I’ve just reviewed a recent case out of the Northern District of New York that weighs in on the complicated issues of child support, dependent social security disability benefits, and group long-term disability benefits.
In that case, Mr. Brutvan was found disabled by both the Social Security Administration (SSA) and the insurance carrier who administered his group long-term disability policy purchased for him by his former employer.
In a normal situation, almost all (not every one!) long-term disability (LTD) policies contain an offset clause where any money received by the disabled individual for social security disability is reduced. This means that the LTD company may withhold from its monthly payment to you the amount you receive in social security disability benefits.
It’s important to remember that when you are approved for social security disability, you will receive additional funds from the SSA if you have a minor child.
Mr. Brutvan’s Case
Mr. Brutvan, it appears from the case opinion, was divorced from his wife with his minor child living with the child’s mother. Mr. Brutvan then agreed to have SSA pay his ex-wife directly whatever he received from them as his dependent benefit.
When the LTD company fought to recover from Mr. Brutvan the dependent benefits he received from the SSA, Mr. Bruzan said he does not really “receive” them because they go straight to his ex-wife.
The court found, when it examined the policy language closely, that social security disability benefits could not be offset by the insurance company. The court essentially stated that because a specific statement was missing from the policy stating that dependent benefits could be offset, a fair reading was that these kinds of benefits are not allowed to be offset.
What makes this case even more interesting is that no child support order was ever entered by the family law court. The LTD Judge’s opinion notes the divorcing parties handled child support informally. Therefore, there was no way to know if the dependent benefits were the “only” child support paid or if the dependent benefits were paid above and beyond child support.
Unfortunately, the court never reached that issue because they said no dependent benefits whatsoever could be offset. It would have been interesting to see if dependent benefits were permitted how the court would have handled this issue, keeping in mind that there was no way to distinguish the child support from the dependent benefits.
Settlement Agreements in Divorce Cases Involving Disability Benefits
I offer this case note not as specific advice, because each state has different domestic relations laws just like each federal circuit interprets ERISA differently, but as a reminder to be careful and creative when fashioning settlement agreements in divorce cases. And also as a reminder in all ERISA cases to read that policy with a fine toothed comb. Each policy is different and each policy may omit or add key language.
1) Chances are claimants are entitled to more than one set of disability benefits and;
2) The interplay of disability benefits and family law support obligations can be complex.
All persons who are or expect to be in a family law case that involves disability benefits should not hesitate to contact me for a consultation; I’m also available to strategize with family law attorneys who have disability benefits as an issue in divorce cases. You can reach me by phone at (301) 244-4523 or by email at email@example.com.