The idea of suffering a disability that prevents you from working can be very unnerving, especially if you are the primary breadwinner in your home, responsible for providing for yourself and your family. Unfortunately, accidents, injuries, and disabling conditions are common – a 2017 Disability Statistics Annual Report published by the Institute on Disability/UCED – University of New Hampshire estimates that about 12.8 percent of the U.S. population has a disability.
For those who do suffer from a disabling injury or condition, understanding disability insurance is key. At Walton Law, LLC, our experienced disability lawyers can guide you through the differences between private disability insurance and Social Security disability benefits. Here’s a brief overview of what you should know:
The Basics of Social Security Disability Insurance
Social Security Disability Insurance (SSDI) is a type of insurance program that is maintained by the federal government. This type of insurance is intended for those who have earned work credits during the course of their working years. As such, the benefit amount is based on contributions made by the (now disabled) worker to the Social Security trust fund.
Not only must a person be “insured” as a result of their contributions made, but they also must have a qualifying disabling. This means that the person has a disability that is either listed in the blue book of conditions, or that prevents the person from engaging in any substantial gainful activity (SGA) and that has lasted or is expected to last for at least six months or result in death. The benefits will remain in effect for as long as a person meets the definition of disability set forth by the Social Security Administration, or until they reach age 65.
An Overview of Private Disability Insurance
Private disability insurance, on the other hand, is not administered through the federal government, and is therefore not based on your contributions to Social Security over time. Instead, private disability insurance is obtained through a private company and is designed to pay for a portion of your income if you are unable to work for an extended amount of time due to an injury or illness.
The two primary types of private disability insurance are short-term and long-term insurance. Short-term insurance will typically replace a larger percentage of lost wages than will long-term insurance (approximately 60-70 percent of salary compared to 40-60 percent of salary). The other key difference between short- and long-term disability coverage is the amount of time the policy will last for; short-term usually only will make payments for up to one year, whereas long-term disability coverage may pay for multiple years and up until retirement.
Finally, another key difference between private disability insurance and SSDI is the fact that the former can be obtained in a number of different ways (e.g. through an employer, through the workplace, through a professional association, or individually) and may be customizable.
Summing it All Up: Key Differences You Should Know
For many people, Social Security Disability Insurance can complement private disability insurance and vice versa. In summary, a few of the key differences between the two types of insurance are:
- Costs of Private Disability Insurance vs. Social Security Disability Insurance. Depending on how private disability insurance is acquired, you may have to pay for your premiums out of pocket. SSDI, on the other hand, will be provided to you so long as you have earned enough credits during your working years.
- Qualifying for Insurance. Typically, it is much easier to get private disability payments; the Social Security Administration maintains a rigorous qualification process, and thousands of claims are denied each year.
- Benefit Period Differences. With private insurance, your benefit period will be fixed (agreed upon upfront). With Social Security Disability Insurance, you can receive benefits for the length of your disability or until age 65.
Consult with Our Social Security Disability Lawyers to Learn More
If you have questions about disability benefits, our lawyer at the office of Walton Law, LLC can help. Attorney Randy Walton is an experienced Social Security disability lawyer who understands how important it is for you to receive wage replacement benefits if you are suffering from an injury or illness that prevents you from working. To learn more about the types of disability benefits available and how to start applying for Social Security Disability Insurance benefits today, please reach out to us by phone at (251) 455-5819, in person, or by sending a confidential message using the intake form on our website.