Receiving a long-term disability (LTD) diagnosis can affect every part of your life. If you also have obligations like child support or alimony, your previous court-ordered payments may quickly become difficult to manage based on a higher income.
Navigating disability and family law can be complicated. Are LTD benefits classed as “income” for support, you wonder? Can they be garnished? When should the court adjust an existing order? It is important to answer these questions as soon as possible so you do not miss any payments or face legal penalties. Understanding how LTD income is dealt with, whether you give or receive support, ensures safety for the future.
Is Disability Income Counted for Child Support and Alimony?
Family courts count Long-Term Disability (LTD) benefits as “income” for the purpose of calculating or varying child support and/or alimony (spousal support).
This is a critical distinction in family law. In general, disability payments are considered a substitute for lost income from your job. You receive these payments from a private insurance policy or public benefits like SSDI, Social Security Disability Insurance. Because child support and alimony depend on the other parent’s or spouse’s earning capacity, any replacement income, regardless of the source, is included.
Most state family law statutes broadly define "income" for support purposes so that all available funds are included. Disability benefits are definitely within this broad definition:
- Private Long-Term Disability (LTD) benefits — Private insurance policy payments are typically counted as income for both child support and alimony. These payments are a percentage of your regular salary and are treated the same as wages.
- Social Security Disability Insurance (SSDI) — These federal benefits are based on your work history and contributions to Social Security and are always counted as income for support obligations.
- Supplemental Security Income (SSI An exception of importance exists — Supplemental Security Income is a public assistance program based on need, not prior earnings. Most states do not consider SSI to be an income for the child support or alimony calculations because it is a last resort benefit.
The essential change involves the amount of income, not the existence of such an obligation.
The benefits from LTD usually equate to only 50% to 80% of your prior income. So, your overall support payment will more than likely be reduced as this is now based on your new lower disability income. However, you cannot simply stop paying support. You still have an obligation. You have to file for a modification with the court in a formal way. This will make the base of your new payments your disability benefits instead of your last salary, which is higher.
Can Child Support Be Taken from Disability?
Most of the time, benefits for disability can be garnished to pay child support or alimony due to a court order.
Federal and state law permits garnishment of benefits like SSDI and private LTD payments to enforce family support obligations. However, federal benefits are usually protected from garnishment except for this one debt. SSI payments are federally protected and are generally not subject to garnishment for child support or alimony.
The first thing you must do when you receive LTD benefits is to make a motion to change your support order so you do not accrue arrears based on your old salary, which you can no longer pay.
Modifying Child Support Due to Disability
If you are diagnosed with a long-term disability and your income drops significantly, you have a legitimate legal reason to lessen your child support payment amount. This is not an automatic process. You must formally request the change from the court.
Changing a standing child support order in any state can be done through showing “substantial and continuing change in circumstances” since the last order was made. A typical instance of such a change is an involuntary long period of loss of income caused by a disability.
- Involuntary loss — The word involuntary is the key term. Because you did not elect to leave the workforce or take on a lower-paying position, the court will generally consider your reduced income from Long-Term Disability (LTD) or Social Security Disability Insurance (SSDI) benefits valid grounds for modification.
- The burden of proof — To obtain a modification, you must prove to the court that you are disabled by submitting your approval letter, a statement showing your monthly income, and medical proof that your disability is permanent.
When the court finds a significant change in circumstances, it will use the child support guidelines in your state to recalculate the amounts.
- New income input — The court uses the same formula to set your new lower disability income (LTD or SSDI). Because the court views disability benefits as income, the resulting support obligation is now lower and reflects your current financial situation.
- Potential credits — If your children receive Social Security Dependent benefits based on your disability record, many states will give you credit for these auxiliary payments against your court child-support obligation, thus lowering the amount you have to pay.
Although your ability to pay something may have changed, the court is primarily focused on the child’s best interest. The judge will take into account both your disability expenses and the needs of the child before settling on a new amount.
Crucial Warning: Act Immediately. The change in child support payments will not take effect as of the date your income dropped. Usually, they are effective only as of the date you filed the motion to modify. If you delay taking action, you could have a hefty bill you cannot pay. This will be based on your past salary.
The Impact of Disability on Alimony (Spousal Support)
The relationship between Long-Term Disability (LTD) and spousal support (also known simply as “alimony” or “maintenance”) is like child support, but involves a more complex legal hurdle. The original divorce decree creates a more difficult legal hurdle.
Just like child support, alimony is based on a party’s income. A significant and involuntary reduction of that income because of a long-term disability is usually seen as a material change in circumstances, allowing for a modification. A court will consider a request to lower alimony based on two critical issues:
- The payer’s reduced ability to pay — The judge will deem your LTD or SSDI benefits part of your present income and recalculate your ability to meet the existing obligation. When a disability income is significantly less than the previously earned wages, the required payment will likely be reduced, provided the original agreement allows for it.
- The recipient's ongoing need for support — The control will take your decreased capacity to pay into account, and the carrying spouse’s financial need. If the recipient is unable to self-sustain or their financial income deteriorates, the judge may make changes in the reduction to balance out the fairness and need for the adjustment.
When it comes to alimony, the terms of your original divorce settlement or judgment are key, so review your legal document for a “non-modifiable” clause.
Many state laws allow divorcing couples to agree that spousal support will not be modifiable as to duration (how long it lasts) or amount (the monthly payment), even if one party’s finances change drastically.
- If the divorce decree says it is non-modifiable — If your divorce decree states explicitly that the alimony is non-modifiable, it will be very difficult or impossible to change the amount to be paid because of your disability or financial hardship after the fact. Under these circumstances, you are contractually liable for the original amount.
- In case the order is modifiable (or silent) — If the order is modifiable or silent, you must file a motion immediately with the court. If you become disabled involuntarily, that may provide powerful support for a claim to reduce the payment amount due to lower disability income.
It is important to speak with an attorney as soon as possible because waiting may only create unmanageable arrears that cannot be undone. You should know your original decree and how to file it.
Which Is the Better Option: SSDI Benefits or Dependent Benefits?
When Social Security Disability Insurance (SSDI) has been approved, the support calculations will change due to private insurance and dependent child benefits. The most important factor for reducing a parent’s out-of-pocket child support obligation is the interaction.
Most Long-Term Disability (LTD) policies, especially those through an employer, are designed to work with SSDI.
- Mandatory application — The beneficiary of nearly all LTD contracts must apply for SSDI benefits. Your LTD insurer may deny or reduce your benefits if you do not apply or cooperate.
- The offset provision — After getting SSDI approval, your private LTD benefit is typically offset (reduced) by the amount of the primary SSDI check. Let us say your LTD policy pays you $3,000 monthly, but your SSDI benefit is $1,500 monthly. In that case, your LTD insurer will only pay you $1,500. This is meant to avoid double-dipping and reduce the private insurer's costs. Although the total benefit you receive (LTD + SSDI) stays about the same, the source of payment changes.
One of the most significant financial benefits in any family law case is when a parent gets SSDI approved. A child of a disabled parent can often receive SSDI benefits based on the disabled parent’s earnings record. SSDI dependent benefits are also referred to as auxiliary benefits.
- Direct payment to custodial parents — This payment is a percentage of what the disabled parent receives. This is usually around 50% of the primary check (given to all entitled dependents). The custodial parent (the child support recipient) receives the Social Security Administration (SSA) payment.
- The child support credit — Most states allow the benefit to be used as a dollar-for-dollar credit toward a disabled parent’s current monthly child support obligation, though the exact rules vary by state.
If you are ordered by a court to pay $800 per month for child support, and your child receives $600 per month in SSDI Dependent Benefits, you only have to pay out-of-pocket $200 per month. If the benefit for the dependent is more than the child support amount, then your current support obligation will be reduced to 0. The extra money, however, usually goes to the custodial parent.
You still must go to family court and file a motion to modify to credit this amount towards your obligation officially. Getting approval for SSDI does not reduce the court order.
What to Do When Your Ex-Spouse Stops Paying Due to Disability
If your ex-spouse is disabled, you must be proactive as soon as possible to get child support. The first thing you do is communicate and collect information. Contact your ex-spouse immediately to determine their official status, specifically if they have been approved for Long-Term Disability (LTD) or, more importantly, Social Security Disability Insurance (SSDI). Request copies of your award letters and new income statements. The only way to realistically measure the extent of your support going forward is by knowing the source and amount of their new income, which a court will consider.
The first thing you should do is apply for SSDI Dependent Benefits for a child. SSDI is based on the work record of the disabled parent. Therefore, minor children are entitled to a monthly benefit paid directly to you from the SSA. Contact the SSA to initiate this claim. These funds are not automatically distributed and may take months to process. The key federal payment is by far the largest payment possible and can often give you credit equal to a significant portion of the current child support order.
Get ready for what’s coming: the court will potentially cut the money for child support. As losing the ability to earn income because of a disability is a “substantial change in circumstances,” the court has to recalculate the obligation based on your ex-spouse’s lesser disability income. However, this obligation rarely disappears completely. Your ex-spouse is responsible for paying any shortfall if the amount under SSDI Dependent Benefit exceeds the original obligation. Keep enforcing the original court order until a new one is made. If any arrears accrue, your local child support agency can garnish the SSDI of your ex-spouse.
Find a Social Security Disability Attorney Near Me
The transition to disability income is a significant financial event, but it does not nullify your legal duties to your family; it simply changes the numbers. Inaction is the most significant financial risk for both payers and recipients of support. A court order does not automatically change until a judge does. Therefore, arrears could quickly pile up based on your old salary.
If you are involuntarily losing income due to a disability, then you need specialized legal help immediately. Do not wait for penalties to accrue. Contact experienced social security disability attorneys at Leland Law today to file the necessary motion to modify your support order and ensure you receive proper credit for any SSDI dependent benefits. Protect your future financial stability by contacting our California team at 866-449-6476.
