Long-Term Disability Benefits
People with long-lasting disabilities can use Social Security Disability Insurance (SSDI) or private long-term disability insurance to replace income they earned before their impairment. Each option has its own requirements, wait times and benefit amounts. Many people receive money from both.
- Written by Lindsey Crossmier
Lindsey Crossmier is an accomplished writer with experience working for The Florida Review and Bookstar PR. As a financial writer, she covers Medicare, life insurance and dental insurance topics for RetireGuide. Research-based data drives her work.Read More
- Edited ByLamia Chowdhury
Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.Read More
- Published: March 3, 2023
- Updated: March 7, 2023
- 6 min read time
- This page features 10 Cited Research Articles
- Edited By
- Both SSDI and private long-term disability insurance can provide you with income when you’re unable to work for at least a year.
- While almost everyone has access to SSDI, you’ll need to go through a five-month waiting period before you receive any benefits. Private long-term disability benefits are often available much sooner.
- Getting private long-term disability insurance on your own or through your employer is easy and offers higher, more reliable benefits than relying on SSDI alone.
Comparing Types of Long-Term Disability
There are two types of long-term disability insurance: Social Security Disability Insurance and private long-term disability insurance. While many people get approved for both, not every medical condition qualifies for both. It’s important to understand the differences between the two and when they may apply to you.
Social Security Disability Insurance (SSDI)
The Social Security Administration offers Social Security Disability Insurance, which provides a financial backstop for someone who is too disabled to work. SSDI replaces some of your income when you won’t be able to work for at least one year due to an illness or injury.
Everyone who pays payroll taxes has access to this program. Even people who don’t work may access benefits based on their spouse or parent’s work history. SSDI is most people’s first recourse when they become disabled.
Long-Term Disability Insurance
Private insurance companies offer long-term disability insurance, which provides an income replacement for people who can’t work due to a prolonged illness or injury. You can purchase it individually or as part of a group plan through your employer.
Private long-term disability benefits serve as an alternative or adjunct form of disability insurance alongside SSDI. But most people who apply for long-term disability benefits are required to apply for SSDI first. If both the government and your insurance company approve you for SSDI benefits and private long-term disability benefits, then the insurance carrier may subtract your SSDI amount from your private benefits each month.
How Do Long-Term Disability Benefits Work Through Social Security?
To receive SSDI benefits, you’ll need to provide medical documentation that supports your disability claim. If your claim is approved, you’ll be awarded monthly benefits to replace a portion of the income you used to earn.
SSDI does not provide benefits for people with short-term disabilities. If doctors expect your condition to improve within a few weeks or months, you’ll need to apply for private short-term disability benefits instead.
Which Medical Conditions Qualify for SSDI?
Many medical conditions may qualify you for SSDI benefits. Approval decisions are usually based on the severity of your condition and not just the condition itself.
To quality as severe, your condition must significantly limit your ability to do things such as sitting, standing, walking, communicating or remembering. In addition, your condition must prevent you from doing any work you are qualified for, and it must expect to last at least 12 months or to end at death.
- Chronic obstructive pulmonary disease
- Spinal problems
Mental disorders such as depression and anxiety also may qualify for SSDI if the disorder is severe enough and resistant to treatment. However, the subjective nature of symptoms makes the approval process more difficult.
How Much Income Can SSDI For Long-Term Disability Replace?
The amount of money you receive from SSDI depends on how much you paid into the program before you were disabled. The median recipient receives about half of their previous income from SSDI. Because of caps on how much of your income is subject to Social Security taxes, lower-wage earners usually receive proportionally higher benefit amounts.
Who Needs Long-Term Disability Insurance?
Long-term disability insurance supports anyone who wants to ensure their income will be secure regardless of their ability to work. Most medical conditions that qualify for SSDI benefits also qualify for long-term disability insurance. So, many people will use private long-term disability insurance to fill gaps in their SSDI coverage.
For example, one might rely on private coverage for income during SSDI’s five-month waiting period or use it as an addition to their SSDI benefits for higher overall income.
Which Medical Conditions Qualify for Long-Term Disability Insurance?
Every insurance company defines disability differently. Your provider may not approve you for long-term disability benefits even if you were approved for SSDI. Conversely, the government may not approve you for SSDI even if your provider approves you for disability coverage.
Review your personal disability insurance contract to get a better idea of what your provider considers a disability. For example, some providers consider a person disabled if they cannot perform the duties required in their current occupation. Others require the disability to be severe enough to make employment impossible.
Regardless of the definition your provider uses, you will need to submit your medical documentation for their review. This is true even when you were previously receiving short-term disability benefits from the same provider for the same impairment.
When Will You Start Receiving Long-Term Disability Insurance Benefits?
You’ll receive long-term disability benefits after a certain period has passed following the onset of your disability. This time span is called the elimination period, which is a standard part of contracts to ensure it’s not a short-term disability. Most long-term disability plans have an elimination period between 30 days and two years.
According to the U.S. Chamber of Commerce, 90 days is the most common elimination period length. Check the details of your plan to confirm how long you’ll have to wait.
How To Get Long-Term Disability Insurance
Many states require employers to provide their staff with long-term disability insurance. However, this coverage doesn’t always provide enough income to keep you financially healthy during the time you miss work. This is why many people buy private long-term disability plans even if they have access to work disability plans.
- Get a few quotes from a reputable insurance agent or broker.
- Complete an application for the policy of your choice, including providing information about your medical history and lifestyle.
- Undergo a medical exam to confirm your good health.
- Sign your contract and pay your premium each month or year.
Is Long-Term Disability Insurance Right for You?
Long-term disability insurance is a good idea for anyone who wants to secure their earning potential. According to the Centers for Disease Control and Prevention, one in four U.S. adults has a disability. While not all people are so severely disabled that they can’t work, many find themselves unable to earn as much as they used to.
It’s not just physical laborers who should worry about this possibility. In fact, nearly 11% of U.S. adults have a disability that seriously impairs their ability to concentrate, remember things and make decisions. These impairments can drastically limit one’s ability to perform office work, which in turn, may reduce their earning potential.
Long-term disability insurance protects you and your family from the financial impact of these problems. It’s a critical part of a good safety net no matter which industry you work in or how much money you earn.
10 Cited Research Articles
- Centers for Disease Control and Prevention. (2023, January 5). Disability Impacts All of Us. Retrieved from https://www.cdc.gov/ncbddd/disabilityandhealth/infographic-disability-impacts-all.html
- Internal Revenue Service. (2023, January 1). Frequently Asked Questions: Regular & Disability Benefits. Retrieved from https://www.irs.gov/faqs/social-security-income/regular-disability-benefits/regular-disability-benefits
- U.S. Chamber of Commerce. (2022, August 25). Short-Term vs. Long-Term Disability: What’s the Difference? Retrieved from https://www.uschamber.com/co/run/finance/short-term-vs-long-term-disability
- Forbes. (2021, May 19). Everything You Need To Know About Disability Insurance. Retrieved from https://www.forbes.com/sites/paulamorgan/2021/05/19/everything-you-need-to-know-about-disability-insurance/?sh=46ab555d3420
- American Society of Anesthesiologists Community. (2021, March 1). Protecting Your Most Important Asset - YOU: A Primer on Disability Insurance. Retrieved from https://community.asahq.org/blogs/shyamal-asher1/2021/03/01/a-primer-on-disability-insurance
- Center on Budget and Policy Priorities. (2021, February 12). Chart Book: Social Security Disability Insurance. Retrieved from https://www.cbpp.org/research/social-security/social-security-disability-insurance-0
- U.S. Bureau of Labor Statistics. (2015, February). Disability insurance plans: trends in employee access and employer costs. Retrieved from https://www.bls.gov/opub/btn/volume-4/disability-insurance-plans.htm
- National Academy of Social Insurance. (n.d.). What Is Social Security Disability Insurance? Retrieved from https://www.nasi.org/learn/social-security/what-is-social-security-disability-insurance/
- Social Security Administration. (n.d.). Disability Benefits. Retrieved from https://www.ssa.gov/pubs/EN-05-10029.pdf
- The Maine Bureau of Insurance. (n.d.). Maine Bureau of Insurance: Guide to Disability Insurance. Retrieved from https://www.maine.gov/pfr/insurance/sites/maine.gov.pfr.insurance/files/inline-files/consumers_guide_to_disability_insurance.pdf
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