Disability Benefits: How To Get All You're Entitled To
If illness or injury stops you from working, several sources of income may be available. Many people miss benefits because they do not know what exists or how to apply. This is a checklist of places to look.
Employer-provided benefits
Ask your human resources department about short-term and long-term disability coverage, paid sick leave, and any salary continuation policy. Group disability coverage is common, and the plan documents explain waiting periods, benefit amounts and how long payments last. Federal law may also provide unpaid, job-protected leave for eligible employees under the Family and Medical Leave Act, which protects your job and health coverage even though it does not pay wages.
Individual disability insurance
If you bought your own policy, review it for the definition of disability, the elimination period and required paperwork. Report the claim promptly, since late notice can cause problems.
Social Security disability benefits
Social Security Disability Insurance pays benefits to workers who have paid enough into the system and who have a medical condition expected to last at least a year or result in death, and that prevents substantial work. Supplemental Security Income is a separate, needs-based program for people with limited income and resources. Details, including how to apply, are at ssa.gov.
- Apply as soon as you become unable to work. The process can take months.
- Gather medical records, work history and contact information for your doctors.
- If your claim is denied, appeal within the deadline stated in the notice. Many initial claims are denied, and appeals are common.
Workers' compensation
If your condition is caused by your job, workers' compensation may pay medical costs and part of your wages. Report the injury to your employer promptly and follow the state's procedures.
Other sources
- Veterans' disability benefits, if you served in the military.
- Disability or waiver provisions in your life insurance, credit insurance or mortgage protection policies.
- Retirement plan provisions that may allow disability-related withdrawals.
- State and local programs and nonprofit assistance.
Taxes on disability benefits
Taxability varies. Benefits from a policy you paid for with after-tax dollars are generally not taxed, while employer-paid benefits generally are. Social Security disability benefits may be partly taxable depending on your total income. Keep your benefit statements for tax time.
Practical tips
Keep copies of everything you submit, record dates and names of every phone call, and meet every deadline. Plan around the gap between when income stops and when benefits begin.
If you are facing a long-term illness or injury, contact our office and we can help you plan around the tax and cash flow effects.
This article is general information, not tax, legal or investment advice for your specific situation.