Many of my clients are perplexed and upset when, after being approved by the Social Security Administration for Social Security Disability, the insurance carrier on their Employer-sponsored (ERISA) plan terminates their long term disability benefits. This happens every day.
Why? Because although insurance carriers that provide employer-sponsored benefits should consider your social security disability status when determining your case, they are not bound by the Social Security Administration’s decision that you are disabled. This seems odd, particularly since most insurance carriers compel claimants to apply for Social Security Disability soon after being approved for their Employer-sponsored plan. They do this, not to assist you in obtaining additional benefits, but to lessen their own financial burden. Typically, if you are approved by the Social Security Administration for disability benefits, the insurance carrier then deducts the money you receive from Social Security from the benefits you are receiving from your plan, i.e. them.
In other words, the insurance carrier that provides your employer-sponsored disability plan wants you to be approved for Social Security Disability so that they can save money on your claim.