If you've recently accessed your Social Security statement and noticed you now qualify for Social Security Disability (SSD) benefits upon becoming too disabled to work, you may be wondering whether it's worthwhile to drop your existing private or employer-sponsored long-term disability (LTD) insurance policy. In some cases, these SSD payments may often be enough to partially or even completely replace your current income. However, in other situations, the payments provided by SSD may still fall far short of your financial needs. Read on to learn more about the differences between SSD and LTD to determine what level of coverage you may need.
What are the differences between SSD and LTD insurance?
If you become debilitated by an injury or illness that leaves you unable to hold down any gainful employment, you may qualify for federal disability benefits. Those who have no (or little) work history will receive Supplemental Security Income, a subsistence-level benefit designed to cover basic expenses like food, clothing, and shelter. Those who have worked enough quarters to qualify for Social Security retirement will be eligible for SSD payments instead. Because SSD is based on your earnings history, the amount you receive is generally more comparable to your pre-disability salary than it would be if you were receiving SSI. Both SSD and SSI are funded through payroll tax deductions.
Long-term disability insurance policies are available for purchase through private insurance companies. These policies are often subsidized by employers and offered to employees as a perk (along with health insurance, life insurance, and short-term disability insurance), and generally provide you with a percentage of your pre-disability salary for a set period of time.
When may you need to retain (or purchase) LTD coverage even when SSD-eligible?
The threshold for what is considered "disabled" can sometimes vary widely. To be deemed sufficiently disabled to receive SSD benefits, you must be unable to perform not only your normal job, but any "substantial gainful activity," which can include more sedentary jobs or even attending school or vocational training. This can sometimes make it difficult for those who work highly physical jobs to qualify for SSD.
On the other hand, long term disability insurance benefit providers set their own disability qualifications -- and in some cases, you may qualify for benefits even if you are able to perform other jobs within your organization. This more relaxed disability determination threshold can help keep you solvent if the Social Security Administration believes you're still able to work.
As a result, it can often make financial sense to purchase (or maintain) LTD coverage even after you become eligible to receive SSD payments if disabled.
Share11 November 2015
When I sued a product manufacturer after a disfiguring accident, I never expected to actually go to court. I assumed that the case would eventually be settled, like most personal injury cases are. To my surprise, they wouldn't budge, and we ended up having to go all the way to court. I was pretty nervous about testifying, but I had a great attorney that prepared me well, and everything went smoothly. In the end, the jury saw things my way. I realized that I probably wasn't the only person to ever experience an unexpected day in court, and that's how I got the idea to start this blog. If you're looking for tips to help you prepare or wondering what to expect when you go to court for a lawsuit, this blog contains important information for you.
