Employment — ERISA

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United States Court of Appeals For the Seventh Circuit

Civil

Employment — ERISA

Children’s Social Security disability benefits paid based on a parent’s disability are “loss of time disability” benefits.

“As a result of that total loss of time, a Social Security disability benefits recipient is entitled to a certain ‘package of benefits,’ including dependent child benefits. See, e.g., Hopkins v. Cohen, 390 U.S. 530, 534 (1968) (holding that attorney fee award of percentage of ‘past-due benefits to which the claimant is entitled’ should include percentage of payments to disabled claimant’s spouse and children based on his disability). Those dependent benefits, then, are paid on account of the primary recipient’s total disability — or, put another way, because of the primary recipient’s total ‘loss of time’ from work. See 42 U.S.C. § 402(d)(1)(B). We are not swayed, as the Carstens court was, by the fact that dependents may continue to receive dependent Social Security disability benefits after the primary recipient has died, or the fact that the recipient receives a child’s Social Security disability benefits on behalf of and in trust for the dependent child. The benefits that are subject to offset under these plans are those paid under section 402(d)(1)(B) based on the parent’s disability. If the disabled parent dies, these benefits for children become survivor benefits and are no longer subject to offset (but the private disability insurance benefits also cease in all likelihood). The overriding purpose of the benefits — to replace income lost due to a disabled parent’s inability to work, see Califano, 430 U.S. at 213 — is unaltered. Social Security disability benefits, whether primary or dependent, are ‘loss of time disability’ benefits paid because of the primary recipient’s disability. Such payments fall squarely within the offset provisions of the plaintiffs’ disability plans and accordingly may be used to reduce their long-term disability benefits.

Affirmed.

11-2889 Schultz v. Avaiall, Inc Long Term Disability Plan

Appeal from the United States District Court for the Northern District of Illinois, Castillo, J., Hamilton, J.