Social Security Disability (SSDI)
- Social Security Disability, or SSDI, is a government-funded disability benefit program. To be eligible, an individual generally must work 5 out of the last 10 years in order to earn quarters of coverage.
- Eligibility: SSDI pays individuals who are unable to work for 12 months or more due to illness or disability if they meet certain requirements. You must show that you cannot work in your own occupation or any other occupation based on factors including age, education, and work experience.
- Waiting Period: five months.
- Benefit Amount: also known as the Primary Insurance Amount (PIA). Calculated based on Social Security taxes paid to the IRS. Benefits may be payable to dependents up to a family maximum.
- Medicare: entitlement to SSDI comes with entitlement to Medicare 24 months after eligibility for SSDI benefits.
- Filing a Claim: online or by calling the Social Security administration.
- Long-term disability (LTD) refers to a private-sector insurance that provides income replacement benefits to individuals who cannot work for an extended period due to disability or illness. LTD plans are either purchased by individuals or provided by employers as part of an employee benefit package. Group plans are covered under ERISA, a federal law. Policies vary greatly in terms of coverage, benefit amounts, waiting periods, and the definition of disability.
- Eligibility: some policies cover individuals who are no longer able to perform their own occupation. Other policies follow the stricter Social Security standard of disability and only provide benefits if you are unable to perform any occupation. Many policies will cover an individual up to two years if they cannot perform their own occupation but then follow the stricter any-occupation definition of disability.
- Waiting Period: also called elimination period. Common waiting periods range from 30 to 90 days but can be longer or shorter depending on the policy.
- Benefit Amount: generally a percentage of the pre-disability income that varies between 50% to 70% of the individual salary. No payment to dependents.
- Premiums: individuals who purchase long-term disability insurance must pay regular premiums to maintain coverage. Premiums vary based on factors such as age, health, occupation, and the level of coverage chosen.
- Rehabilitation Benefits: many policies offer benefits such as vocational training, education or other services to help individuals return to work.
- No Medicare benefit.
- Filing a Claim: file with the insurance company or plan administrator.
There are many similarities but some key differences. Important in long-term disability claims is reviewing the policy to determine how it defines disability. Important in both types of cases is having good medical records with adequate documentation of your disability.