Often, my clients get confused when I explain their Employer-sponsored disability plans to them. Most of them have never fully read these plans and are unaware of the term Other Income. Other Income refers to any other income (or benefits) you receive while you are receiving disability benefits from your Employer-sponsored disability plan.
For example, let’s say you are forced to stop working due to severe symptoms of your disability. Generally, your Employer-sponsored disability plan will begin to pay you benefits much sooner than, say Social Security Disability – which the insurance carrier will compel you to apply for, at some point. Let’s further say that you have been receiving benefits from your disability plan for about a year, but you have been waiting for the Social Security Administration to make a decision.
After a little over a year, you have been receiving 60% of your total income from your Employer-sponsored plan – $3,000 monthly, for example. Then Social Security reaches a positive decision on your claim, and those benefits amount to $2,000 monthly. Another year goes by when you are contacted by the insurance carrier demanding that you owe them a $12,000. They arrived at that amount by subtracting the $2,000 you received from Social Security from the amount they pay you – $3,000. That equals $1,000. Then, they multiplied that $1,000 by 12 months – the amount of time you were receiving benefits from both the insurance carrier and the Social Security Administration.
Understandably, most, if not all, of my clients have a very difficult time coming up with this money. Unfortunately, it usually is at this point that many of them contact my office for help.
What To Do
First, make sure that you read and understand your Long-term disability (Employer-sponsored) plan, backwards and forwards. Do that before you find yourself disabled. Second, depending upon your circumstances, you might want to invest in a Private, Individual Long-term disability plan in addition to what your employer provides. Many private plans offer higher benefits and not as many restrictions.
And third, if you become disabled, please contact a disability attorney before you apply for benefits. That will eliminate misconceptions altogether, and is your best protection against unforeseen events.