If you are currently involved in a personal injury claim and are out of work, you may be worried about how you will pay the bills until your case resolves. This is a common concern for those who are recovering from serious injuries. Fortunately, many Americans wisely purchase long-term and short-term disability insurance for just that reason. What happens to those benefits if you recover compensation in your case?
What Types of Benefits are Subject to Setoffs?
If you recover money from a negligent party in an auto accident, medical malpractice, or some other form of injury case, you will need to reimburse certain entities for payments made on your behalf. Think of it this way: You cannot recover twice for the same injury. Here are some common payment sources that may need to be repaid from your settlement or jury award:
- Private Health Insurance
- Medical Payments from Auto Insurance
- Some Long-term and Short-term Disability Benefits
- ERISA Health Plans
- Medical Bills Left Unpaid by Insurance
- Workers’ Compensation Liens
- Child Support or Other Government Liens
Things that do not have to be repaid from your personal injury recovery include:
- Health insurance payments for conditions unrelated to your injury
- Veterans Benefits
- Regular Social Security Retirement Income
- Any liens that are waived or released
When do You Have to Pay Back Short-Term Disability Compensation?
The best way to answer this question is through an example. Say you were injured in an automobile accident that put you out of work for two months. Fortunately, you have an employer-sponsored short-term disability plan that covers 80% of your regular income while you are out. You normally earn about $6,000 per month. Over the course of two months, your disability plan pays you 80% of your lost income, or $9,600. Now assume that you recover a settlement from the at-fault party, including full compensation of $12,000 in lost wages. In most cases, you will have to refund or reimburse your disability insurance carrier for the $9,600, but you would be able to keep the difference.
When Might You Have to Pay Back Long-Term Disability Compensation?
A lot of the outcome will depend on the nature of the disability plan you have. In the example above, we looked at typical short-term disability plans that pay when you are out of work due to an injury or medical condition. However, long-term disability benefits (LTD) are a bit different.
Many large employers are self-insured, meaning benefits are governed by a federal law known as ERISA or the Employee Retirement Income Security Act of 1974. This law gives your employer a fairly absolute right to recover benefits paid to you if you recover compensation from someone else. With these types of plans, there is a necessary assumption that the disability is prolonged and will not quickly resolve. In many cases you will be required to also apply for Social Security Disability (“SSDI”) benefits.
Are There Times When You Will Not Have to Reimburse a Disability Plan?
Maybe. When an experienced injury lawyer handles your case, he or she is sometimes able to negotiate with the disability plan or your employer in order to reduce the impact of the setoff or reimbursement. Think of it this way: If your employer has paid money to you for injuries caused by someone else, then they rightfully should be reimbursed. Of course, the employer or its insurance carrier also realizes that it could take years to succeed at a jury trial. Likewise, there is always a risk that you will recover nothing at trial. In order to mitigate this risk and get paid something, many disability plans will negotiate a reduction in their lien.
What if You are Denied Disability Coverage?
If you are unjustly denied long-term disability, you may have additional options. Often the problem stems from inadequate medical evidence or a physician simply not understanding the standard for qualifying you for disability compensation. Likewise, there are times when disability insurance plans misread their own bylaws or policies, and incorrectly deny compensation.
Most lawyers simply do not have the experience or breadth of knowledge to take on long-term disability denials, as these can be highly complex contractual disputes. But at Burke Harvey, LLC, our attorneys understand what it takes to make insurance companies comply with their legal obligations.
If you have been denied compensation or have concerns about losing your personal injury recovery to a long-term or short-term disability offset, call Burke Harvey, LLC today to schedule a free initial consultation. Our firm is made up of dedicated and thoughtful attorneys with decades of legal experience. We carefully assess each case with an eye toward doing justice. With offices in Atlanta and Birmingham, we handle a variety of injury claims, ranging from auto accidents and medical negligence cases to complex litigation against insurance companies for improper claims denials. If you need legal representation, you can count on Burke Harvey, LLC to fight for the justice you and your family deserve.