Coordination of Private Ins. Disability Benefts with SSDI

[cf59673]

What is the name of your state? California

My employer's LTD plan has a coordination of benefits clause such that they reduce dollar-for-dollar their payout with social security disability income (SSDI) benefits, essentially capping my total disability benefits to 60% of my salary regardless of source.

This seems totally unfair, since I have paid into social security
independent of the insurance contract between my employer and the insurance company. Furthermore, I hit the social security contribution caps for every year for the past 25+ years that I have been working prior to my disability, and hence, qualify for the maximum social security disability benefit.

So why should an insurance company be able to usurp my SSDI benefits with corresponding reductions in their payouts ? I didn't pay into the system and work so hard so an insurance company would get a reduction in expenses.

Is there some way to fight this ?

 

[CIAA]

No,... insurance premiums are based on the insurance company taking the offset. Also, one of the primary reasons for doing it this way is so that you are unable to make more on disability than you would make working. If you paid the disability premiums your disability benefits are tax free. Unfortunately, if your employer pays the premiums the payments are taxable.

 

[cf59673]

But why try to reduce the payouts ?
The premium contributions are not coordinated.
Once on disability, your expenses are guaranteed to rise - one primary reason is that your health insurance is guaranteed to terminate after the 18/29 month period.

 

[cf59673]

In addition, if the private insurance coordinates with social security disability income, then it begs the questions of why I would even bother to apply for social security disability at all.
Any SSDI benefit I might be awarded would be reduced dollar for dollar by the private insurance company payout, and hence, there would be no financial benefit to me whatsoever, only a reduction in the insurance company's expenses.

Can the private insurance company force me to pursue an SSDI application and claim ?

It seems that I would be better off not applying for SSDI at all.

However, the private insurance company states that they will withhold estimated SSDI benefits until I prove that I have applied and no further appeals are possible, hence, putting a financial burden on me until they fully capture my social security benefits. Is this legal ? Can I fight this ?

The only other benefits of an SSDI award that I can think of is that I would get a COBRA extension and Medicare after 29 months. But with HIPAA, couldn't I purchase a health insurance policy that includes prescription drug benefits (Medicare doesn't cover prescription drugs) ? Furthermore, the 11 month extension on COBRA would be at a 150% of premium cost making that undesirable with reduced income.

All of this would keep the benefit payments coming from the private sector, in lieu of the public sector, where it really belongs. The coordination with SSDI is tantamount to pushing someone on disability onto the government dole and out of the private sector.

 

[CIAA]

Again, the premiums charged are based to a large extent on "loss ratio" and these loss numbers contemplate that the SSD reduction will occur. As you have read in your policy, if you do not file for SSD they can and will calculate an expected benefit and reduce your benefit. No, there is not much you can do about this, as it is included in the terms of the insurance contract. The insurance company has the right to rely on the contract terms just much as you do. Additionally, they don't look at your SSD benefit as throwing someone "onto the government dole and out of the private sector" because, as you noted earlier, SSD is a benefit you personally have been paying for all these years. As for HIPPA, medicare and a presciption supplement will be a whole lot cheaper. I'm sorry I could not give better news.

 

[cf59673]

So, is your statement:

"the premiums charged are based to a large extent on
'loss ratio' and these loss numbers contemplate that the
SSD reduction will occur. "

to be construed as justifying the coordination because the employer and insurance company premeditated (schemed) beforehand to reduce their premium costs and payout liabilities by usurping the insured's SSDI benefits, benefits neither the employer nor insurance company owned or have a legal right to take ? How can they legally advertise they will pay 60% of income whiling hiding the coordination phrase in the bowels on the policy ?

I also have an issue with your choice of the word 'contemplate' in the above quote. In addition to coordination with SSDI, I have a private disability income policy that I purchased through a professional society about a decade before I became insured under my employer's LTD plan and had paid the premiums myself independent of my employer's plan. Yet, the employer's policy says it will coordinate will all other group policies. Certainly, they could not have 'contemplated' that I would have another group policy and have included that in their calculations of loss ratios and hence premiums charged.

Furthermore, the employer's LTD policy has an "own occupation' definition of disability, while SSD has an "any occupation" definition of disability. Certainly, they could not have contemplated that SSDI would be awarded for all claims.

So, If I apply for SSDI and am denied (as is customary), then the estimated SSDI benefits should be reset to zero, and hence, the insurance company should not be able to reduce my benefit. They can't force me to appeal a denial, can they ?
They can't force me to appeal all the way up through federal court, bearing litigation expenses myself, while they financially encumber me by withholding estimated SSDI payments, can they ?

Your logic is as lame as the reasoning about limiting disability income. I certainly don't want to have a disability. I'd rather have a career and life instead of AIDS and death. Disability insurance is sold on the premise that it will replace loss of income due to sickness or injury. These underhanded coordination clauses and artificial percentage reductions renege on that promise are a breach of faith.

 

[CIAA]

We are sincerly sorry for your illness and hardship. We are not attorneys and do not give legal advice. We are consumer advocates and we try to give the best advise and explanations based on our years of experience.In that regard:

The "loss ratios" are based on years of loss experience incurred under similar policies with similar language and invlolve thousands of claims. Under the circumstances the loss ratios include all offsets stated in the policy including other coverage, SSDI, supplemental earnings, etc.

Based on your qustion, I thought you were moving from "own occ" to "any occ". If your policy is "own occ", and you can and are attempting to engage in gainful employment, you should not have to file with SSD. You and your doctor should provide proof and ask for an exception. Considering the seriousness of your condition they may make you file anyway, but you can file with SSD saying you can work. They may be able to make you appeal, depending on the policy language but this would seem unlikely if you can work and just can't qualify for SSD. You certainly should not be required to file suit and I doubt your policy requires it. I do find it unusual that there would be an offset for other "group" policies and not "individual" policies as well and would question the intent.