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SSDI and LTD offsets basics

ERISA Long-Term Disability Policy “Offsets”

If you only receive SSDI benefits, this section may not apply to you. However, if you receive both SSDI and LTD benefits from an ERISA policy provided by your employer, you may have an “offset” provision in the policy for earned income.

In other words, any income that you earn (including from part-time work), even if it is within the permissible SSA guidelines (e.g., less than SGA), that income may be deducted from the LTD benefits that your policy pays under an “offset” provision in the policy.

Common “offset” provisions are for social security disability benefits, workers compensation benefits, and state disability benefits. These and other offsets reduce the amount of disability benefits you receive to avoid “stacking” benefits.

Of course, it is important to check your LTD policy under the “Other Income” or “Coordination

With Other Benefits” sections of the policy to determine exactly what your policy provides.

However, many LTD policies provide that your LTD benefits will be “offset” or reduced, on a dollar-for-dollar basis, for:

∙           Salary, compensation, or income you receive from any other employer.

∙           Benefits you receive from any Federal, State, county, municipal, or other government agency.

∙           Temporary state disability benefits.

∙           Benefits from any workers' compensation law.

∙           Benefits you receive, or are eligible to receive, under the Social Security Administration.

“Earnings” typically do not include “passive” or unearned income, such as dividends, interest, capital gains, retirement, pension plan, or royalties.

Therefore, you may not be able to “keep” any earned income under Social Security's TWP or EPE provisions, because the income you earn may be applied by the insurer to offset your LTD benefits.

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