In addition to dispensing retirement benefits for working Americans, the federal Social Security program provides income support to eligible individuals who become disabled through a medical or accidental emergency.
Social Security Disability Eligibility
Some of the criteria for being eligible for Social Security Disability payments include a disability that prevents a person from working which is expected to last a year or more or results in a life expectancy of less than one year.
Social Security determines eligibility for either retirement or disability benefits based upon the number of calendar year quarters a person has worked. To be eligible for disability benefits a person must have worked:
- Enough quarters to qualify for Social Security benefits (“duration of work” test)
- Enough quarters in the recent past (“recent work” test). The number of quarters of recent work required for disability benefits increases with the applicant’s age.
Social Security Disability Denials
However, even though the applicant may indeed be disabled and collecting disability payments from a long-term disability insurance policy, the Social Security Administration may still deny the disability claim. In fact, very few disability applications are approved upon the first application and result in a lengthy appeal process. Often individuals must engage the services of an attorney in order to obtain their disability payments.
Social Security Disability Payments
However, once approved, Social Security Disability pays the monthly amount of Social Security that the applicant was entitled to at the time of disability.
Since the application process is typically a lengthy one, an approved individual eventually receives a lump sum payment that covers the time period from the date of disability, as determined by Social Security, to the date of approval.
Long Term Disability Insurance and Social Security Disability
An employer-sponsored long term disability insurance policy typically guarantees 50 to 60% of an employees’ income upon disability. However, the amount of the monthly disability insurance payment generally is reduced by the amount received from Social Security Disability. The insurance company will pay the full monthly benefit amount during the Social Security application process but the insurance carrier will require reimbursement of the lump sum Social Security benefit.
Read and understand the provisions of a long term disability policy; you might not be entitled to the monthly benefit amount from the policy that you are expecting because it is reduced by your Social Security benefit.
Larry Parman
Attorney at Law
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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