Disability Insurance

Being able to support your child even during times when you are unable to work is important. Disability insurance allows you to still collect wages from your job even if you are disabled. There are two different types of disability insurance. There is short-term disability insurance and long-term disability insurance. It is important to explore if your employer offers long-term disability insurance and to ensure the plans meet your family’s needs.

This section of Disability Insurance covers:

What is Disability Insurance?

Types of Disability Insurance Coverage

Social Security

What is Disability Insurance?

In the United States, at least 51 million working adults do not have disability insurance separate from Social Security support.¹ Disability insurance will replace your income if you are unable to work due to a disability. As a parent with a child that has a blood or bleeding disorder, you may already have medical or life insurance in place for you and your family. Disability insurance will help support your family if you become disabled, preparing your family for a loss of wages from your health event.

If you and your family count on your job to pay for expenses, you should think about having disability insurance. Many employers offer disability insurance for their employees. The plans vary greatly, and some may not offer enough coverage for the needs of your family. You will also have to pay taxes on the amount you get as a payout if your employer paid for the premiums. Premiums are the amount that is paid every month for insurance coverage. If you pay for the premiums instead of your employer, then the payout is not taxable.

Individual disability coverage is generally much more expensive than employer provided disability insurance. If your employer provided disability insurance isn’t enough, you may think about getting individual disability insurance to meet your family’s needs.

Types of Disability Insurance Coverage

Disability insurance comes in two types: short-term and long-term. Many employers offer short- or long-term disability coverage during an open enrollment period. Often you do not have to disclose any health conditions during these. Ask your human resources department about the open enrollment period and how to sign up.

Short-Term Disability Insurance

This coverage replaces part of your lost salary if you miss six months or less of work. The coverage may begin only after other types of leave have been used. Often about 40% to 70% of your pay is replaced.² The length of coverage and how much money you will receive varies from plan to plan. Some states have their own rules for short-term disability and may have different requirements. Currently, there is no federal law that requires employers to offer short-term disability benefits to their employees. For more information on short-term disability in your area, find your state department of insurance office.

Long-Term Disability Insurance

Typically, long-term disability insurance can be purchased to replace 50% to 70% of your salary. Some employers allow employees to purchase extra insurance from the same company, sometimes raising the total to 80%. Some policies may have a maximum monthly amount that you can receive.

The salary is set at the time the policy is purchased. You will likely want to increase the value of the plan as your compensation increases. Some plans only allow increases with a physical examination. Other plans allow increases without a physical exam for the first few years of the plan.

Long-term disability policies vary in the length of payout. Some policies will only pay out for 5 or 10 years and some will pay out until age 65. Policies also vary in which diseases qualify for payout. Some policies may have exclusions, such as pre-existing conditions. Others may not cover mental health.

Important factors to think about when choosing a long-term disability insurance policy:

A disability policy can be designated as an own-occupation policy. Most policies are any-occupation, which means you must work if capable, even if not in the same capacity as before. An own-occupation policy will allow you to collect benefits for you and your family until you return to your previous job. Typically, these policies are better if you have a high-skill or high-paying job.

Be aware that government agencies can take up to 24 months to approve a disability claim. You may need to provide documentation such as a health care provider’s note and a letter from your employer verifying your disability.

If you want more information on long-term care insurance, please go to American Association for Long-Term Care Insurance Information Resource Center.

Social Security

You and your family may be eligible for benefits from the Social Security Administration (SSA). Benefits from the SSA include Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Not everyone is eligible for Social Security benefits, even if you have a disability.

As a parent, if you are unable to work due to disability you could be eligible for SSDI benefits. To be eligible for SSDI, you must have a qualifying disability and have enough work credits for a certain length of time. As a parent unable to work due to disability you may also qualify for SSI. To be eligible for SSI you must have a qualifying disability and not have enough income or other benefits.³ Your child may also be eligible for SSI themselves if they are under 18 and have a qualifying disability with limited income and resources.⁴ Some states also supplement SSI benefits.

If you want more information about social security benefits, please go to Disability Benefits from the SSA. If you want information about social security benefits for children, please go to Supplemental Security Income (SSI) for Children.