The Hidden Value of Social Security Disability Insurance: Why It’s Important During Benefits Enrollment
Editor’s Note: It would surprise many employees to know they already have access to disability coverage. If you’ve paid FICA taxes for five of the last 10 years, your Social Security Disability Insurance policy is paid up.
Two years into a pandemic and the changing economy and Great Resignation forced U.S. employees to better understand their work and benefit options. Things to consider included remote work, job shuffling, and accessing Social Security Disability Insurance (SSDI) income if the worker experienced a severe medical condition (with the option to return to work if the person ultimately recovered).
Social Security Disability Coverage is Available to Millions of U.S. Employees
Would it surprise you to know you already have disability insurance? If you’ve paid FICA taxes for five of the last 10 years, your policy is paid up. SSDI is an earned insurance benefit that over 156 million workers have access to as a result of their payroll tax contributions.
Even though SSDI has been around since the 1950s, many American workers are not familiar with this federal disability insurance program. For many, it’s a stretch to connect this coverage to their working careers. However, these days, it is absolutely vital to understand SSDI as a protection for the working American. The global pandemic drove people to search for more economic assistance. Any investigation should include the federal benefits people already have in place.
It seems too good to be true to describe an insurance policy that offers monthly income, dependent benefits, and assistance with returning to work after recovery from a severe illness. But it is a fact. A small portion of FICA payroll taxes covers the premium for this type of disability insurance coverage.
The biggest potential loss is for U.S. workers who bypass this insurance coverage simply due to lack of knowledge.
Social Security Disability Insurance brings with it monthly income while you’re not able to work. The monetary support you receive through Social Security disability benefits continues until you’re able to return to work on a regular basis or retirement age.
SSDI – A Gateway to Other Critical Benefits
In addition to monthly income, SSDI is a gateway that unlocks other critical benefits to support you and your family through your illness.
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- Medicare Coverage. You’re eligible for medical, hospital, and prescription drug coverage 24 months after your SSDI benefits begin.
- Family Benefits. SSDI approval can activate benefits for your spouse (including divorced spouse) as well as your children under the age of 18 – adding up to 50 percent more income to your SSDI monthly payments. [Note: Benefits for children are available to offspring under age 19 if still in school, or if disabled before age 22.]
- Cost-of-Living Adjustment. The Social Security Administration (SSA) evaluates cost of living allowances annually, which could increase your monthly payment (especially during times of high inflation).
- COBRA Extension. The length of your COBRA benefits could be extended an additional 11 months while you’re receiving SSDI.
- LTD Security. If you have private long-term disability (LTD) insurance, your policy generally requires you to apply for SSDI. Doing this can protect your LTD benefits.
- Retirement Benefits. Approval for SSDI triggers a Social Security earnings record freeze that can result in higher Social Security Retirement income.
- Tax Relief. You may not have to pay income taxes on a portion of the SSDI benefit payments you get each month.
- Return to Work. There are incentives if you return to work: free help from a certified Employment Network, protection to work and receive SSDI benefits, and more.
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Who Qualifies for SSDI?
Similar to other types of insurance, individuals must file a claim for SSDI benefits. With this claim, the SSA reviews your work and medical history to determine if you qualify for Social Security Disability Insurance benefits.
If you worked in a job where you’ve paid FICA taxes for five of the last 10 years, you could be eligible for SSDI. Other factors include being unable to work in any capacity because of a mental or physical impairment that’s expected to last at least 12 months or be terminal. You must also be under the care of a healthcare professional who can confirm the severity of your medical condition(s) and agrees your illness is serious enough to keep you from working.
Insider tip: There is a 5-month waiting period for benefits. This is a big reason to apply as soon as you anticipate being out of work for 12 months or longer, or have a terminal diagnosis.
American Workers Learning More
The ability to learn more about this vital insurance program is at the fingertips of many Americans. Filing an SSDI claim and receiving the benefit can be an in-depth process, which is why having a representative can make a difference. A recent study by the National Bureau of Economic Research found that having representation at the beginning of your application gives you a 23 percent higher chance of an approval.
As more people search for answers due to long COVID and its effects, it’s important to recognize SSDI for the increasingly valuable income and security it offers to U.S. workers. It’s a vital protection available to millions of employees who simply haven’t found out about it – until now.
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