When you are awarded Social Security Disability why do you have to repay a portion of your benefit to the insurance carrier when you paid LTD benefits through your employer with after tax dollars?

There are two circumstances in which you would have to repay benefits once you qualify for Social Security disability benefits:

The first is if you own an individual Disability policy that includes a Social Insurance offset benefit. Social Insurance benefits are benefits that the insurance company pays on a disability claim, but will offset dollar-for-dollar with social security benefits.

The second is if someone receiving benefits from a group Disability policy is eligible for social security benefits. Every group policy will have a provision in the contract that explains how benefits will be handled when a claimant is eligible for social security benefits. As much as group policies are great because they are less expensive and usually can be obtained without medical underwriting, the contract itself is not as good. In a sense, you get what you pay for. Most group disability policies will offset dollar-for-dollar with any social security benefits received, including personal and family benefits. In many situations the amount you will receive from the actual disability insurance company will be minimal.

More specific to the question being asked - it can take a long time for social security benefits to be approved and paid. Therefore, many times the insurance companies will pay out benefits during months in which a claimant was technically eligible for social security benefits. Once the social security benefits are approved and paid, the claimant will be expected to repay the insurance company for all benefits paid that would otherwise have been offset. A claimant will not be expected to repay benefits for months in which they were not eligible for social security disability benefits.