There are undoubtably many complex situations which can arise from SSDI primary and family offset provisions contained within disability claims. Most ERISA group STD/LTD policies now contain provisions allowing the insurance company to reduce (offset) for monetary awards made by social security. The intent of the offset is to prevent claimants from receiving BOTH SSDI and disability benefits which together exceed pre-disabilitiy income. It would not be fair for someone to actually make more money disabled that if working.
However, there are issues which can arise due to complicated family situations that do not make any reasonable sense at all. For example, recently one of our clients notified us MATRIX refused to remove a dependent offset from her monthly disability benefit. Our client was divorced some years ago, and is not the custodial parent of her son who turned 18 in June of this year. Our client’s ex-husband is also disabled and receiving SSDI. He was issued an SSDI award letter for himself AND his dependent son.
In the meantime our client presumed her son received SSDI benefits under her husband’s SSDI award. She received no benefit from any money awarded to her son over a period of years. MATRIX attempted to also offset pension benefits received by this client which she had immediately rolled over into retirement plan. When notified, MATRIX did remove the offset for her pension, but continued to offset for the dependent award of her son who was in custody of her ex-husband and who also benefitted from her son’s SSDI award.
MATRIX refused to remove the SSDI offset for our client’s son alleging the dependent could receive benefits from both his mother’s and father’s SSDI awards. Of course this isn’t true. When challenged, MATRIX claimed it consulted an expert who advised our client’s son could have received a dependent award under his mother’s “record” which was “awarded” to her ex-husband. MATRIX demanded my client go to Social Security and obtain a letter stating under which “record” the dependent award was made.
Sure enough, SSA granted the dependent award under our client’s “record” but awarded it to the husband and included the dependent on the husband’s award letter. According to SS, when both parents are receiving SSDI, the dependent award is counted under the “record” of the spouse receiving the lesser SSDI benefit. Where does this leave our client? My client must now pay MATRIX back $32,000 in overpayment for a dependent award made under her record. She was never the custodial spouse, nor did she ever receive any money for any dependent. Since her husband is actually an ex-husband, it is unlikely any assistance paying back the overpayment will come from him. Our client’s disability benefit has been reduced to $0 until the overpayment is repaid.
In this situation MATRIX attempted to offset for a retirement benefit which it was not entitled to. This mistake was corrected. Our client has been penalized by MATRIX because the policy says the company can offset SSDI benefits received or “entitled to”. To my knowledge not even Unum penalizes a claimant for dependent benefits received by an ex-spouse. In addition, MATRIX also is attempting to offset for the dependent award AFTER he turned 18. When questioned about it, a MATRIX manager said, “Well you didn’t tell us about it, so we didn’t know.” In my opinion, any company who knows enough to offset a dependent award in this complicated situation should also know when a dependent turns 18.
This situation isn’t going to happen all that often, but when it does it will be devastating to the parent with the lesser SSDI benefit and who will be penalized by the disability insurer even when no real money is received. Although MATRIX may claim it has a contractual right to offset our client’s benefits it isn’t reasonable to do so in this complex situation and the company could apply logic and not offset our client’s benefits. Of course MATRIX will offset our client and take her benefit. As to the issue of our client’s son turning 18, we now have to prove that fact before MATRIX will remove the offset altogether and compute the overpayment.
MATRIX is indeed a scoundrel and has actually threatened to report my client for fraud. The company probably won’t because it was reasonable for our client to presume her son’s SSDI award was taken from her ex-husband’s record since the son’s award was included on her ex-husband’s SSDI award letter. My client never knew her “record” was charged for the dependent award until she was asked by MATRIX to obtain a letter directly from SSA.
In my experience I have never found MATRIX to act as a fiduciary to any claimant for any reason. Its activities resembling “grabbing” for offsets is unprecedented. In any case, this situation points out what can happen when families are divorced, both parents are receiving SSDI, with one non-custodial parent. One of the parents will be hurt financially. In my opinion this situation should be brought to the attention of my client’s senators since clearly the intent of the offsets is not to penalize a non-custodial, disabled parent. Changes to the law need to be made.
DCS, Inc. gives a swift kick to MATRIX for attempting to take offsets it’s not entitled to, and penalizing a non-custodial spouse when it is clearly not the intent of the policy or law to do that.
I don’t get it..the disabled person is reason for the client’s son getting SSDI so why would it go on her husband and what does lesser benefit have to do with it? If the husband is on SSDI then the benefit is paid under his SS number–if it is not that is news to me and my wife–there is no way the benefit is paid under her and at the time I was awarded my benefit would have been more than hers–confusing at a minimum-but divorced and custodial parent is only one getting benefit unless a court order the mother/client to pay support and she “benefitted’ in that way–i was livid when I found out my kids SSDI was deducted–nobody knows this stuff until after they are disabled-folks-read your policies and buy extra insurance-and most of all pay after tax–killed by all of the above…and mine says SSDI and LTD can add up to max 60 percent of my old pay and regular bonuses-always paid-were excluded so its more like 46 percent of my pay 6 years ago…but at least they did not dump it…more i read here the more I worry frankly…i know its not your intent but better to be cautious then wind up with zero paychecks-that should be illegal to leave a person essentially to be foreclosed-have no ability to pay rent when they went along all this time and no fraud at all was involved–yes, call a senator client..