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The potential for financial devastation from disability is substantial. For most Americans, the ability to earn an income is their primary financial engine. If something stops the engine, everything else comes to a halt as well.
In spite of the critical need for ongoing income in most people’s financial program, relatively few Americans obtain personal disability income insurance from an insurance company. Some may pick up group disability coverage from an employer, but for most Americans, their primary disability insurance is through the Social Security Administration (SSA).
According to the SSA website (www.ssa.gov), Social Security provides disability benefits for all workers who qualify, i.e., they have “worked long enough and paid Social Security taxes.”
Like other private forms of disability insurance, SSA benefits can only be paid if your disability fulfills or meets a pre-established criteria. SSA considers you disabled* if:
- You cannot do work that you did before;
- SSA decides that you cannot adjust to other work because of your medical condition(s); and
- Your disability has lasted or is expected to last for at least one year or to result in death.
* Please contact the Social Security Administration for complete eligibility criteria. The text above is a summary of those requirements.
SSA explicitly states “This is a strict definition of disability. Social Security program rules assume that working families have access to other resources to provide support during periods of short-term disabilities, including workers’ compensation, insurance, savings and investments.”
Under the law, your payments cannot begin until you have been disabled for at least five full months. Payments usually start with your sixth month of disability, providing your disability is approved (more on this later).
The amount of benefit paid will depend on several factors, including your earnings and family size. In some situations, additional benefits through the Supplemental Security Income (SSI) program may be available. Benefits may be paid until you return to work or reach retirement age, at which time your payments will be disbursed from your Social Security retirement.
In summary, the SSA disability insurance is minimal when compared to coverage available through insurance companies, but certainly is better than no coverage.
But beyond the strict definition of disability, lengthy waiting period and limited benefits, disabled workers face a significant hurdle when applying to receive SSA benefits: The claims process itself.
According to the SSA, the average processing time for an individual awaiting a decision from Social Security with regard to a disability claim is 442 days.
That’s almost 15 months!
And that’s just to get a decision. Approval is another matter altogether, because according to the Social Security and Disability Resource Center (www.ssdrc.com), only about 40 percent of all claims are approved from the initial submission.
If you are denied benefits, SSA offers two appeals. The first is called Reconsideration (in which another 20 percent are approved to receive benefits), and the final appeal is a hearing before an Administrative Law Judge.
How quickly a SSA disability claim is resolved depends on a number of factors, many impossible to determine in advance. As the SSDRC says:
“Social Security Disability and SSI cases can be won in as little as 30 days, or take as long as two years for benefits to be awarded. There is simply no way to predict how long a case will take because unlike other programs (Dept of Social Services, for instance), the federal disability program does not have deadlines for applications or appeals.”
The bureaucracy and legal procedures involved in receiving SSA benefits has made professional assistance almost a necessity. SSA claims have become a specialized niche for some law firms.
Participation in Social Security is mandatory for almost all Americans who earn an income. And if you are entitled to benefits from SSA as a result of a disability, you should by all means make a claim. But honestly…
Is this the only insurance protection you want in place in the event of a disability?
