Working every day in Social Security can be en eye-opening experience. Some of the stats we’ve learned over the years are staggering. For instance, did you know 25% of all 20-year-olds won’t work until retirement age? In 2017, 39% of all working Americans had no money saved. So, what are you to do if you can’t work? If you become disabled at an early age and you have no savings, it may be difficult to survive financially. If you decide to pursue Social Security Disability, you’re going to be in for a long wait. Some people prepare for this by purchasing long-term disability insurance (LTD). However, individuals who have LTD may have questions about how it impacts Social Security Disability.
Let’s start with an explanation of long-term disability insurance. For most, an LTD policy will take place after a short-term disability policy ends. Most short-term policies last about 6 months. According to insure.com, long-term disability insurance pays a percentage of your salary, usually 50 to 60 percent, depending on the policy. The benefits last until you can go back to work or for the number of years stated in the policy. Some policies pay out as long as you are disabled until age 65.
Many employers offer LTD insurance policies, but you must opt into these policies. If your employer does not offer a plan, you can purchase LTD through an insurance agent. Most LTD policies require a monthly fee.
If you’ve done any research on the Social Security Disability process, you know that it takes a long time for claims to be approved. Most people have to wait years before they get approved. Long-term disability insurance can be beneficial during this time because it does not take as long for an LTD claim to process. So, LTD can help supplement your income while you’re waiting to be approved for SSDI.
Can you get both?
One of the first things we’re asked when a client has an LTD policy is “Can I get both?” The answer depends upon a few factors. Keep in mind, SSDI is not an income-based program. The SSA does not care how much money or how many assets you have when you’re pursuing SSDI. You could have 27 houses and every Ferarri ever made and still qualify for SSDI. In other words, the income you receive from an LTD policy won’t keep you from receiving benefits. The limitations are usually found in your LTD policy. Some LTD policies require you to file for SSDI within a specific time period.
Once you’re approved for SSDI, most long-term disability policies won’t continue to pay you the full amount. Instead, the policy will offset the balance paid by the SSA. For example, if you were making $60,000 per year before you became disabled, and your policy paid you 60% of your annual income, you’d receive about $2,500 per month. If you’re approved for SSDI for an amount of $1,800 per month, your LTD policy should pay you the remaining $700 per month. Keep in mind though, this depends upon your LTD policy. Some policies may not pay anything if you’re approved for SSDI.
Know your policy.
Regardless of whether your employer offers an LTD policy or you purchase one from an agent, you should get to know it well. Don’t hesitate to ask your HR rep about specifics, or reach out to your insurance agent for clarification on the details.
If you’d like to know more about the ways in which SSDI impacts long-term disability, call us today for a free consultation. Our number is 1-877-526-3457. If you’d rather talk at a later time, fill out this form so we may call you at a better time.