Lately the question of whether a long-term disability carrier can offset Social Security payments to a dependent has been a popular one. Most claimant’s are aware that their LTD plans offset Social Security benefits awarded to the disabled individual, but most plans also offset the SSD benefits paid to the dependents or spouse of the disabled individual as well, if those benefits result from the individual’s disability. As always it is important to read your plan documents carefully.
A household that receives Social Security benefits needs to be aware of who collects what amount and for what reason. For instance, assume Dad is a disabled individual with an adult disabled child living outside of the home and Mom is the child’s designated caretaker. Mom may receive a benefit from Social Security as the child’s caretaker. This payment cannot be offset by the LTD carrier however because the payment does not derive from Dad’s disability. Explained another way, if Dad is a disabled individual and Child A is disabled as well, any payment from Social Security for reasons of the child’s disability cannot be offset by the LTD carrier.
If a member of the household is designated to manage the funds for a disabled person other than the LTD recipient, those funds cannot be offset from the LTD payment because they are not benefits connected with the LTD recipient’s disability.
The only time an LTD carrier can offset the Social Security benefit paid to a spouse or dependent is when that payment derives directly from the claimant’s status as a disabled person.
Attorney Allen is an associate attorney of Alan C. Olson & Associates, s.c. If you have questions regarding social security disability benefits, please feel free to contact her at: [email protected]