If you watch television, you have probably seen the advertisements involving the duck that quacks for an insurance company that provides disability insurance. That has been a very effective advertising campaign as many people and companies have signed up for the insurance. Sometimes, we here at Ascend Disability Lawyers, LLC receive questions regarding whether a disabled person can receive disability benefits from both the Social Security Disability Insurance (“SSDI”) program and from a private disability insurer. The quick answer is “yes, but there will be a set-off.” Here is a primer on some legal issues with respect to private disability insurance and SSDI.
New Orleans SSDI Benefits: Private Insurance Disability Payments Will Deduct SSDI
As many know, SSDI is run by the Social Security Administration (“SSA”) — a federal governmental agency. In general, the majority of citizens in New Orleans and Louisiana are eligible for SSDI through the SSA if they have a disease or condition that prevents or severely limits them from engaging “in gainful employment.”
By contrast, citizens of New Orleans and Louisiana can apply for private — not governmental — disability insurance from many insurance companies. As long as the monthly premium payments are made, then you — the insured — are covered if you become disabled. Under most policies and as is true with SSDI, the cause of your disability does not matter. You can be injured at work, at home, in an accident and more.
However, certain types of workplace injuries might make a worker eligible for disability benefits under Louisiana workers’ compensation laws. Thus, most private disability policies have provisions requiring a set-off — a deduction — for any disability benefits received through the workers’ compensation laws. Likewise, most private disability insurance policies will provide a set-off for any payments received through SSDI. Further, most private insurance plans will REQUIRE that a person receiving benefits apply for SSDI benefits or workers’ compensation benefits. Often, failure to apply will result in cessation of private disability payments. With respect to the set-off, as an example, if you receive $3,000 a month from a private insurer and then begin receiving $1,000 through SSDI, your private insurance carrier will begin paying only $2,000 a month.
New Orleans SSDI Benefits: Case Example: Jackson v. Aetna Life Ins. Co.
A good example of how this works in practice can be seen in the recent US District Court case of Jackson v. Aetna Life Insurance Company, Civil Action No. 16-15837 (US Dist. E.D. Louisiana December 19, 2017). In that case, John Jackson worked at a biofuel plant in Mississippi operated by KiOR, Inc. In 2013, Jackson was diagnosed with various conditions that made it impossible for Jackson to continue working.
KiOR provided group employee benefits including disability insurance through Aetna. The policy provided long-term disability (“LTD”) benefits if a covered worker became unable to work. Following his diagnosis, Jackson submitted a claim to Aetna and Aetna determined that Jackson was eligible for LTD benefits. Aetna began making disability payments of $3,750 per month. However, Aetna required that Jackson apply for SSDI and also notified Jackson that any SSDI payments would be set-off against his monthly payments from Aetna.
After that, Jackson applied for SSDI benefits and, in April 2014, SSDI benefits were awarded in the amount totaling $1,636.80 per month. The SSDI benefits began in July 2014, but were retroactive to April. Aetna had paid the full amounts in April, May, June, and July and asserted that they had overpaid. Thereafter, Aetna began deducting $1,636 from Jackson’s monthly Aetna benefits and also began deductions to recover the overpayments. Jackson did not dispute these set-offs.
In addition to the SSDI payments, Jackson’s family — wife and minor son — applied for family benefits through the SSA. If you are eligible for SSDI benefits, under some circumstances, your spouse and minor children can also apply for so-called family or auxiliary benefits. In general, minor children with a parent receiving SSDI benefits are eligible to receive benefits. In Jackson’s case, the SSA awarded an additional $818 per month in family benefits. Aetna then began deducting $818 from Jackson’s Aetna monthly payment.
In the lawsuit, Jackson did not challenge the set-off taken by Aetna for his own SSDI benefits. However, he argued that Aetna was not allowed to take a set-off for the family benefits. The court disagreed with Jackson and held it proper for Aetna to deduct the $818 per month.
As the Jackson case demonstrates, disability benefits CAN be obtained from BOTH the SSA and from private insurance companies. However, nearly every private insurance policy will allow a set-off for payments received through SSDI or through some other government-paid program. But, of course, despite the set-offs, the private insurance provided significant additional monthly benefits to Jackson and his family. Aetna provided $3,750 a month; the SSA would have provided only about $2,400 including the family benefit.
New Orleans Disability Benefits: Denial of SSDI Benefits Can Lead to Revocation of Disability Benefits through a Private Insurer
There are many reasons that private disability insurance companies require that insured persons apply for SSDI benefits. First, as shown above, it allows the private insurance companies to pay less since they reduce their payments by the amount paid by the SSA. Second, failure to apply for SSDI (or workers’ compensation benefits) can be a basis for denying disability benefits entirely. Third, private insurance companies also use the SSDI system as a “check” on the veracity of the disability that is being claimed. If the SSA denies a claim for SSDI, the private insurance company is very likely to reevaluate the claim and very likely to rescind coverage under the private policy.
That scenario played out in another case involving Aetna. See Davis v. Aetna Life Insurance Company, No. 16-10895 (US 5th Cir. June 14, 2017). In that case, Lashondra Davis worked as a customer support worker. In 2010, she was diagnosed systemic lupus erythematosus (“lupus”), fatigue, and related conditions. Her employer provided various benefits, including short- and long-term disability (“LTD”) insurance through Aetna Life Insurance Company. After being diagnosed, Davis applied — and received — disability benefits through Aetna beginning in late 2010.
As required by the Aetna policy, Davis applied for SSDI.
However, the SSA denied her claim in July 2012. The SSA administrative law judge (“ALJ”) held that Davis did not sufficiently demonstrate the requisite degree of loss of joint and muscle movement and other conditions consistent with lupus. Further, the ALJ found that, based on the evidence presented, Davis had only mild restriction on her daily physical activities and that she only had mild difficulties with regard to concentration, persistence or pace — occupational related factors. The ALJ also determined that Davis’ self-reporting of physical and mental limitations was not supported by the medical evidence and, therefore, was not credible. As such, the ALJ denied the claim made by Davis that she was unable to engage in gainful activity.
Following the denial of SSDI benefits, Aetna re-evaluated Davis’ case. Aetna gathered additional evidence and had Davis undergo additional medical evaluations. In 2014, Aetna concluded that Davis was not disabled and notified Davis that her LTD benefits were being terminated.
Davis sued Aetna claiming wrongful denial of benefits. However, the US District Court ruled in favor of Aetna. With respect to SSDI, the court held that the ALJ’s denial of Davis’ request for SSDI highly relevant as to whether Aetna acted arbitrarily and capriciously.
For New Orleans Social Security Disability Benefits, Call Ascend Disability Lawyers, LLC
As can be seen, there is a complex web of legal issues involving in obtaining disability benefits. One must consider all of the requirements to obtain SSDI and other SSA benefits along with issues that might arise by virtue of policies issued private insurance companies. New Orleans and Louisiana are entitled to apply for and receive social security disability benefits if they qualify and to maximize your chances of success, you are going to need an experienced SSDI lawyer like those at Ascend Disability Lawyers, LLC. Ascend Disability Lawyers, LLC is a leading Louisiana SSDI law firm. We have been helping New Orleans citizen, and the disabled obtain the benefits to which they are entitled for over a decade.
