LTD disability repayment saga

[Suprabob]

What is the name of your state (only U.S. law)? California
I was very ill and received LTD from a insurance company which required me to apply for SSDI and repay benefits if SSDI was approved. After 10 months, I begin to feel much better and asked my doctor for a release to return to work, which he approved. I reported to the LTD insurance that I was returning to work and they closed my claim. A few days later I get a large direct deposit from SSDI and a letter stating I have been declared disabled. I was sure the the LTD would ask me for the money they gave me back, but they never did. I still returned to work - now collecting Social Security and work pay for the last 9 months. I reported to Social Security informing them of my return to work and they said I was eligible to collect SSDI for 12 months under a return to work program. They sent me paperwork to fill out that unfortunatly show income from the LTD company - because they sent me a W-2 for that disablity income. To Social Security it looks like I was working for them the whole time I was sick for the 10 months I was sick. Somehow I have a feeling that SSDI is going to let the LTD people in on my little secret, although I don't know this for sure. Should I just come clean to the LTD company or just wait and see if they just forget about it. I sure would like to keep that money!What is the name of your state (only U.S. law)?

[azskye]

Did the LTD insurer give you a W-2? As if you had been directly for them?
If so, that is illegal for them to do. You should receive your money on a 1099 Form instead.

If you have a W-2, contact the Social Security Dept. and tell them that you have a W-2 which is wrong, and that you needed a 1099. A form SS-8 might be of great help (I have filled one out). I am disabled, not an attorney. However, have been in the W-2 v 1099 form struggle for years.

The LTD carrier should know better, but! if they pay you with a W2, guess what? They get to deduct your payments as wages to SS & off their taxes as if you are their own employee!! What a HUGE hoax!

Unless your plan states CLEARLY that you must repay the LTD, and, you have told them you are back to work, don't sweat the repayment. I WOULD advise you to hold onto the whole thing tho, it may awhile for them to come back and ask for it. Many people are now fighting the repayment clause unless your plan documents say directly that repayment is part of the deal. They finally denied my LTD when I said I would sue them. That really upset my attorney - lol. I caved in after negotiating a 90% repayment plan. Remember, everything in this life is negotiable.

If you have a requirement to pay them back, then do the right thing, and send them the money AFTER you have straightened out the W2 v 1099 issue. They cannot legally report you as an employee!

Tell SS that the $$ it shows as wages is not, and that you are pursuing a correction of this with the LTD carrier. You should contact the LTD people and DEMAND a revised payment notice asap.

I am thinking of asking my attorney to start a class action suit since they are getting away with murder with the tax deductions they get if we all are listed as employees! Think of how may disabled ppl like us are treated as employees every year by these folks! Think of the money they save by doing that! AND, they screw around with your life by doing this. Total chaos for us, and great tax breaks for them!


Here's a BIGGER HOAX:
If you are a regular old employee, who has no direct interest in your employer's biz's profit, then you should file an SS-8 with SS (find the form on the IRS.gov site) and ask the IRS to determine if you owe federal taxes. The IRS does NOT tell us that if we are NOT contractors, and if we are not federal employees, that we do not owe federal taxes under the 1978 Employee Act, Section 530.

TRUE!!! Check it out - google sect. 530, and read the info very carefully, and with the assumption you are not a contractor, but a common-law employee. If you are an employee, then the $$ you get for disability are not taxable by the Feds either. READ UP.

Good Luck! Please get back to me on this for my potential suit.

Skye - NOT an ATTORNEY, NOT LEGAL ADVICE

[Suprabob]

Well, I took a look and it was reported on a W-2. However, in box 13 of the W-2 is is checked "Third-party sick pay". The Statutory employee box is not checked. I'm just wondering if I just tell SS that the income that was reported has to be paid back from the SSDI award that they would actually contact the LTD to see if it happened and raise a red flag.

[rebeccarollers]

Like you I'm on disability and received a letter from LTD that I was required to file, otherwise they could deny my claim. I went through a lawyer so they handled everything, but if I were you I'd contact your LTD carrier and advise them of SSDI award. You know that you owe the money, and it could be easy enough for them to prove that you knew this. If you don't eventually it will probably catch up with you and they'll want their money.

Regarding the W-2 I'd take it into your local S.S. office and show them and they can document your case.