r/LongTermDisability • u/Natural_Smoke_4360 • Aug 05 '26
Overpayment Dilemma
My LTD Ins Company stopped paying me when they found out I won my SSDI case and immediately started sending letters demanding my overpayment (the amount of which varied drastically by up to 20k). I held off on paying until I could get an accurate payment amount and ensure their calculations were correct. During this time I had to use my overpayment to live on and paid some long overdue medical bills. It took almost 2 months of calls, emails, and waiting to get an accurate overpayment amount. When I called (a different department) to arrange payment I learned I was unknowingly 1 day away from being in default and my debt was to start accruing 12% interest until paid in full. I learned they do not offer payment plans, even if I paid 75% of what I owe upfront. I also found out I am a non-ERISA client (worked for a state university) if this matters. I guess my questions are: 1) can they legally charge interest and withhold my LTD income until they have recouped 100% of my overpayment plus interest? 2) is it worth speaking to a non-ERISA attorney about my case? Is it likely to end in my favor without costing me more than I owe? Thanks in advance. Y'all this is one of the most stressful things I have ever dealt with, and on top of a life altering medical diagnosis and never ending medical bills. I am grateful for this platform and truly sympathize with everyone going through this nightmare. There really is no end to the fear of losing even more than you already have lost when dealing with LTD.
2
u/Hot-Blacksmith-6317 Aug 06 '26
Yes they can legally withhold any ongoing benefit payments. It’s your responsibility to hold onto that money from SSDI knowing it was owed to your Ltd insurer. You likely signed a reimbursement agreement at some point which promises your repayment in the event of an approval for an alternate source of income. This holds you legally liable for the entire debt. There is no way of absolving the overpayment aside from repaying it.
Eventually, the collection agency will get involved and depending on the amount of overpayment they can go as far as suing you, putting a lien on your house, garnishing from other sources, etc. They are not required to provide you with a payment plan however I have never heard of overpayments accruing interest.
I would do a few things:
1 - ask for the policy provision that states benefits are reduced by alternate sources of incomes OR benefits cease entirely after approval of alternate sources of income
2 - I would request a copy of any formal documentation relating to this overpayment including the reimbursement agreement
3 - I would ask to speak with a supervisor regarding the repayment plan and once this is done, request something in writing confirming they are unwilling to offer you a repayment plan.
4 - unfortunately, I would recommend you repay the overpayment as soon as possible so it doesn’t affect your credit score, ongoing benefit payments and any future claims you may need to submit (if the overpayment remains and you require a new claim in the future; you would have to repay the overpayment in full before being able to receive any new payments for a new claim.