Our law firm receives many inquiries from long-term disability claimants whose insurance companies claim that they overpaid them benefits and insist that the claimants pay them back. Often, these claimants do not have the money to pay the companies back and want to know their legal rights.
First, it’s important to know the common situations in which these overpayment issues arise. Group disability insurance companies that fund employer-provided disability benefits draft their policies to include “offsets.” An offset is a type of other income you might receive (or are eligible to receive) which reduces what the insurance carrier is obligated to pay you. If you receive other income which applies retroactively, the insurance company will require you to pay back the benefits it paid you during the relevant time period. As an example, below is language from a Lincoln National Life Insurance Company group disability policy.
RIGHT OF RECOVERY. If benefits have been overpaid on any claim; then full reimbursement to the Company is required within 60 days. If reimbursement is not made; then the Company has the right to: