Disability Insurance, Worker's Comp, and Social Security

There may come a time when, because of injury or illness, it is not possible to work and earn an income. Thankfully, financial safety nets do exist. You could be eligible for a variety of government and employer plans that can provide you with cash benefits during your disability. To know which is right for you, understand the basics of each.

Short and Long Term Disability Insurance

Your employer may offer short-term disability (STD) and long-term disability (LTD) insurance policies to employees. Premiums may be paid either by you or the company.

STD pays a percentage of your salary, with a set maximum cap, if you become temporarily disabled. Depending on the policy, you can receive 50, 60, or 66 2/3 percent of your weekly salary for 13 to 26 weeks. Benefits are virtually guaranteed, paperwork is minimal and most policies begin paying out within one to 14 days after you become sick or disabled. Most employers do require you to use any sick time and vacation days that you’ve accumulated before your benefits begin.

Long-term disability insurance takes over when short-term disability ends. It usually replaces at least 50 percent of your salary (up to a specific amount), and can provide you with benefits for years.

Social Security Disability Benefits (SSD)

SSD benefits are available if you have accumulated a minimum number of Social Security credits, and you are unable to work for a year or more because of a disability.

To receive SSD, you must prove that you are unable to do the work you did before the disability, and cannot adjust to other work because of your medical condition. To determine disability, Social Security will use the medical evidence from doctors and hospitals where you’ve been treated.

SSD benefits are not guaranteed. In fact, the majority of claims are rejected the first time around, so be prepared to put a considerable amount of time and energy into the process. Benefits do not start right away either, but (in the best case scenario) begin the sixth full month after the date the disability began, and continue until you can work again on a regular basis. It is best to avoid counting on the benefits to arrive in a timely fashion. Delays are common, so it is important to plan for a wait.

The amount you receive depends on your work history, but it is never as much as your normal earnings. You can receive the benefits until age 65. After that, SSD automatically converts to Social Security retirement benefits, but the amount remains the same.

State Disability Insurance (SDI)
Several states offer disability insurance, a program that provides short-term benefits if you are unable to work because of illness, injury, or pregnancy. Premiums are automatically deducted from your pre-tax earnings.

To be eligible for SDI, you must be disabled for at least eight days and be under the care and treatment of a doctor during the first eight hours of the disability. You must also be employed or actively looking for employment when the disability occurred, and have earned at least a few hundred dollars during the last twelve months from which SDI deductions were withheld.

SDI benefits provide you with a percentage of your previous income. The most you can expect to receive through SDI is between 50 to 60 percent of your monthly income before taxes, for up to 52 weeks. It typically takes 14 days for benefits to begin.

Workers’ Compensation

If you are hurt on the job, you may be entitled to workers’ compensation insurance benefits. It can provide temporary or permanent payments, coverage of medical expenses (including transportation to and from medical exams), vocational rehabilitation, and even death benefits.

Workers’ compensation can last for a few years. The amount you receive and duration of monthly benefits varies by state, but the monthly payments are usually quite low.

Delays on claims do happen, but if the workers’ compensation insurance company refuses payment, SDI may pay the benefits while the case is pending.

Supplemental Security Income (SSI)

SSI is a program run by Social Security to assist the non-working poor. It pays monthly benefits to children and adults who are disabled, blind, or who are at least age 65.

If you are applying for SSI because you are disabled and can’t work, you must accept vocational rehabilitation services if they are offered. Though you may indeed be qualified for SSI, be aware that benefits can be quite difficult to obtain. Expect delays, rejected claims, and a lot of paperwork.

There are strict income and asset limitations for those receiving SSI, the amount of which depends on the state where you live. The amount you receive for SSI depends on your state, plus other income sources you may have. Some states will add to the basic rate to adjust for the standard of living in your area.

If injury or illness is preventing you from earning an income, you do have options. While some benefits are not easy to get, completing the required steps usually pays off – which is exactly what you need during this stressful time.