Disability insurance is a type of insurance designed to provide a person with replacement for the income they lose when they become unable to work because of a physical or mental disability.
Disability is an illness or injury, either physical or mental, which prevents a person from performing their regular and customary work. Disability may also include elective surgery, pregnancy, childbirth, or other related medical conditions. However, for some programs, e.g. federal disability, these conditions would not qualify a person to receive disability insurance payments.
The definition of disability may vary. A private disability insurance policy defines what disability is for the purposes of its policy and when it does and does not pay a claim.
A disability benefit might be provided by a state’s workers’ compensation system, if a person is injured within the course and scope of their employment. Again, a state’s workers’ compensation law would define “disability” for the purposes of the state’s system. The federal program of Social Security Disability Insurance (SSDI) defines “disability” for the purposes of the federal Social Security disability system.
There are basically three ways to get disability insurance benefits. One way is for a person to purchase a private policy of disability insurance, or income protection insurance, or to be provided with private insurance coverage by an employer. A second way is to obtain it from the federal Social Security Administration’s SSDI program. The third way is to obtain it from a state disability system, but only five states offer this option.
As for private disability insurance, sometimes employers make private disability insurance policies available to their employees. Some employers may even provide disability insurance as a benefit. The company that offers the disability insurance is private.
Usually, however, the employee has to pay the premium for disability insurance. The employer does not pay the cost, unless the employer provides the insurance as a benefit of employment. However, even if the employee pays the premium, the employer may assist by allowing automatic paycheck deductions for that purpose.
What Kinds of Private Disability Insurance Are Available?
Private disability insurance policies commonly define the kind of disability that qualifies for coverage in two different ways as follows:
- General-Disability Insurance: If a policy offers general disability insurance, it only provides benefits to a person if they cannot perform any kind of job for which the person may be qualified because of sickness or injury. If the insured policyholder is still able to perform some kind of job for which they qualify, they cannot claim disability benefits under their general disability insurance policy;
- Occupational-Disability Insurance: If a policy provides occupational-disability insurance, then it pays disability benefits to a person who becomes unable to perform their regular job because of sickness or injury. They can claim their policy benefits even if they were still able to perform some different jobs.
This distinction can be very significant. For example, if a dentist loses a hand, they probably are no longer able to perform their chosen occupation as a dentist. If the dentist has an “occupational-disability” policy, they would be able to claim their disability benefit, even though they might still be able to work in some capacity either in dentistry or in some other field.
If the dentist has a “general-disability” policy, they would not be able to claim their disability benefit, because the dentist would probably be able to work at something other than dentistry. So, even if the dentist’s only alternative job option is something completely unrelated to dentistry, they would have to work at that alternative job and would not be able to claim a disability benefit.
If a person believes that a claim they have made against their private disability insurance policy has been denied in error, they may have a claim for insurance bad faith. A person would want to consult a personal injury lawyer who can determine if they have a case because their claim has been denied in bad faith and should have been paid.
Which States Have State Disability Benefit Systems?
Five states, California, Hawaii, New York, Rhode Island, and New Jersey, have mandatory state disability insurance programs provided through the state government. In California, this employee disability insurance is covered by a tax withheld from the pay of employees. It pays a monthly benefit to a person in the event that they are physically disabled. It may also pay for family leave, which allows an employee to take maternity or paternity leave or to care for a family member who is seriously ill.
An eligible California worker can receive about 60 to 70 percent of the wages they earned in the 5 to 18 months before the date of the claim. A person can be paid benefits for a maximum of 52 weeks. At the end of that period, if a person is still disabled, they would turn to the SSA’s SSDI program.
The state disability programs in California, New Jersey and Rhode Island offer paid family leave. This allows partial wage replacement for people who are unable to work while they take care of a spouse, a registered domestic partner, child, parent and other immediate family members. The other states with state disability programs do not allow new parents to turn to the program for paid leave to bond with their newborn children.
The maximum amount of time for which people are allowed to receive disability benefits from the state disability insurance programs is as follows:
- California: For disability, 52 weeks for disability and for paid family leave, 6 weeks;
- Hawaii: 26 weeks;
- New Jersey: For disability, 26 weeks and for paid family leave, 42 days;
- New York: For disability, 26 weeks;
- Puerto Rico: For disability, 26 weeks;
- Rhode Island: For disability, 30 weeks.
The amount of benefits per week paid out by these state disability programs varies. Generally, the more money a person makes in the base period before they become disabled translates into a higher state disability benefit payment. However, each state caps how much it will pay out in total benefits.
If a person applies to their state disability insurance program for benefits because they have become disabled and their claim is denied, the person would want to consult a local lawyer who specializes in disability law for help in challenging the denial.
Am I Eligible for Federal Disability Benefits?
To be eligible for disability benefits under the program of the federal Social Security Administration (SSA), SSDI, a person must meet the following conditions:
- Be unable to work because they have a medical condition that their doctors expect to last at least one year or result in death, i.e. a terminal illness;
- Not have a disability that is only partial or expected to last only a short time;
- Fulfill the SSA’s definition of a disability;
- Be under the person’s full Social Security retirement age.
A person also has to have accumulated enough work credits in the Social Security system from past employment to qualify for SSDI. If a person does qualify for SSDI benefits, certain members of their family may be eligible to receive benefits depending on the person’s work record. There is more complexity to the SSDI system and if a person wants to submit a claim, they may want to consult an experienced SSDI lawyer.
Supplemental Security Insurance, or SSI, is another program administered by the SSA. It has different criteria for eligibility. It is designed to serve low-income citizens who have a qualifying disability, but do not have the work credits to qualify for SSDI. Some people who qualify for SSI may never have worked at all.
Do I Need the Help of a Lawyer for a Disability Insurance Problem?
If you have a policy of disability insurance from a private company and a claim you have made has been denied, you want to consult a discrimination lawyer for help with that situation. If you have made a claim against your state’s disability insurance program and it has been denied, you would want to consult a disability lawyer for help
If you have submitted a claim for SSDI or SSI and it has been rejected, you would want to consult an experienced SSDI lawyer for help.
Of course, a person can always consult a lawyer before submitting a claim and that might be the best approach. A lawyer can be a great help in putting together an initial claim that is likely to meet with success, so you get your benefit payments sooner rather than later.