Favorable Disability Determination can affect Long-Term Care (LTC) Benefits
October 30, 2018
Is a Favorable Disability Determination by the Social Security Administration binding on the Long-Term Disability (LTD) Carrier who has required the Disabled Worker to File for SSD?
There are instances where after a favorable Social Security Disability decision, the Long-Term Disability (LTD) carrier will decide to stop benefit payments, essentially thumbing its nose at the favorable determination. While the lay person would logically think that if the LTD carrier or ERISA plan is going to reap the benefit of Social Security’s favorable decision by then claiming an offset, then it should also be bound by that decision to continue the person’s LTD benefits, albeit at a lesser rate. Unfortunately, the case law in the various Federal Circuit Courts differ and the general rule is that the LTD carrier or ERISA plan administrator is not bound by a Social Security Administrations’ favorable disability determination when reviewing a claim for benefits under an ERISA LTD plan.
While an ERISA decision maker is not automatically bound by the favorable findings of the Social Security Administration that a person is disabled, the ERISA decision maker is not free to ignore the decision of the Social Security Administration. The fact that a person has been found disabled by the Social Security Administration is a factor that courts will consider when reviewing the denial of LTD benefits.
When a court is determining just how much weight should be given to a Social Security decision, the court generally looks at the decision and the context of the record as a whole. A court should apply increasing amounts of skepticism to the LTD carriers decision making, taking into account such factors as: whether the plan required the disabled employee to apply for Social Security Disability Benefits; and whether the LTD carrier benefited financially from the favorable decision from the Social Security Administration.
In my opinion, both the purchasing employer and the employee should scrutinize the terms and conditions of any LTD policy and determine if it is worth the premium that the employer is paying or that the employee is sharing with the employer.