Insurance Companies and Social Security Disability Benefits?

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Why Do Car Insurance Companies Want People to Apply for Social Security Disability Benefits?

Yesterday, I received a letter from an insurance adjuster encouraging my client to apply for Social Security disability (SSDI) benefits.  My client was involved in a car accident last year.  She initially missed close to 6 months of work before returning to her job.  After a brief return, her treating doctor disabled her from employment yet again due to severe low back pain and other ailments. 

Under the Michigan no-fault law, a person is entitled to receive 85% of their gross wages from the car insurance company responsible for paying benefits.  However, the car insurance company can get a set-off if the claimant obtains Social Security disability benefits from the federal government

Under the Michigan no-fault law, and specifically, MCL 500.3109(1), “benefits provided or required to be provided under the laws of any state of the federal government shall be subtracted from the personal protection insurance benefits otherwise payable for the injury.”  This means the car insurance carrier for my client can take a set-off against the wages it has paid her if my client ends up receiving Social Security disability benefits in the future. 

This is not the first time an insurance adjuster has contacted me to encourage one of my client’s to apply for social security disability benefits so it can save a few bucks through a set-off. 

I find this practice appalling.  My client wants to get back to work.  She doesn’t want to rely on U.S. taxpayers for money.  Furthermore, the standard for qualifying for SSDI benefits is high.  An applicant is telling the U.S. government he or she is unable to engage in any substantial gainful activity (SGA) because of a medically determinable physical or mental impairment which can be expected to last for a continuous period of at least 12 months. 

It is unlikely my client would qualify anyway. 

To make matters worse, needless SSDI filings like the one the car insurance company wants my client to do only clogs the system.  Currently, it is taking 18 months to get a hearing with a magistrate on a Social Security disability case.  Individuals who really need the benefits and would qualify are being denied access due to this wait time. 

I told the insurance adjuster in writing that my client would not be applying for benefits.  It is a waste of time for her and a waste of government resources.  The car insurance company should do the right thing and pay her wage loss benefits, as mandated by the Michigan no-fault law, without trying to get a set-off.