A brother of mine worked for a major employer and was injured while work for them. Through his employer he had long term disability insurance (LTD). With the help of the LTD insurance company, he applied for and was granted disabled status by Social Security. The LTD insurance company had been writing him checks to make up the difference between his social security disability payment and 80% of his salary.
Soon after the received disabled status from SS the LTD company told him they had more stringent requirements for disability than the government and stopped sending the supplement check. He hired a contingency lawyer who negotiated a settlement of $25,000 in cash. The law firm took 60% of the settlement leaving him with just $10,000.
My understanding is since this wasn’t a personal injury case he must report the full $25,000 as income even though he received just $10,000. Being disabled every dollar is important to him so I wanted to check to be sure I got it right or if there is a way to save him a few dollars. He has no other sources of income besides Social Security Disability Payments
