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[cancer] Disability insurance blues - Lakeshore
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Jay Lake
Date: 2013-09-22 07:27
Subject: [cancer] Disability insurance blues
Security: Public
Tags:cancer, economy, friends, health, law, personal, work
The disability process rolls along in fairly good order. A combination of foresight, luck and social privilege on my part means I will neither starve nor go bankrupt in the process of dying of cancer (assuming nothing really weird happens to my healthcare coverage along the way). I continue to not discuss it in detail for confidentiality reasons. However, a number of issues go on bubbling below the surface, per the comments below. And yes, I am receiving advice from competent counsel as well as a financial planner and a CPA. So I'm not at sea on all this. I'm just frustrated. Meanwhile…

[info]snippy responded to my recent post about the frustrations of not working [ jlake.com | LiveJournal ] with the following comment:
It's not right. But neither is giving a portion of the available support to people who are defrauding the system, because that portion is then unavailable to people who really need it.

Hard cases make bad laws, and one bad apple spoils the whole barrel. This is why, even though I believe it is unethical, I think we should move to a guaranteed minimum income for everyone with higher taxes on incomes over $100,000 to pay for it. No income limit on SS taxes either. (I believe it is unethical because of the negative effects on some people's characters, but the practicality overcomes those objections-no bureaucracy, no verification requirements, those things save money that then goes into the fund for minimum income distribution.)


To which I made a further response which I wanted to kick up to its own blog post here.
Except in my case, I'm not defrauding.

My private LTD policy was an employer sponsored benefit for which I paid the premiums out of my own pocket post tax. Its entire purpose was to provide partial income replacement should I become disabled working that job. Assuming the policy is actuarially sound (which isn't my problem either way), the premiums I paid fully offset the cost of the benefit I am now claiming.

However, if I receive any other disability income (such as SSDI), my LTD carrier deducts value of those payments from my benefit.

This is exactly the same as if I paid for a $20,000 life insurance policy and a $10,000 life insurance policy, but the carrier for the $20,000 policy only paid me $10,000 because I had the other policy also in place. How is this not flatly stealing from me? (Well, I know how, because this is how disability law is written. But it's written to flatly steal from people in my position.)

Furthermore, the LTD benefit is tax-free to me because of the way my premiums are structured. The SSDI benefit is taxable. I have just replaced a goodly portion of the LTD benefit with my SSDI benefit, and that dollar-for-dollar replacement is now subject to tax. Again, I flatly lose. Why?

Finally, the LTD benefit is specifically built around my statutory employment, designed to replace that income, again in a presumably actuarially sound manner. How is it relevant that I might have other income such as royalties from writing reprints, given I paid premiums for partial replacement of that specific income stream, into a policy designed for that purpose?

A similar set of issues pertains to the SSDI award itself, including the question of whether royalty income from work performed prior to the date of disability is considered offsetting income. One portion of the SSA rules says this is not, another portion says it is. They are flatly contradictory on the letter of the rule. What the heck am I supposed to do with this? Any fraud examiner looking at my case could choose either interpretation as it pleased them. I'm pretty sure SSA will always choose the interpretation that allows them a clawback.

I'm not defrauding anyone. I'm in a complex situation where even asking the questions could trigger a fraud audit, costing me a great deal of time and money to defend myself. It's very, very frustrating.
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Debbie N.
User: wild_irises
Date: 2013-09-22 15:53 (UTC)
Subject: (no subject)
I should probably dig in and answer snippy directly, but maybe they will see it here. Countless studies show that fraud at the individual level in benefits situations is minimal. It's not non-existent--if you really believe that one bad apple spoils the barrel, then the fraud argument holds. However, since fraud at the doctor/practice/hospital level is rampant, what you would have to get rid of first is the medical establishment, which it's hard to see how we could survive without.

Fraud, much as we may not like it, is a characteristic of all human endeavors involving money. It drives me crazy to see people like jaylake deprived of things that would improve their lives because someone else is doing What People Do.

The guaranteed minimum income solution is interesting and fruitful, but I guarantee you people somewhere along the chain would find a way to game it.
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User: lindadee
Date: 2013-09-22 16:02 (UTC)
Subject: (no subject)
I know this somewhat begs the question, but have you considered whether it would be more beneficial to give up the SSDI to receive the fulk benefit of the long term insurance?
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Jay Lake
User: jaylake
Date: 2013-09-22 16:13 (UTC)
Subject: (no subject)
My LTD policy actually requires me to apply for SSDI, in order to obtain the offset if possible. The system is absolutely rigged to privilege insurers.
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Skellington
User: skellington1
Date: 2013-09-23 15:31 (UTC)
Subject: (no subject)
Exactly -- *someone* will always find a way to game any system. The system isn't designed for them, though -- it should be made to do the most good for those who need it, and have it be understood that there will always be a certain, small amount of loss to fraud. Not really different from stores that budget for a certain amount of loss due to theft.
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bemused_leftist: pic#121392909
User: bemused_leftist
Date: 2013-09-22 19:12 (UTC)
Subject: (no subject)
Keyword:pic#121392909
Sounds like an example of 'cognitive tax imposed on the poor'.
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Karen
User: klwilliams
Date: 2013-09-22 23:06 (UTC)
Subject: (no subject)
My company has the same LTD benefit (pays 50% of your salary up to $60K a year), but I hadn't checked the fine print. SSDI would pay me about half that. I hope I don't end up needing it.
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Jay Lake
User: jaylake
Date: 2013-09-23 04:02 (UTC)
Subject:
I am sorry. I did not mean to misquote or misrepresent your good thoughts and advice.
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