Can You Collect Long Term Disability and Social Security?

Individuals can often receive both Long-Term Disability (LTD) and Social Security Disability (SSD) benefits concurrently, though financial adjustments apply. LTD insurance is typically a private or employer-sponsored program replacing income when illness or injury prevents work for an extended period. SSD encompasses government-funded programs supporting those meeting federal disability criteria. Understanding their distinct characteristics and how they interact is key.

Understanding Social Security Disability Benefits

Social Security Disability benefits, administered by the Social Security Administration (SSA), include two main programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). SSDI is an earned benefit for individuals who have worked and paid Social Security taxes, accumulating sufficient work credits. The required work credits depend on age at disability onset.

SSI is a needs-based program for individuals with limited income and resources, regardless of work history, funded by general tax revenues. Both SSDI and SSI require applicants to meet the SSA’s strict definition of disability. This mandates an inability to engage in substantial gainful activity (SGA) due to a medically determinable physical or mental impairment expected to result in death or last for at least 12 months.

The SSA’s disability definition is rigorous, focusing on an individual’s inability to perform any substantial work, considering age, education, and past work experience. Medical evidence must document impairment severity and its effect on working at SGA levels. For 2025, an individual cannot earn more than $1,810 per month from work to be considered non-SGA. This amount can change annually.

Understanding Long-Term Disability Insurance

Long-Term Disability (LTD) insurance replaces income if illness or injury prevents an individual from working for an extended period, often beyond six months. Coverage can be employer-offered or individually purchased. Unlike Social Security, LTD policies are contractual agreements, so terms and conditions vary significantly.

LTD policies have their own disability definitions, differing from the SSA’s and impacting eligibility. Common definitions include “own occupation,” where benefits are paid if an individual cannot perform their specific job, and “any occupation,” requiring inability to perform any job for which they are reasonably suited. Many group LTD policies initially use “own occupation” for the first 12-24 months, then transition to “any occupation.”

Most LTD policies include a waiting period, or elimination period, between disability onset and when benefits begin. This period typically ranges from 30 to 180 days. The benefit period, or total length of time benefits can be received, also varies, with standard choices including 2, 5, or 10 years, or extending to age 65 or 67.

How These Benefits Interact

A primary mechanism for concurrent LTD and SSD benefits is the “offset” or “integration” provision in LTD policies. Most LTD plans reduce their monthly payout by the amount of Social Security disability benefits received. This offset prevents over-insurance and ensures the combined benefit does not exceed a certain percentage of pre-disability income, typically 60% to 70%.

For example, if an LTD policy promises a $3,000 monthly benefit and an individual receives $1,500 per month from SSDI, the LTD insurer may reduce its payment to $1,500. The combined total remains at the initial LTD benefit amount. LTD insurers often require claimants to apply for Social Security disability benefits, as SSA approval reduces the insurer’s financial liability.

LTD policies also account for retroactive lump-sum SSDI payments. If an individual receives a large back payment from the SSA covering past months of disability, the LTD carrier will likely consider this an overpayment. The insurer will then seek to recover this amount, often by reducing or suspending future LTD payments until the overpaid amount is recouped. In some less common scenarios, a “reverse offset” might occur with Workers’ Compensation benefits, where Social Security disability payments are reduced if Workers’ Compensation is also received, ensuring the combined total does not exceed 80% of average current earnings before disability. This offset typically applies to the SSDI benefit, not SSI.

Important Considerations for Concurrent Receipt

When receiving both LTD and SSD benefits, individuals must adhere to specific reporting requirements. It is crucial to inform the LTD insurance carrier immediately upon approval for Social Security disability benefits and provide benefit details. Failure to report can lead to significant overpayments that the LTD carrier will demand back.

The differing definitions of disability between LTD policies and the Social Security Administration can create complexities. An individual might qualify for LTD benefits under an “own occupation” definition but not meet the SSA’s stricter “any occupation” standard. This divergence means approval for one benefit does not automatically guarantee eligibility for the other.

Retroactive lump-sum Social Security payments can significantly impact LTD benefits. If the Social Security Administration approves benefits with a past start date, a large lump sum payment for those back months may be issued. LTD carriers typically consider this lump sum as income for the corresponding period and often require repayment of LTD benefits previously paid for those same months. This can result in the LTD carrier demanding a lump-sum reimbursement or reducing future LTD payments until the overpayment is recovered.

Both SSD and LTD benefits can have tax implications, with differing rules. SSDI benefits may be partially taxable depending on total income. For 2025, if combined income exceeds $25,000 for single filers or $32,000 for married filing jointly, a portion of SSDI benefits may be taxable. The taxability of LTD benefits depends on how premiums were paid: pre-tax premiums mean taxable benefits, while after-tax premiums mean typically tax-free benefits. Consulting a tax professional is advisable.

Individuals receiving or applying for both benefits should thoroughly review their specific LTD policy documents. These documents outline exact terms regarding offsets, reporting requirements, and how various income sources, including Social Security, affect benefits. Understanding these provisions ensures compliance and helps manage financial expectations.