Most people who read Lindnee’s Blog contact me because they know I will always tell them the truth about their claim situations and because I have the knowledge and experience to provide accurate answers. This is one of those siutations.
I seem to be hearing a lot lately from claimants who either did not give back their SSDI retro-active payments to insurers, or who do NOT want to repay insurers when they get the money from SSA. Although nearly all claimants are asked to sign “Payment Option Forms” where they can opt to receive 100% of the benefit while waiting for SSDI, or have estimates for SSDI awards removed from benefits. Not too many people actually choose estimates.
I completely understand how hard it is to give an insurance company the $40,000+ payment from SSA when it is more money than you’ve ever had together in one place, ever. People who are disabled are often behind on mortgage payments, medications and are in debt. It’s difficult to pay back money that is needed to meet family debts and obligations.
The truth is, insurers “FRONT” you the money and pay you total gross benefits while waiting for SSA to award SSDI. If you did not want to “give back” the overpayment, then you could have opted to have your benefits reduced by an estimate for SSDI. But, of course, no one wants to do that. I’ve had claimants tell me, “I want my full benefit now and I’ll worry about the overpayment later.” The problem is, “later” usually means the over payment never gets paid back.
Of course, the usual question that follows is, “What can my insurance company do to me if I don’t pay it back?” Well, they can (and will) reduce your benefit to $0 until the overpayment is paid back, or they can sue you. In fact, for a period of time Unum became fed-up with claimants not handing over the overpayment that they changed the Payment Option Form to include a voluntary lien on all property and assets to recover the overpayment.
Unum has since changed the POF again, but the message is clear: If you promise to payback the overpayment when we front you the money for SSDI approval, then you should pay it back. If you don’t, we’ll recover it from you by taking your benefit and assets.
Some insurance companies like The Hartford won’t front claimants a full benefit at all, and take estimates for SSDI offsets from the very beginning. The point I am trying to make is that claimants cannot expect insurers to operate in “good faith and fair dealing” when at the same time refusing to pay back what was promised.
My opinion and recommendation is that if you sign the Payment Option Form promising to pay back the retro SSDI award, then you should pay it back. If you don’t want to hand it over, opt to have an estimate removed from your monthly benefit.
Claimants cannot expect insurers to operate in good faith and fair dealing while at the same time going back on a promise to repay what was “fronted” while waiting for SSDI to make a decision. Some insurance companies will “make a deal” to have a stated amount removed from benefits, but not all will agree to a minimal payment.
This Consultant believes, and recommends, that claimants have an obligation to obtain copies of their Plans and understand the “offset” provisions (reductions) prior to disability. Nearly all integrated Plans contain provisions allowing insurers to reduce benefits by Primary and Family SSDI Awards.
Many people I speak to on the phone who tell me they don’t want to pay the money back do not have a copy of their Plan, and do not understand why an overpayment will exist iin the first place.
It is the “WRONG thing to do” to request maximum benefits while waiting for SSA to make a decision, promising to pay back in the future, and then refusing to repay what’s owed once the money is received. Insurance companies FRONT you the money with a promise that you will pay it back once SSDI is awarded. In a sense, the Payment Option Form is a separate contract that claimants breach when they don’t payback what is owed.
I believe that both parties in the SSDI offset process should be fair and honest.