About one in three Americans is covered by private long-term disability insurance—most often provided by an employer. If you are one of those who are eligible to receive company disability insurance benefits, you should be aware that if you become disabled, your company’s insurance provider may insist that you file for Social Security disability benefits. What’s more, they may press you to use an outside Social Security claim company of their choosing, oftentimes someone who is not an attorney. In reality, you can choose your own representative.
If you are awarded Social Security disability benefits, it may reduce your monthly private insurance disability benefits. Why? The reason can be found in a common disability insurance policy provision called “offsets.” Offsets permit your insurer to deduct from what they pay you other income that you receive due to your disability. Social Security Disability Insurance (SSDI) benefits are the most common type of offset. If, before you reach retirement age, you become seriously disabled to an extent that you cannot work, SSDI may pay monthly benefits to you. In 2020 the Social Security Administration paid an average monthly disability benefit of $1,258. It is easy to see why an insurance company may require you to file a Social Security claim—it is in their best interest to reduce what they have to pay you. However, you don’t have to use the insurance company’s representative.
It is important to remember that if you are awarded Social Security disability benefits, the cost of representation will be the same whether you use your own disability attorney or the disability vendor specified by your company! This is true, even if your insurance company tells you something different. If you get a back payment award from Social Security, under the offsets provision your insurance company will be entitled to that money. Our experience is that the disability insurance company will pay the representation fees by reducing the amount that you will owe them. So the cost is the same.
Long-term disability insurance companies are not the only insurance companies who contract with outside vendors to represent those applying for Social Security Disability benefits. We have also seen health insurance companies do the same. If you receive a letter from your health insurance company (or other insurance company) asking you to sign up with their vendor for representation, ask questions. For example, will an attorney represent you at a hearing, or a non-attorney? Will you meet with or communicate with that person before the day of the hearing?
However, there may be an occasion to use the insurance company’s representative. If a private Social Security attorney casts doubt on your chances of winning Social Security disability benefits, and the insurance company is forcing you to apply anyway (they may threaten to reduce your benefits by what you could possibly get from SSDI payments), you may have no choice but to use their vendor.
So what should you do if you are asked to hire your insurance company’s representative? Our recommendation is that you first seek an independent evaluation of your specific case. You can contact the local Chicago disability attorneys at Nash Disability Law for a fresh, unbiased opinion at no cost.