FAQs About Offsets for Disability Insurance Benefits

If you are or will be receiving benefits under an employer sponsored group disability plan or private disability insurance plan, you may come across “offsets” (also referred to as “deductible sources of income”) that affect the amount paid out to you. In short, offsets are terms within your policy that allow your insurance company to reduce your benefit based upon other forms of income you may be eligible to receive from other sources. Examples include Social Security Disability Insurance (SSDI), Maryland Temporary Disability Assistance, workers’ compensation, and others. Still, you probably have additional questions about how these offsets work and your rights under the law. While a Maryland long-term disability lawyer can provide personalized information, some answers to other commonly asked questions may help.

What kinds of offsets is an insurance company allowed to apply?

As mentioned, an insurer can deduct disability benefits paid to you through Social Security, state programs, and other forms of income that you are eligible to receive – regardless of whether or not you actually collect them by estimating the benefits that are due. Additional offsets may apply for retirement or pension benefits, group insurance provided by your employer, and others. The key language regarding offsets is within your coverage description.

Where can I find information about offsets in my disability insurance policy?

You can locate the details regarding your disability offsets by referring to the language falling under the “Summary of Plan,” “Long-Term Disability Benefits,” or some related label such as “offset of benefits” or “deductible sources of income”.  If you get your disability insurance through your employer, you should be able to find the information on offsets within the Summary Plan Description.  The federal Employee Retirement Income Security Act of 1974 (ERISA) requires employers to give workers a summary of their insurance coverage, including rights and obligations under the plan. 

What does ERISA say about offsets?

ERISA does not directly address offsets, as the law focuses on the requirements for employers and insurers that offer benefits to employees. ERISA does not tell what types of benefits or amounts these entities must provide, and it does not regulate offsets.

Why are my disability benefits being offset?

There is no law prohibiting offsets, so insurance companies contract to apply them in order to avoid a “double dipping” situation. If you are receiving disability income from multiple sources, you could be making more through your benefits that if you were healthy and working.

How can I avoid offsets in my policy?

In most cases, there is not much you can do to change the effect of offsets for your disability benefits through a group policy with your employer.  For private insurance under an individual plan, you may be able to negotiate with your insurance company. An insurer is probably not receptive to making changes because the company will have to pay out more. Still, if your insurance company is not upholding its end of the deal, you should discuss your options with an attorney.

Consult with a Long Term Disability Lawyer About Offsets 

For more information on offsets and how they affect your benefits under either a group plan or a private disability insurance plan, please contact the Law Offices of Steinhardt, Siskind and Lieberman, LLC. We have offices throughout Maryland, in Glen Burnie, Owings Mills, Ellicott City, or Annapolis. Our team can set up a consultation with a long-term disability attorney at any of our locations.

Resource:

dhr.maryland.gov/weathering-tough-times/temporary-disability-assistance/

https://www.steinhardtlawfirm.com/erisa-and-the-department-of-labor/