Good morning!
I'd like some input on the wording of a long-term disability policy involving a critical matter. (Also, I'd greatly appreciate any input, even though I am not an agent.)
My husband recently transitioned to long-term disability, and he has private policy from his employer. As well, Social Security approved him for a monthly benefit. It's only $500 per month as most of my husband's work history is in Europe, not the United States.
Here's my question, the private insurer has been subtracting the $500 from my husband's monthly long-term disability benefit, which is 60 percent of his gross monthly income.
Based on something I read in his policy, I'm beginning to wonder if that is *allowable*.
The policy states that his monthly LTD benefit is:
1.) the lesser of:
a.) 60 percent of the your (sic) Basic Monthly Earnings rounded to the nearest dollar; or
b.) $8,000; and
2.) minus Other Benefits which you and your dependents receive for that month when added to the Monthly Benefit exceeds 70 percent of your Monthly Basic Earnings at the time you become (sic) Disabled for that month.
So, as a recap, hubby's LTD is a: 60 percent of basic monthly earnings and b: minus other benefits which you and your dependents receive for that month when *added* to the monthly benefit *exceeds 70 percent* of your monthly basic earnings at the time you become disabled for that month.
My new thought is that 60 percent of my husband's basic monthly earnings plus $500 from Social Security do *not* exceed 70 percent his basic monthly earnings. My new view is that the insurer should *not* be able to subtract hubby's pathetic Social Security income from his
monthly benefit. (The only really bright spot to all of this is that hubby's long-term disability income is *not* taxable because he paid the premiums with *post-tax* dollars.)
(For argument sake, let's say hubby's income is $100,000 per year. With that figure, his monthly benefit would be $5,000. Under that scenario, I would argue that hubby is allowed to earn $833 in Social Security benefits *before* the insurer can *start* subtracting Social Security benefits; 70 percent of gross monthly income would be $5,833.
Using the hypothetical $100,000 figure, I say the insurer cannot subtract $500 from the monthly benefit as that does not put hubby's income *at or over* $5,833. Under the hypothetical figures, I'm sure the insurer would like to cap combined monthly income at $5,000, or 60 percent of gross monthly income, from *both* long-term disability income and Social
Security.)
Does anyone have any insight before I contact the insurer? Thanks in advance for all insight.
I'd like some input on the wording of a long-term disability policy involving a critical matter. (Also, I'd greatly appreciate any input, even though I am not an agent.)
My husband recently transitioned to long-term disability, and he has private policy from his employer. As well, Social Security approved him for a monthly benefit. It's only $500 per month as most of my husband's work history is in Europe, not the United States.
Here's my question, the private insurer has been subtracting the $500 from my husband's monthly long-term disability benefit, which is 60 percent of his gross monthly income.
Based on something I read in his policy, I'm beginning to wonder if that is *allowable*.
The policy states that his monthly LTD benefit is:
1.) the lesser of:
a.) 60 percent of the your (sic) Basic Monthly Earnings rounded to the nearest dollar; or
b.) $8,000; and
2.) minus Other Benefits which you and your dependents receive for that month when added to the Monthly Benefit exceeds 70 percent of your Monthly Basic Earnings at the time you become (sic) Disabled for that month.
So, as a recap, hubby's LTD is a: 60 percent of basic monthly earnings and b: minus other benefits which you and your dependents receive for that month when *added* to the monthly benefit *exceeds 70 percent* of your monthly basic earnings at the time you become disabled for that month.
My new thought is that 60 percent of my husband's basic monthly earnings plus $500 from Social Security do *not* exceed 70 percent his basic monthly earnings. My new view is that the insurer should *not* be able to subtract hubby's pathetic Social Security income from his
monthly benefit. (The only really bright spot to all of this is that hubby's long-term disability income is *not* taxable because he paid the premiums with *post-tax* dollars.)
(For argument sake, let's say hubby's income is $100,000 per year. With that figure, his monthly benefit would be $5,000. Under that scenario, I would argue that hubby is allowed to earn $833 in Social Security benefits *before* the insurer can *start* subtracting Social Security benefits; 70 percent of gross monthly income would be $5,833.
Using the hypothetical $100,000 figure, I say the insurer cannot subtract $500 from the monthly benefit as that does not put hubby's income *at or over* $5,833. Under the hypothetical figures, I'm sure the insurer would like to cap combined monthly income at $5,000, or 60 percent of gross monthly income, from *both* long-term disability income and Social
Security.)
Does anyone have any insight before I contact the insurer? Thanks in advance for all insight.