[cancer] Disability insurance blues

snippy

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.)

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.