Long-Term Disability Benefits

There are two types of long-term disability insurance: Social Security Disability Insurance and private long-term disability insurance. While many people get approved for both, not every medical condition qualifies for both. It’s important to understand the differences between the two and when they may apply to you.

The Social Security Administration offers Social Security Disability Insurance, which provides a financial backstop for someone who is too disabled to work. SSDI replaces some of your income when you won’t be able to work for at least one year due to an illness or injury.

Everyone who pays payroll taxes has access to this program. Even people who don’t work may access benefits based on their spouse or parent’s work history. SSDI is most people’s first recourse when they become disabled.

Private insurance companies offer long-term disability insurance, which provides an income replacement for people who can’t work due to a prolonged illness or injury. You can purchase it individually or as part of a group plan through your employer.

Private long-term disability benefits serve as an alternative or adjunct form of disability insurance alongside SSDI. But most people who apply for long-term disability benefits are required to apply for SSDI first. If both the government and your insurance company approve you for SSDI benefits and private long-term disability benefits, then the insurance carrier may subtract your SSDI amount from your private benefits each month.

To receive SSDI benefits, you’ll need to provide medical documentation that supports your disability claim. If your claim is approved, you’ll be awarded monthly benefits to replace a portion of the income you used to earn.

SSDI does not provide benefits for people with short-term disabilities. If doctors expect your condition to improve within a few weeks or months, you’ll need to apply for private short-term disability benefits instead.

Many medical conditions may qualify you for SSDI benefits. Approval decisions are usually based on the severity of your condition and not just the condition itself.

To quality as severe, your condition must significantly limit your ability to do things such as sitting, standing, walking, communicating or remembering. In addition, your condition must prevent you from doing any work you are qualified for, and it must expect to last at least 12 months or to end at death.

Mental disorders such as depression and anxiety also may qualify for SSDI if the disorder is severe enough and resistant to treatment. However, the subjective nature of symptoms makes the approval process more difficult.

The amount of money you receive from SSDI depends on how much you paid into the program before you were disabled. The median recipient receives about half of their previous income from SSDI. Because of caps on how much of your income is subject to Social Security taxes, lower-wage earners usually receive proportionally higher benefit amounts.

Long-term disability insurance supports anyone who wants to ensure their income will be secure regardless of their ability to work. Most medical conditions that qualify for SSDI benefits also qualify for long-term disability insurance. So, many people will use private long-term disability insurance to fill gaps in their SSDI coverage.

For example, one might rely on private coverage for income during SSDI’s five-month waiting period or use it as an addition to their SSDI benefits for higher overall income.

Every insurance company defines disability differently. Your provider may not approve you for long-term disability benefits even if you were approved for SSDI. Conversely, the government may not approve you for SSDI even if your provider approves you for disability coverage.

Review your personal disability insurance contract to get a better idea of what your provider considers a disability. For example, some providers consider a person disabled if they cannot perform the duties required in their current occupation. Others require the disability to be severe enough to make employment impossible.

Regardless of the definition your provider uses, you will need to submit your medical documentation for their review. This is true even when you were previously receiving short-term disability benefits from the same provider for the same impairment.

You’ll receive long-term disability benefits after a certain period has passed following the onset of your disability. This time span is called the elimination period, which is a standard part of contracts to ensure it’s not a short-term disability. Most long-term disability plans have an elimination period between 30 days and two years.

According to the U.S. Chamber of Commerce, 90 days is the most common elimination period length. Check the details of your plan to confirm how long you’ll have to wait.

Many states require employers to provide their staff with long-term disability insurance. However, this coverage doesn’t always provide enough income to keep you financially healthy during the time you miss work. This is why many people buy private long-term disability plans even if they have access to work disability plans.

Long-term disability insurance is a good idea for anyone who wants to secure their earning potential. According to the Centers for Disease Control and Prevention, one in four U.S. adults has a disability. While not all people are so severely disabled that they can’t work, many find themselves unable to earn as much as they used to.

It’s not just physical laborers who should worry about this possibility. In fact, nearly 11% of U.S. adults have a disability that seriously impairs their ability to concentrate, remember things and make decisions. These impairments can drastically limit one’s ability to perform office work, which in turn, may reduce their earning potential.

Long-term disability insurance protects you and your family from the financial impact of these problems. It’s a critical part of a good safety net no matter which industry you work in or how much money you earn.