Why It’s More Critical Than Ever to Support Mental Health and How Insurers Can Help
Editor’s Note: SSDI is an often-overlooked income benefit for individuals with disabilities or serious illnesses. Many Americans workers are unaware of this critical benefit that they earned while working. Employers and employees fund this federal program by paying Federal Insurance Contributions Act (FICA) payroll taxes.
No one thinks it will happen to them, but according to the Centers for Disease Control and Prevention, 26% of Americans live with some type of a disability, ranging from musculoskeletal disorders such as back pain and arthritis to mental health. This translates into 61 million of us (or one out of every four people) whose daily life is affected by this broad term of “disability.”
Dealing with a disability can create financial hardships for these impacted individuals and their families. It’s important to know about financial programs that are available to help you and your loved ones during this time such as long-term disability (LTD) insurance and Social Security Disability Insurance (SSDI).
What is Short- and Long-Term
Disability Insurance?
If your employer offers disability insurance coverage, you can file a claim when you experience an illness or injury. Short-term disability plans provide benefits for approximately three to 12 months on a per disability basis and may be offered to employees as a company-paid benefit. If you are unable to work for an extended time, LTD plans provide monthly benefits after a waiting period or other benefits have ended
If Your Employer Doesn’t Offer LTD
The U.S. Bureau of Labor Statistics reports long-term disability insurance plans were available to only 35% of civilian employees in March 2020. Most workers did not have to contribute toward the costs of these disability benefits (only 6% contributed). The U.S. government data also reveal that access to LTD plans varies according to earnings. For example, in the lowest group of earners, 9% of workers had access to LTD, compared to 59% in the highest group.
Even if your employer offers group LTD, the coverage may not be enough to protect your finances when you face a serious injury or illness. If you do take advantage of employer-offered LTD insurance, the income benefit typically will not cover all your expenses when you have to stop working. Low-end group plans usually replace about 40% of your income – leaving an income gap. Some group plans may offer a benefit up to 60% of pre-disability income. However, when you consider the average LTD claim lasts 34.6 months, it’s easy to see how your emergency savings could shrink rapidly causing major financial hardships – even bankruptcy.
If You Are Not Eligible for LTD
Some employees are not eligible for LTD even if their employer provides it. These employees include part-time, seasonal, and temporary workers. It IS possible to work part-time and get Social Security Disability Insurance benefits, but your eligibility hinges mostly on how much you earn while working. The Social Security Administration (SSA) has an earnings limit to qualify for benefits. In 2023, that amount is $1,470 per month – so if you are earning below that amount, it is possible to qualify for SSDI benefits. However, the majority of SSDI applicants have stopped working due to severe disability.
So why does the SSDI program have an earnings limit? It’s because a key requirement of eligibility is that your injury or illness is severe enough to prevent you from working. SSDI benefits are designed for those who have a considerable work history but can no longer work due to a qualifying injury, disability, or illness. More than 159 million U.S. workers are insured for this federal disability program. When a medical condition keeps you from earning a sufficient income, SSDI benefits are there to help support you and your family.
SSDI Offers Extra Protection
SSDI is an often-overlooked income benefit for individuals with disabilities or serious illnesses. Many Americans workers are unaware of this critical benefit that they earned while working. Employers and employees fund this federal program by paying Federal Insurance Contributions Act (FICA) payroll taxes. You qualify for SSDI if you meet these conditions:
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- Have a medical condition, illness or injury that prevents you from working for 12 months or is terminal.
- Have worked at least five of the last 10 years and paid FICA taxes.
- Are between 21 and full retirement age.
- Are being treated by a healthcare professional who can confirm the severity of medical condition(s).
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Although the SSDI approval process can take months or much longer, the benefits can make a significant difference for those dealing with chronic illnesses or disabilities. These include:
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- Monthly income: the average 2023 benefit is $1,483, and it maxes out at $3,627.
- Medicare coverage: medical and prescription drug coverage begin 24 months after SSDI cash benefits start.
- Protected Social Security retirement benefits: approval for SSDI triggers a Social Security earnings record freeze that can result in a higher retirement income.
- Dependent benefits: SSDI approval can result in benefits for children under 18, adding up to 50% more to an individual monthly payment.
- Annual cost-of-living adjustments.
- Return to work incentives through Social Security’s Ticket to Work
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LTD insurance coupled with the extra protection of SSDI can make a significant impact in your life and the lives of those you love. It’s more important than ever for American workers to understand the types of disability income programs available. These offerings are vital and key to assisting them when they experience a gap in their working careers, especially when it’s unexpected.
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