of the SSDI appeal timeline explain the next steps.

If You Are Supporting Someone Through This

Family members and caregivers can help by keeping track of paperwork from both the insurer and the SSA. See our guide on helping a loved one apply for SSDI.

Sources and Further Reading

• SSA: Disability benefits
• U.S. Department of Labor: Claims procedure for employee benefit plans