I have been receiving disability benefits through my former employer since Sept. 1995. I have recently been awarded Social Security Disability Benefits, effective date 9/96. I received a check from Social Security for back benefits. The disability company through my employer says I have been overpaid since Social Security is paying me for the same benefit period, and I must send them the check from Social Security. Can this be done? Also, I have been receiving benefits totalling 60% of my salary and recently read that it should be 80% of my salary. The discrepency between these two percentages came from 1. The policy sent to the employer regarding coverage limits (they said 80%) and 2. The benefits statement I received the day I began working for the company (they said 60%). The disability company is saying 60%, they do not agree with the written test in the policy guidelines. Another problem. Since the employer paid the premiums on the policy, I have had to pay income taxes on the benefits I received (at the end of the year I receive a W-2 with no taxes deducted). Now I am supposed to pay taxes on the Social Security benefits. How do I deduct the taxes from the lump sum check from Social Security if it does indeed have to go to the disability company? I certainley don't want to pay Fed. taxes AND then give the taxes back to the disability company. The disability company is reducing my benefits by the amount that Social Security will pay me monthly. For some reason, I feel that disability insurance is provided above and beyond Federal funds. Why do we (in this case the employer) pay for this insurance just to have it taken away? Is this disability coverage not a "perk" when you decide to work for the company? It sure hasn't been a "perk" for me recently, Major Headaches.........

Is this correct? If anyone can help me understand all of this (if anyone CAN understand all this) I would greatly appreciate it. Many Thanks,
Dolores

Didlad:
You obviously have a number of concerns, which are of a technical nature. I hope I can help inthis limited space.
1. It is not uncommon for LTD plans to off-set payments by payments recieved from Social Security (SS. However, most plans provide for a minimum monthly benefit even with offsets applied. If there is a minimum benefit, you would not have to send back all of the payments to the insurer. They should be required to show you how they figure what they overpayed you. Check your plan document or insurance certificate for this provision.
2. I doubt your plan has ever provided an 80% benefit. Most state insurance departments will not allow an insurer to sell a group policy that provides more than a 66 2/3%, in some rare cases they may be able to go up to 70%. I do not know the insurance law in your state. The 80% provision you read may be related to income indexing with regard to partial return to work provisions in your plan.
3. As far as federal taxes go, I know that the IRS requires you to pay taxes on the total LTD benfit payments if the employer pays the total premiums for the policy. You may have to talk to a tax advisor to determine the effects of reimbursing the insurer. You may be eligible for a refund of federal taxes after you reimburse the insurer. I'm sure you cannot be taxed twice for the same ampount of income.
When you find out more information, and have more questions, please post them and we'll see what else we can help you resolve.
Good luck.