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ERISA plans may offset child’s Social Security benefits, says 7th Circuit

By: DOLAN MEDIA NEWSWIRES//March 7, 2012//

ERISA plans may offset child’s Social Security benefits, says 7th Circuit

By: DOLAN MEDIA NEWSWIRES//March 7, 2012//

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By Pat Murphy
Dolan Media Newswires

Employee benefit plans could reduce long-term disability benefits by the amount of Social Security disability benefits received by the plan participants’ dependent children, the 7th Circuit has ruled in affirming judgment.

The two plaintiffs in the case received long-term disability benefits under separate employee benefit plans. Each plan provided for a reduction of benefits if the disabled employee also received federal disability benefits under the Social Security Act. Pursuant to the offset provision, the plan reduced the plaintiffs’ benefits by the amount of Social Security disability benefits they received directly as well as by the amount of Social Security disability benefits paid on behalf of their dependent children.

The plaintiffs filed an ERISA class action, arguing that a child’s Social Security disability benefit is not a “loss of time disability” benefit as defined by the plan’s offset provision.

The court disagreed, explaining that “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.”

U.S. Court of Appeals, 7th Circuit. Schultz v. Aviall, Inc. Long Term Disability Plan, No. 11-2889.  March 2, 2012. Lawyers USA No. 993-3612.

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