Offsets Based on Social Security Benefits A Case Study
Many disability insurance policies, especially those governed by ERISA, are subject to offsets—meaning that the insurer can reduce benefits if the insured receives income from other sources. However, not all sources of other income are fair game, as evidenced in the case of Aisenberg v. Reliance Standard.[1]
Here, Mr. Aisenberg, an attorney underwent a serious open-heart surgery in July 2020 and was unable after that to complete the material and substantial duties of his job as an attorney. Reliance denied Aisenberg’s claim twice, before the Court ordered them to pay benefits. However, when calculating benefits, Reliance claimed that an offset applied to Aisenberg’s Social Security benefits.
Aisenberg’s policy stated that the “Other Income Benefits” that may be offset under his policy included benefits “resulting from the same Total Disability for which a Monthly Benefit is payable under this policy” which can include “disability or Retirement Benefits under this United States Social Security Act.” Aisenberg argued that his benefits should not be offset because he was not receiving Social Security disability benefits, but rather Social Security benefits from earned income (as a result of having reached retirement age). Reliance argued that because he began collecting Social Security benefits during the same year he became disabled, his Social Security benefits did result from the same disability.
The Court did not find Reliance’s argument persuasive and found for Aisenberg, stating that under the plain language of the plan, only Social Security disability benefits would be eligible for an offset, and it did not matter when Aisenberg took out his earned income Social Security benefits.
However, not all policies have the same policy language (for example, they may not have the same “resulting from” language in Reliance’s plan) and there are certain instances where, under some insurance company’s plans, offsets for all Social Security benefits could be taken.
This case highlights the importance of carefully reviewing your policy and understanding how offsets will work under your specific plan. If you feel that your insurance company is incorrectly applying an offset, it is a good idea to at least speak with an experienced disability insurance attorney.
Every claim is unique and the discussion above is only a limited summary of the court’s ruling in this case. If you are concerned that your insurer is not evaluating your claim under the proper standard, an experienced disability insurance attorney can help you assess the situation and determine what options, if any, are available.
[1] Aisenberg v. Reliance Standard Life Ins. Co., No. 1:22CV125 (DJN), 2024 WL 2154739 (E.D. Va. May 14, 2024).
