How much can I expect to pay back on LTD insurance?

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PostPosted: Thu Jun 18, 2009 4:33 pm   Post subject: How much can I expect to pay back on LTD insurance?  

Received SSDI after being on LTD for 3years. Got a lump sum payment and now LTD is saying I have to pay them a lump sum equal to what I received. Don't remember signing anything saying I would have to pay them back. Have requested a copy of SPD from employer and copy of Personnel file of everything I signed. Will I have to pay this back? If so can it be in payments or will they require lump sum? Most money was spent on Dr bills and credit cards used to just get by while waiting on SS

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PostPosted: Fri Jun 19, 2009 2:28 am   Post subject: how much can I expect to pay back my LTD insurance?  

It isn't anything that you signed, it's in the policy language. Almost all types of disability income policies (DI) contain language that deal with duplication of benefits situations; a situation whereby the insured is receiving DI payments from more than one source. You received your LTD from your group carrier, and I would bet the house that there's language in the master policy issued to your employer that deals with this.



Your SSDI took about an average length of time to get approved. When you finally got approved, they sent you a lump-sum check that covered your SSDI benefits retroactive to the end of your five-month SSDI waiting period. Your LTD carrier found out about this, and you probably provided them the information as an honest person would.



DI policies are not intended to allow the insured to profit due to a disability. You can't make more on DI than you did when you were working, and there's a great possibility that when you combine the LTD payments with the SSDI check, you actually made more than you did while you were working. As well, taxes change. If your LTD was set up properly, you weren't taxed on the benefit unless your employer paid all or part of the premium.



So, you can't "double-dip" (so to speak) on DI benefits, and the LTD carrier is stating that you did, and the language within the policy allows them to recover a all or a portion of what they paid you if the double-dip occurred. Private DI coverage will typically coordinate benefits with other income streams such as SSDI to ensure that you aren't profiting from your disability.



Does this help?



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PostPosted: Fri Jun 19, 2009 7:10 am   Post subject:   

Hello lsensabaugh ,



Quote:
Received SSDI after being on LTD for 3years. Got a lump sum payment and now LTD is saying I have to pay them a lump sum equal to what I received.




I'm little confused.... has the LTD carrier asked you to return what they have paid to you or they want the entire check directed to them?
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PostPosted: Fri Jun 19, 2009 7:34 am   Post subject:   

Hi Isensabaugh..



I do empathize with you..

Quote:
Got a lump sum payment and now LTD is saying I have to pay them a lump sum equal to what I received.


Did they send you a letter explaining it?

Quote:
Will I have to pay this back?


Do you have any paper work with you? Or is it that all documents concerning this policy are within the personal file?



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PostPosted: Fri Jun 19, 2009 11:40 am   Post subject:   

When your employer gives you something, they want it to be as cheap as possible. The way to make an insurance product as cheap as possible is to make sure that the insurance company is paying out less in claims. One way that this is done with group disability policies is to integrate the policies with social security and other government programs. Therefore, virtually all group disability products integrate with social security.



The insurance company is probably correct that you now owe them a bunch of money. You probably don't have the money to pay a lump sum. If you are still collecting from the insurance company, they will probably stop the payments until they get the money that is owed to them.

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PostPosted: Fri Jun 19, 2009 11:48 am   Post subject: how much can I expect to pay back my LTD insurance?  

Quote:
Private DI coverage will typically coordinate benefits with other income streams such as SSDI to ensure that you aren't profiting from your disability.




InsTeacher, with quality DI products, that is not an accurate statement.



Ex. Joe is a self-employed consultant, he is making $100,000. The insurance company is willing to give him a monthly benefit of $5,000. This does not integrate with anything else.



Joe accepts a position with ABC company for $100,000. As part of this job, a policy is given to him that pays 60% and does integrate with SSDI.



He becomes totally disabled. He will collect $5,000 (tax free) from the private insurance carrier and he will collect $5,000 (taxable) from the group coverage. The group coverage will integrate with SSDI. He is now making $120,000 with only half of it being taxable.
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PostPosted: Sat Jun 20, 2009 4:37 am   Post subject: how much can I expect to pay back my LTD insurance?  

Expert, I don't disagree in the least. Maybe I should have explained myself better. When I said "private" insurance, I was differentiating it from "government" insurance and not referring to the difference between group and individual policies. Probably should have explained myself better, huh? Smile



You are right as to what you said with individual policies, although I have seen those contracts integrate with other sources here and there. Group contracts will normally integrate with S.S. and other streams as has been pointed out.



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PostPosted: Sat Jun 20, 2009 9:22 pm   Post subject: how much can I expect to pay back my LTD insurance?  

As for individual policies integrating with SSDI...



With a top occupation class (CPA, attorney, etc), it is usually optional. Having it integrate, lowers the premium, but usually not to an extent that makes it worthwhile.



With a lower occupation class (secretary, etc.), it is usually mandatory.



The exception is if someone already has group coverage. Because group coverage is already integrated, the insurance company won't allow the individual polity to be integrated.

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