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Denied Claims Blog
VA Benefits Not a Disability Offset
November 23, 2011
A battle rages between companies that provide disability insurance and recipients of those benefits. This is especially true if the recipient is a veteran receiving VA benefits. Several cases have been filed against various insurance companies, including Unum, on behalf of veterans.
The Key Legal Issue
Insurance companies reduce disability payouts under the disability insurance plan if a person has other “income.” In several cases, insurance companies have deemed VA benefits as income. Based on this presumption, an individual’s disability insurance payments are offset by VA benefits, reducing the payments. The legal issue at hand is the language used in disability insurance policies and the denial of benefits based solely on whether a recipient is receiving VA benefits.
Riley vs. Sun Life and Health Insurance Company
One disability claimant, James Riley, suffers from Multiple Sclerosis and applied for benefits through his group disability plan. His employer obtained the disability insurance plan through Sun Life and Health Insurance Company. When Mr. Riley applied for benefits, Sun Life offset the plan’s payout by the amount Mr. Riley receives through VA benefits. The case went to court, and two of the judges on the case agreed with Mr. Riley that his VA benefits should not be used to offset the amount of money he would receive under his group disability plan. However, one judge dissented and agreed with Sun Life.
Employee Retirement Income Security Act of 1974 (ERISA)
Whether VA benefits can be used to offset the payout of a group disability plan may depend on the language contained in the disability insurance policy. ERISA has an offset provision for other benefits, such as VA benefits, SSDI and Worker Compensation, received due to a disability. However, if the condition of disability filed under the group plan is different from the condition of disability filed for VA benefits, the offset may not apply.
The Common Practice of Offsetting Benefits
The list of insurance companies that offset disability insurance benefits is long. If you receive notification that your disability insurance benefits are going to be offset by your VA benefits, you do not have to accept the determination by the insurance company. In many cases, benefits are offset without merit. Essentially, the plan administrator makes the decision to offset disability insurance payments based solely on the fact that VA benefits are being received. There is no preliminary inquiry by the insurance company to determine the condition of disability filed for with the VA.
If your VA disability payments are for an unrelated disability, you may be due back payments from your insurance company. In addition, the language in your disability insurance policy may not require your payments to be offset by your VA benefits. The practice of offsetting benefits is a tactic used by insurance companies to reduce their payouts. The practice is widespread, and most people do not realize there is legal recourse. If your benefits have been reduced unjustly, an attorney can help you recover the lost benefits.
If you or your loved one’s disability insurance benefits have been offset by VA benefits, you should contact our attorneys for a free consultation. We will protect your legal rights and will make every effort to ensure you receive the compensation you deserve.