What you need to know about going on long-term disability

If you have a serious illness or injury that makes you unable to do your job for six months or longer, you may qualify for long-term disability insurance. Long-term disability could replace part of your income for many months or years when you’re ill or injured and unable to work. Let’s take a closer look at long-term disability and what you need to know about applying and utilizing this benefit.

What is disability insurance?

Disability insurance provides financial support when you are too sick or injured to do your job. If your injury is something you’ll recover from in a few weeks, your best recourse is to apply for short-term disability first. But when you’re facing a prolonged treatment or recovery, you may skip ahead to the longer form of this insurance.

“You have to be enrolled into the program and meet eligibility,” says Erin Bradshaw, chief of mission delivery at the Patient Advocate Foundation. Once approved, you’ll receive some percentage of your income for however long you’re eligible.

You can get disability insurance from your employer or the private insurance market. “This may be an elective [for which you’ll pay a premium] or paid fully by your employer,” Bradshaw says. Disability programs are also available from the federal government.

How much does disability pay?

Disability pays various benefits, though typically, it will cover 60% of your pay for the duration of your ailment, assuming you’re approved. “It could be higher and it could be lower,” says Joseph McDonald, a partner at McDonald & McDonald, an Ohio-based law practice specializing in disability insurance. “Every plan is different.”

What is the difference between short-term disability and long-term disability?

Short-term disability is meant to pay benefits when a patient’s injury or illness will take a matter of weeks to recover from. Long-term disability may last for years and even up to retirement age if the injury or illness prevents the patient from working.

What is long-term disability insurance?

To determine whether an injury or illness qualifies you for long-term disability, you’ll have to look at the plan’s definition of a qualifying medical condition, Bradshaw says. “It will be important to read and understand the coverage.”

Reach out to the plan administrator or your company’s HR department with questions. Ask about pre-existing clauses or exclusions that may prevent you from qualifying for coverage. “Long-term disability is more stringent and will ensure you meet the guidelines as this policy is designed to support patients through retirement if needed,” says Bradshaw.

What is the difference between private long-term disability insurance and SSI and SSDI?

If you can’t afford long-term disability insurance or your company doesn’t offer it, you may wish to apply for federal disability benefits.

Supplemental Security Income (SSI) provides a monthly cash benefit for people who are disabled and have limited income and limited resources. Social Security Disability Insurance (SSDI) benefits are available to people with disabilities who have paid high enough Social Security taxes while employed. Both are programs from the federal government, and you’ll need to apply to either SSI or SSDI to see if you qualify.

What types of conditions are covered by long-term disability?

There are a wide range of serious injuries and illnesses covered by long-term disability insurance. Some examples from Bradshaw include:

• Accident resulting in a traumatic brain injury that disables the individual physically or mentally

• Many types of cancer, based on the course of treatment

• Progressive health conditions like multiple sclerosis or Parkinson’s disease

How much does long-term disability insurance cost?

In cases where your employer doesn’t cover the cost in full, individual long-term disability insurance may cost about 1% to 3% of your annual salary. So if you make $40,000 a year, your long-term disability coverage would cost between $400 and $1,200 a year.

Factors that affect the cost of long-term disability insurance include your age, your sex, and your occupation.

Is there a waiting period to collect long-term disability benefits?

Like short-term disability, long-term disability insurance comes with waiting periods, which often equal the lengths of short-term disability policies, McDonald says.

For example, if a short-term disability policy is six months, the waiting period to begin long-term disability would also be six months. The patient would move from short-term disability to long-term disability after the six-month period ends. “This way, you can transfer seamlessly from one product to another,” McDonald says.

Without short-term disability insurance coverage, the waiting period for long-term disability could be considerably longer from the time of application, from 90 days up to a full year, Bradshaw says. These extended waiting periods mean you may wish to sign up for a short-term policy while you wait. This will ensure you have some coverage and won't rely entirely on personal savings.

Do I need to see a doctor when I’m going on long-term disability?

See a doctor before applying for long-term disability to get the most complete and up-to-date information on your injury or illness. In addition to requiring an initial report from a doctor on your initial prognosis, you may need to provide evidence to the insurance company to continue your long-term disability policy. So be sure to schedule regular doctor visits—likely a minimum of every three months. “Continue to see a doctor with updates on your condition,” McDonald says. “Your duty to provide evidence never stops.”

What happens after long-term disability insurance ends?

If you should recover from the injury or illness causing your long-term disability and be able to work again, your long-term disability coverage will end. But for many patients, long-term disability may persist for quite some time.

Bradshaw says that a long-term disability policy is intended to continue until the person reaches retirement age or upon death. But you could lose coverage if you don’t keep up with your review periods.

“There may be review periods and renewals to ensure the disability status makes you still qualified,” Bradshaw says. “Failure to do so will likely result in the insurer discontinuing your benefits before the benefit period would traditionally [terminate].”

Should it be determined that you’ll need your long-term disability coverage for years or even decades before you reach retirement age, your insurance company may encourage you to apply for Social Security Disability Insurance (SSDI).

“Often, long-term disability plans will support you in this process as they will supplement the difference of the SSDI award,” Bradshaw says. “Plus SSDI eligibility puts you on the track to Medicare eligibility and sometimes Medicaid based on income/assets.”

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Prices were accurate at the time this article was published but may change over time.