The Games That Carriers Play With Your Social Security Disability And Retirement Benefits

Welcome to another episode of Winning Isn't Easy! In today's show Nationwide ERISA Long Term Disability Attorney Nancy L. Cavey talks about " The Games That Carriers Play With Your Social Security Disability And Retirement Benefits" .

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Transcript

ERISA Attorney Nancy L. Cavey: 0:17

Hey, I'm Nancy Cavey national ERISA, and individual disability attorney. Welcome to this week's episode of winning. Isn't easy before we get started, I've gotta give you that legal disclaimer, because the Florida bar has, has said to me that I can't give you legal advice on this podcast, but now that I've said it, I assure you that nothing is ever gonna prevent me from giving you an easy to understand overview of the disability insurance world, the games, the disability carriers play and what you need to know to get the disability benefits you deserve. So off we go. Now, if you are on disability benefits or you are applying for your disability benefits, there's a lot you need to know. And one of the most important things you need to know is the games that disability carriers play with your social security, disability, or retirement benefits. I'm gonna talk about three things today. One what's in your wallet. It depends on what is in your disability policy or plan two can a disability carrier like Aetna deduct social security, retirement benefits from your ERISA, long term disability benefits. And three does a disability carrier like Aetna have to explain why it rejected your favorable social security decision. Let's take a break for a moment before we get started.

Professional Message:: 1:35

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ERISA Attorney Nancy L. Cavey: 1:56

Welcome back to winning. Isn't easy. You're ready to get started. Okay. What's in your wallet. Well, what's in your wallet. Depends on what's in your disability policy or plan many ERISA disability policies or plans provide for offsets, such as governmental retirement benefits. These provisions allow disability carrier legitimately and legally to reduce your gross monthly benefits. By any amount you receive for social security's retirement income, as well as any amount that you receive from your employer in a defined contribution retirement plan. So monies received from a four OHK or a 4 0 3 B pension plan, fortunately are not offsets to your benefits, but unfortunately, many long term disability policy holders find it over time. Their financial situations get desperate and they look for other money to help them pay bills and expenses, and they start tapping their retirement payments. Let's take this into consideration right now before you file your disability claim, or if you're on claim before you think about tapping that money. Now, if you voluntarily elect to receive retirement, uh, payments, even at a reduced rate, these retirement payments can be deducted dollar for dollar from your long term disability benefits. And that's particularly important if you have a disability policy that pays benefits through age 65 or for your lifetime, because again, any retirement payments you receive when you reach the normal retirement age of, or, you know, at 62 as you, if you take it early are gonna be deducted dollar for dollar from your disability benefits. Well, what about social security, disability benefits and the repayment of overpayment of long term disability benefits. Now, one of the offsets that shocks policy holders is the other income deduction for the receipt of social security disability benefits that you, your spouse or minor children receive as a result of your disability. This offset can reduce your long term disability benefits to the minimum mandatory payment. That could be either be a hundred dollars or 10% of the gross amount of your benefits. Each policy is different. So take a look at it, but you need to understand that most of these plans will deduct the amount that you or your spouse, your child receiver entitled to receive because of your disability under the United States, social security act, the Canadian pension or the Quebec pension plan or any similar plan or act. Now let's talk about this. I'm a social security lawyer in addition to being an MERISA long term and individual disability attorney. So this is a question I get all the time, this social security offset that allows your disability insurance carrier to deduct both the primary and the family, social security payments from your monthly gross benefits, uh, is one that you need to read very carefully, not all policies say your spouse and not all policies say your children. You need to make sure that only your social security benefits are subject to an offset. Now, if your policy has no provision at all, allowing for an offset, that policy is considered to be a non-integrated policy, and they're not entitled to take an offset. And that's particularly true with individual disability policies. So obviously before you stop work and apply for your benefits, um, you need to look at that. And quite frankly, when you're buying, uh, your ERISA disability, uh, coverage through your employer, you need to ask them, is there an offset for social security benefits, cuz it's incredibly common to see that in ANSA case. One of the things that you need to understand is that you can figure out how much your disability benefits might be by going to www.ssa.gov. And you can see what the estimated amount of your disability benefits would be, uh, and potentially that of your children. So if you add up those numbers, you need to figure out, well, geez, how much is my policy gonna be reduced for? How long? Um, and is there a minimum mandatory, uh, payment that's gonna be applicable here that makes this disability policy worthless. Now this can significantly reduce your benefits. And I think you need to know that right up front. Why? Well, because most disability policies require that you apply for your social security benefits. And if you don't, they are going to act as if you are getting those social security disability benefits. Um, and they're gonna reduce your benefits by whatever you or your dependents or your spouse could have gotten again, depending on the language in the, in the policy of the plan. Um, many of these, uh, provisions will also require you not only to apply, but if you get denied as two thirds of these are claims are denied at the initial application and request for reconsideration stage to follow through and have a hearing in front of an administrative law judge and lose. Now I know that's a waste of time for a social security lawyer, but I've had to do that. Um, in some instances, just to prove up that they did not have the right to an offset. Now, of course, that adverse decision came back to, to bite us in a bit, uh, because the disability carrier would argue that the denial supports their denial of the disability claim, but that's a topic for a different day. I just want you to understand that disability policies require you to apply. And if you don't apply, they're gonna act as if you're getting the benefits and you've gotta follow the, um, appeal process all the way through in a social security case. Got it. Let's take a break. Welcome back to a winning isn't easy can a disability insurance company like Aetna deduct social security, retirement benefits from your ERISA long-term disability benefits. I read all of the cases that come out every week that involve ERISA. And these are cases across the United States. And I read them because I think it's important not only to keep up with it all, but to learn the games that disability carriers play and how courts in, uh, deal with these games. So many disability insurance policies allow for the deduction of social security, retirement benefits from long term disability payments that the policy holders entitled to receive. However, the devil is in the details. You should get a copy of your policy or, or plan to determine whether the social security retirement benefits are allowed. So let me tell you the story of Smith versus Aetna and the particular policy in questioning what the judge did. This policy provided monthly benefits under the plan that said, and this is a bit confusing, but this is the kind of stuff you'll see in a, in the policy or plan language that the benefits payable under the plan will be the lesser of the scheduled monthly LTD benefits and the maximum monthly benefits minus all other income benefits, but not less than the minimum monthly benefit. This is sort of like a math equation, isn't it? And not particularly clear either. So what do we have to do? We have to look at the policy terms for the definition of other income, which defined that to include disability, retirement or unemployment benefits required or provided for under any law of the government, including benefits from the federal social security act. So in English, this provision allowed Aetna to deduct from Smith's long term disability benefits, any social security, retirement benefits he received. Now, Smith was a clever fellow, had a clever Le lawyer who I happened to know and Smith claimed that there was an exception to the rule that provided that the social security retirement benefits that the insured received, uh, could be deducted because he was getting those retirement benefits before he became disabled under his long-term disability, uh, uh, policy. So he argued that look, I was getting these benefits before I became disabled and you disability care can't reduce my benefits. My long-term disability benefits by something I was getting before I became disabled. Well, um, Hmm. Unfortunately the, uh, judge didn't necessarily agree with that. And as in most cases, facts matter. So Smith argued that he should be deemed disabled in February of 2016, because that was the day he became eligible for receiving his monthly long-term disability benefits. But the court noted that the issue was really what was the date Smith became disabled and not the date he became eligible to receive long-term disability benefits. And unfortunately for him, the two dates were not the same. So how did this play out? Well, Smith was collecting short-term disability benefits in August of 2015. He began collecting his long term disability benefits, 26 laters or February of 2016. But guess what? He began collecting social secure retirement benefits in December of 2015 in the middle of this whole timeframe. Okay. So he was collecting short term, then got retirement, then got long term disability, again, devils in the details. The policy says that under the terms of, of, of the policy or plan that the period of disability begins on the first day, you are disabled as the direct result of a significant change in your physical or mental condition while you're insured under this plan. So in this case, Smith's state of disability was August of 2015, which was the date he stopped working and he began receiving his short term disability benefits. Now he didn't become eligible for his long term disability benefits until he had satisfied that 26 week elimination period, he argued that I wasn't disabled for long term disability purposes, but the plan, the language was pretty clear. It said that the date, the person became disabled under the plan, uh, or policy was before the date. Um, in this case that Smith was eligible to receive his benefits. So he was disabled under the terms of the short term disability plan in August of 2015 and his eligibility for LTD benefits. Didn't negate the fact that he collected social security, retirement benefits in December of 2015. So he was getting these retirement benefits. Yes, we agree, but retirement is different than disability. Isn't it? When you apply for disability, you're saying there's a change in my physical condition. When you're filing for retirement, you're saying, Hey, I'm done. I'm I'm, I'm not gonna work for, for whatever reason. So they aren't the same thing, quite frankly. And the policy clearly said that the carrier had the right to take the offset based on the date of disability, which began when he stopped work and applied for short term disability. So I agree with this, uh, decision, uh, that the court entered finding that Aetna had the right to deduct the social security retirement benefits from his long term disability benefits. Now, does that mean that the carrier is also bound by a social security disability decision and they have to pay benefits. I'm gonna answer that in my next session. Let's take a break.

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ERISA Attorney Nancy L. Cavey: 14:26

Welcome back to winning. Isn't easy. Does a disability carrier like Aetna have to explain why it rejects a favorable social security decision when they deny or terminate your benefits. Many ERISA disability insurance policies or plans require that the disability policy holder or plan beneficiary apply for social security disability benefits when they apply for their ERISA disability benefits. The disability carrier obviously wants to reduce the amount of your benefits by the receipt of the social security disability benefits. And even those of your minor dependents. Again, this depends on the terms of the policy of the plan, but I want you to understand that there's a United States Supreme court decision and MetLife versus Glenn, that clearly states that if a disability carrier denies or terminates your benefits, um, they have to confirm in the denial letter that they have considered the social security decision and explain why they rejected that social security decision in finding that you weren't, uh, disabled or terminating your benefits. But what happens if the ERISA policy or plan doesn't require a request that you apply for social security benefits? What are their obligations at that point to explain its position? Now, this is a twist I will admit. Um, and again, this is policy specific. Um, I'm gonna tell you about the case of Yocum versus Aetna life. And I think the court got it wrong. I'm not afraid to suggest to the court that they got it wrong. It wasn't my case, but nonetheless, I think it's instructive. Unum was a ups employee who was disabled as a result of irritable bowel syndrome and Crohn's disease. Also, she had, uh, interstitial Pitis pelvic floor dysfunction and suffer from anxiety and depression. Clearly she was, uh, disabled. Now her long term disability claim was denied by Aetna and she ultimately filed a lawsuit in federal court, in Kentucky, the court upheld the denial and in doing so addressed Yoko's argument that the denial was arbitrary and capricious, and should be overturned because the denial letter failed to explain why Aetna had disagreed with a social security award. It's well settled law that the disability carrier plan isn't bound by a social security determination when reviewing a claim for benefits under Risa, however, case law suggests that it is arbitrary. And it's capricious not to explain why it's rejecting the social security award when the carrier or the plan requires, uh, the or requests that the policy holder or plan beneficiary apply. What's different about this case, as I've said, is Aetna didn't require Yocum to apply. So the court said that it wasn't reversible error when Aetna didn't explain why it rejected the favorable social security award. Now I think the judge was wrong because under ERISA rules and regulations, a disability carrier or plan, uh, has to provide the policy holder or the plan beneficiary with a full and fair review and explain what it considered, what it didn't, why it considered what it did and how it arrived at the decision to deny benefits or terminate benefits. Um, perhaps in this case, the court felt that Yoko, um, didn't help Aetna out because they never, Yocum never, um, sent Aetna the favorable written decision, uh, or, or the claims file. Uh, and many times the disability carrier will request a release asking for a copy of the social security, uh, file, which I have my client sign. So the court said that Aetna had no reason to explain why it didn't consider the decision. I read these cases because I think there are lots of lessons to be learned. And I think that regardless of whether the policy or plan requires or request a disability policy holder, or PO a plan beneficiary to apply for disability benefits that you should be doing with your lawyer, the following one sending in the entire social security disability application and supporting documents two as part of any social security disability claim, I regularly get residual functional capacity forms from the treating physicians, which are much more thorough than the attending physician's statement forms that disability carriers have your doctors fill out. I want that residual disability capacity form to be part of the material that is sent to the disability carrier. There are also times when, uh, I will secure a vocational evaluation as part of the claim submitted in the social security claim. I want that to be part of the claim. Now, if there has been a hearing, there will be the testimony of a vocational evaluator. So there are times when, um, I'm actually also ordering and submitting the audio transcript of the hearing so that the, the disability carrier understands the hypotheticals that were asked of the vocational evaluator and how the judge social security judge got to the social security decision. If you've had a functional capacity evaluation, uh, we want to submit that, uh, as part of, uh, any social security file, if it's been filed with the court. And then of course you want a copy of the written social security decision. Um, while the disability care can sort of cherry pick the stuff and the social security disability claim, I tell you, the courts will not be impressed if you're not supplying that information to the disability carrier and are reluctant to overturn a wrongful claim, denial termination on the basis that the carrier didn't consider or what you didn't send them, got it. You wanna make them respond to the fact that your benefits were awarded and if they don't do it properly and they're required to do so by the terms of the policy or ERISA regulations, then you've got an avenue of attack. Got it. All right. I hope you've enjoyed this week's episode of winning. Isn't easy, please like this page, leave a review, share it with your friends and family and subscribe to this podcast. That way you'll be notified every time a new episode drops. I hope you tune into the next week for another insightful episode of winning. Isn't easy. Thanks.