A federal appeals court recently ruled in favor of a Vietnam Veteran, determining that his long-term disability insurance carrier cannot reduce his monthly payment by the amount he gets from veterans' benefits. The logic of this decision potentially impacts every veteran who is concerned that obtaining Social Security disability (SSD) benefits or insurance coverage in combination with veterans' benefits will decrease his or her overall income.
When multiple sclerosis made it impossible for him to work, James Riley left his job. The provider of his long-term disability insurance, Sun Life and Health Insurance Co., began paying him benefits. Two years later, Sun Life found out that Riley was receiving veterans' benefits for a disease he contracted during the Vietnam War. Sun Life reduced the amount it was paying Riley, pointing to language in the policy that said that the benefits it was paying Riley could be reduced by "other income." Sun Life's policy defined "other income" as any amount of disability or retirement benefits under the U.S. Social Security Act, the Railroad Retirement Act, or any other similar act or law.
Riley disagreed with Sun Life's interpretation of the policy, sued in federal court and lost. He appealed the decision and the Eighth Circuit Court of Appeals overruled the lower court.
The appeals court determined that veterans' benefits are fundamentally different from SSD benefits. The court commented that SSD benefits are based upon employee contributions into the program, while veterans' benefits are obligatory compensation for injuries sustained during military duty. Because SSD benefits or insurance and veterans' benefits are fundamentally different kinds of income, obtaining one cannot lead to a decrease in the amount received by the other.
Effect of the Ruling
The most obvious effect of the court's ruling is that injured veterans may now be eligible to collect both veterans' and disability benefits. The court's ruling makes it clear that veterans' benefits are different from other benefits, such as SSD and insurance payouts, because veterans' benefits are mandatory compensation for injuries. Disability insurers with policy language similar to Sun Life's may no longer reduce payments to veterans just because the veteran is collecting veterans' benefits.
Determining whether SSD benefits or other disability insurance coverage will affect your eligibility to receive other income can be a frustrating and stressful experience. An attorney experienced in disability law can help you recover the benefits that you deserve.
