Offsets and Overpayments
If you have qualified for long-term disablity benefits under ERISA from an employer-based insurer, and then you also qualify for Social Security disability (SSDI) benefits, you will usually be subject to an off-set of those benefits. This means that you will not be allowed to keep both the ERISA and the SSDI payments, but the SSDI payments that you receive will be subtracted from the ERISA payments. In other words, your ERISA disability payments will be reduced ("off set") by the amount of the SSDI payments.
Most ERISA long-term disability plans have a provision which specifically allows for this kind of off set to be taken against what the carrier calls "overpayments." The provision is often included under a "Benefits from Other Income" section in the Plan, which allows the insurer to recover "overpayments" that you receive or are eligible to receive under workers' compensation plans, disability and/or retirement benefits under the United States Social Security Act, or any similar plan or act.
To recover "overpayments," insurers have at times attempted to apply 29 U.S.C. section 1132(a)(3), which states in relevant part that "... a civil action may be brought ... to obtain other appropriate equitable relief to redress such violations or to enforce any provisions of this title or the terms of the plan." The application by insurers of this equitable relief provision of ERISA to recover overpayments has caused the courts to try to fashion "appropriate equitable relief" based on a number of different legal theories, including "lien by agreement," in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (206), the "common fund" doctrine, in U.S. Airways, Inc. v. McCutchen, 133 S. Ct. 1537 (2013), the old equitable remedy of "surcharge," in CIGNA Corp. v. Amara 131 S.Ct. 1966 (2011), and limiting equitable relief only to an identifiable res, in Montanile v. Bd. of Trustees of Nat. Elevator Indus. Health Benefit Plan, 136 S. Ct. 651 (2016).
Therefore, look closely at the "Benefits from Other Income" section of your long-term disablity plan document.
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