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Benefits and Insurance for People with Disabilities

Benefits and Insurance for People with Disabilities

Sep 2021

If you can't work because you get sick or injured, disability insurance will pay part of your income. You may be able to get insurance through your employer. You can also buy your own policy

Types of Disability Policies

There are two types of disability policies.

  • Short-term policies may pay for up to two years. Most last for a few months to a year.
  • Long-term policies may pay benefits for a few years or until the disability ends.

Employers who offer coverage may provide short-term coverage, long-term coverage, or both. If you plan to buy your own policy, shop around and ask:

  • How is disability defined?
  • When do benefits begin?
  • How long do benefits last?
  • How much money will the policy pay?

Federal Disability ProgramsTwo Social Security Administration programs pay benefits to people with disabilities. Learn about Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI).

Social Security Benefits for People with Disabilities

The Social Security Administration (SSA) has two programs that provide benefits to people with disabilities:

  • Social Security Disability Insurance (SSDI). SSDI is for people who have earned enough Social Security work credits within a certain time period

Definition of Disability

To qualify for either program as a person with a disability, you must meet SSA’s definition of disability, which says:

  • You can’t work, and
  • Your disability is expected to last for at least one year or result in death

Social Security uses a step-by-step process to decide if you have a disability. Partial and shortterm disabilities do not meet SSA’s standard and are not eligible for benefits.

Benefit Eligibility Screening Tool

You can use the Benefit Eligibility Screening Tool to find out quickly whether you may be eligible for SSDI or SSI disability benefits.

Learn More About Social Security Disability Insurance (SSDI)

Work Requirements

When you work and pay Social Security taxes, you earn Social Security “work credits,” up to four a year depending on your income. To be eligible for SSDI, you must have accumulated a certain number of work credits, some of them relatively recently. The number of work credits you need is based on your age when you stopped working due to your disability.

Benefits for Family Members

Your spouse or former spouse and your children may be eligible for benefits when you start receiving SSDI in some situations.

Applying for SSDI

You can apply for benefits online, by phone, or in person.

  • If your application is denied, you can appeal the decision.
  • If your application is approved, you’ll start receiving benefits about six months after your disability began. You’ll automatically be enrolled in Medicare two years after you begin receiving SSDI payments.

Returning to Work

You can generally return to work without losing your SSDI benefits if you earn less than what SSA considers a “substantial” amount. In 2018, average earnings of $1,180 or more per month are usually considered substantial.

Learn More About Supplemental Security Income (SSI)

SSI benefits are for adults and children with a disability who have little income or resources. Seniors 65 and older without a disability may be eligible for benefits if they meet the income limits. People who are eligible to receive SSDI may be eligible for SSI too.

In most states, people who receive SSI also receive Medicaid coverage. Many states also provide supplemental payments to certain SSI recipients.

Defining Disability for SSI

Adults under 65 must meet SSA’s definition of disability.

For a child, disability means:

  • Having a physical or mental impairment that causes marked and severe functional limitations
  • The disability is expected to last for at least one year or result in death

Applying for SSI

Adults can apply for SSI by phone, in person at a local Social Security office, or in some cases online. To apply for SSI for a child, you can start the process online but will need to complete it either in person or by phone.

  • You can appeal if your claim is denied.

Explore this listing of SSI topics to learn more detailed information.

Going to Work

SSI work incentives can help you go to work by lowering the chances that you’ll lose your SSI benefit or Medicaid coverage. You can earn $65 a month without it affecting your cash benefit. Beyond that, your SSI payment will go down $1 for every $2 you earn.

Health Coverage for People With Disabilities

If you have a disability, you have a number of options for health coverage through the government.

  • Medicaid provides free or low-cost medical benefits to people with disabilities. Learn about eligibility and how to apply.
  • Medicare provides medical health insurance to people under 65 with certain disabilities and any age with end-stage renal disease (permanent kidney failure requiring dialysis or a kidney transplant). Learn about eligibility, how to apply and coverage.
  • Affordable Care Act Marketplace offers options to people who have a disability, don’t qualify for disability benefits, and need health coverage. Learn about the Marketplace, how to enroll, and use your coverage.

Health Resources for People With Disabilities

Federal, state, and local government agencies and programs can help with your health needs if you have a disability.

  • Explore the Disability and Health section of CDC.gov for articles, programs, tips for healthy living and more
  • Learn more about assistance and benefits for people with disabilities from the Social Security Administration.
  • Contact your local city or county government to find out what medical and health services are available locally for people with disabilities.
  • Your state social service agency can help you locate medical and health programs.
  • Visit USA.gov’s Government Benefits page to learn more about government programs and services that can help you and your family.

https://www.usa.gov/disability-benefits-insurance

tags: disability insurance, disability, insurance, retirement

NFPR-2019-81

Disability Insurance 101

Disability Insurance 101

Sep 2021

Think about it. What would happen if suddenly, due to an illness or injury, you were unable to work?

Without your paycheck, how long would you be able to make your mortgage or rent payment, buy groceries or pay your credit card bills without feeling the pinch? If you’re like most, it wouldn’t be long at all:7 in 10 working Americans couldn’t make it a month before financial difficulties would set in,and one in four would have problems immediately, according to a Life Happens survey.

That’s where disability insurance comes in. Think of it as insurance for your paycheck. It ensures that if you are unable to work because of illness or injury, you will continue to receive an income and make ends meet until you’re able to return to work.

You don’t hesitate to insure your home, car and other valuable possessions, so why wouldn’t you also protect what pays for all those things—your paycheck

Explore this section to learn more about the different sources of disability income protection and ways to get coverage.

Who Needs It?

Simply put, if you have a job, you most likely need disability insurance. The possibility of a disabling illness or injury may seem remote, but statistics say otherwise.

You actually have a three in 10 chance of suffering a disability that keeps you out of work for 90 days or longer at some point during your working career. And keep in mind that 90% of disabilities are caused by illnesses not accidents.

Most of us have some kind of personal debt, such as a mortgage or credit card bills. Would you be able to maintain your standard of living if you were too ill or injured to work for an extended length of time? Plus, a disabling injury or illness could lead to medical bills, modifications to your car or home or other unforeseen needs that can be quite expensive.

You also have to think long term. How much do you earn in a year and what would that be over a lifetime.A 25-year-old worker who makes $50,000 a year and suffers a permanent disability could lose $3.8 million in future earnings.

For all these reasons, almost anyone who works—whether they’re single, married, with children or without—should consider disability insurance.

  1. The Real Risk of Disability in the United States, Milliman Inc., on behalf of the LIFE Foundation, May 2007
  2. The Council for Disability Awareness, Long-Term Disability Claims Review, 2010

What Do You Know About Disability Insurance” survey, Life Happens, 2018

https://lifehappens.org/insurance-overview/disability-insurance/

Insurance Basics

Insurance Basics

Sep 2021

Insurance may be less about if you’ll need it than when you’ll need it. Anyone who started driving at 16 is likely to have had a claim by the time they’re 34. More than 1 in 20 insured properties reported a claim in 2016, according to Insurance Services Office (ISO). And according to the U.S. government, someone who turns 65 this year has an almost 70% chance of needing long-term care services, which are generally not covered by Medicare.

A network of prudent insurance coverage is the foundation of any solid financial plan. A single healthcare crisis, incident of property loss, or other liability can quickly wipe out a lifetime of savings. The types of circumstances that may require the use of insurance may not be a subject we like to think about, but it’s one of the most important issues to address when planning for the financial security of you and your family.

Here are some common types of insurance available and the associated risks they can help address.

Health Insurance:

Many people receive health insurance through their employer, while others purchase it independently. Health insurance can cover everything from preventive care, treatment for injuries and disease and mental health treatment, as well as products and equipment necessary to address various medical needs. Your insurance may dictate from whom and in what types of facilities you are eligible to receive treatment. It will also indicat what your responsibilities are for payment in terms of deductibles and any limits to your coverage. It is critically important that you review your health insurance on an annual basis and fully understand your policy.

Auto Insurance:

Your automobile insurance is designed to cover property damage and personal injury in the event of an accident. The amount of coverage for these occurrences can range dramatically from policy to policy. With car insurance, you not only have to be concerned about covering your own liability if you’re at fault — but damage that may be caused by uninsured drivers as well. One in eight drivers are uninsured according to The Insurance Information Institute. Luckily uninsured motorists coverage for both property damage and bodily injury is available, although not all states require it.

Disability Insurance:

This covers loss of income resulting from injury or illness. Many people receive disability insurance from their employer, but not everyone does — so it’s important to understand whether or not you have this benefit. If you do not have disability insurance through your employer, you may wish to buy a private policy. You may elect to purchase short-term disability insurance, long-term disability insurance or both. Many people think they’re automatically covered for disability losses through Social Security disability, otherwise known as SSD. However, SSD which is administered through the Social Security Administration, has stringent requirements:

  • You are unable to perform the work you did before.
  • The SSA determines you are unable to do other work due to your condition(s).
  • The disability is expected to last at least a year or lead to death.

Private disability insurance eligibility requirements are often less strict and no not require a complete inability to work in order to receive benefits. And it is possible to receive SSD and benefits from private disability insurance simultaneously.

Long-term Care Insurance:

This can cover medically necessary assisted living or nursing home care —or if you require help at home to carry out daily activities. Many people mistakenly assume that Medicare pays for such services, but this would be a faulty assumption. With Medicare, coverage is generally limited to rehabilitation from an acute injury or illness where a full recovery is anticipated as opposed to long-term care needed in old age as a result of gradually declining function. This type of care is extremely costly. Here are some averages according to government statistics:

  • $6,844/month for a semi-private room in a nursing home
  • $7,698/month for a private room in a nursing home
  • $3,628/month for care provided in an assisted living facility

Life Insurance:

This coverage pays a death benefit when the insured passes away. It’s particularly important for breadwinners with family members who depend on their income. Life insurance needs often change over time as children grow up and move out of the house. Here’s an article that explains some common types of life insurance (link to previous life insurance blog here). This may be the type of insurance people don’t like to think about the most — but in the event of the unthinkable, it may matter the most.

Property and Casualty Insurance:

P&C can cover your home and possessions as well as provide personal liability protection should you injure someone or damage their property. It’s a broad category of insurance. Here are some common types:

  • Homeowners Insurance:insures your home and possessions in the event of theft or damage. It’s important to know your deductible for different types of losses, and any limitation for certain types of events, such as floods and hurricanes.
  • Renters Insurance:this insurance is specifically designed for renters, who do not own their dwelling. It is substantially less expensive than homeowners insurance, and can cover property and liability as a renter.
  • Condo Insurance: These policies can mitigate risks specific to condominium owners,including portions of the structure they’re responsible for, as well as assessments levied against owners to pay for repairs or improvements to commonly owned elements.
  • Umbrella PolicyAn umbrella can extend the coverage of your auto and homeowners insurance policies. Carriers will generally require insured individuals to have a minimum amount of coverage already in place before they will write an umbrella policy.

Risk is a part of life — there’s no getting around that. But with solid insurance coverage, you just might be able to sleep a little better at night no matter what the future may hold.

Reference:

https://www.iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance

https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

Tags: Baby Boomer, behavioral finance, education, finance, insurance, millennials, retirement planning, risk management

What are Disabilities Policies and Why Would You Need One?

What are Disabilities Policies and Why Would You Need One?

Sep 2021

The prospect of suddenly having to face life with a disability that limits your ability to work in the way you're used always seems unlikely. Disability is something other people face, maybe in old age, but not you. While disability insurance may seem unnecessary right now the facts give cause for the preemptive action. Approximately 12% of the total American population and more than 37 million Americans are categorized as disabled; more than half those disabled Americans are between the working ages of 18-64. Additionally, just over 25% of current 20-year-olds will become disabled before they reach retirement age.

Hopefully nothing ever happens that will limit your mobility or personal and professional productivity. But, in the off chance of an accident or the lasting effects of an illness you will be retroactively glad you invested in a disability insurance policy when you did.

Since health insurance is required to avoid a tax fee unless you can prove exemption, most people have an adequate health insurance plan to cover the unexpected broken bone or medicine for the seasonal illness. But, even if health insurance covers the costs associated with a serious injury or illness, it won't cover the lost wages associated with the costs of lost earnings in both the short and long-term. Like it's much better-known plan relative, life insurance, disability insurance serves as protector of your future income that could be lost due to disability-related causes. Disability insurance won't replace your salary, but it will provide an important buffer for financial stability.

So, how do you know if you should invest in a disability insurance policy? If you rely on your income to cover the costs of your basic needs, it's a good idea and as important as life insurance. That being said, not all disability insurance policies are built the same. Plans offer different levels coverage, some of which may not be adequate to your potential situation. Because you're planning for something that may or may not happen to various degrees of disability.

Shop Around

The first place to begin looking into disability policies is to look at your current insurance provider. For the majority of Americans, that provider is going to be their employer; 66% of nonelderly employees were offered employer-covered insurance health insurance and 56% of all households were covered by employer-sponsored health insurance in 2014.

Another option is individual insurance policies. You'll want to price shop as coverage differs, so even if your employer does offer disability coverage it may not be sufficient and you should consider individual coverage.

Short or Long-Term?

Before you drop regular premium payments on yet another insurance policy it's important to know what type of disability coverage you want to purchase. Long-term disability insurance is truly the better bet when it comes to gambling with health. Thankfully advances in medicine and technology are allowing humans to live even after severe illnesses or injuries, but that also means you can live for a long time without being able to fully work. In general, long-term disability insurance can cover around half to 70% of a salary, but that salary is set at the time the policy is obtained. As you gain promotions and salary increases it's wise to increase the plan value and to do so may require an annual physical or other requirement.

Be sure to zoom in on how the policy defines "disability". For some plans that includes categories like mental illness and others exclude categories such as injuries acquired from dangerous activities. The payout for long-term disability can look very different, ranging in five to 10 years of payout, to a pay out until 65-years-old.

Comparatively, short-term disability will cover more of a salary (around 100% of income for the initial payout) and is used in lieu of salary for the insured who misses up to six months or less of work. If the insured still cannot return to work after a certain term, coverage drops down to around 60% of the salary.

Insurance Assurance

Just because you purchase a disability insurance policy doesn't mean it cannot be revoked or changed. The two main types of policy assurances you'll see are "non-cancelable" and guaranteed renewable. If premiums are similar, non-cancelable is usually the best way to go as the insurance company can't raise the policy premium. It's essentially doubles the guarantee. Policies marked as guaranteed renewable mean that so long as premium payments are paid, the insurance company cannot drop it.

Occupation Allowance

Most policies you find will be designated as "any-occupation." This means that the policy owner must work when capable even if not to the same level as prior to the disability; this requires an analysis of the "gainful" employability of the policyholder. With any-occupation policies, long-term disability benefits are awarded if the disability inhibits the policyholder from finding and keeping work that will allow for at least 60% of the salary pre-disability. Another option, "own-occupation" largely benefits the policyholder with a high salary and highly skilled occupation. This type of policy allows for the individual to collect benefits until they can resume their occupation as it was before the disability arose.

Options Abound

Policies can also be written to include different "riders," or options. One important rider is "cost of living" (COLA). With COLA, a policy's total value increases as inflation does. Additionally, residual benefits make up the difference between old and new salaries following the diagnosis of disability, if the policyholder can indeed get a new job but one that's not up to the same salary as the one pre-disability.

You're not alone in looking toward disability insurance. More than 650,000 disabled employees received a collective $9 billion in long-term disability benefits from employer-sponsored group disability coverage, in 2012. Before you take any action, look into all your current and potential disability insurance plan options and speak with your trusted financial advisor.

  1. http://kff.org/private-insurance/issue-brief/trends-in-employer-sponsored-insurance-offer-and-coverage-rates-1999-2014/
  2. http://getmyltdbenefits.com/own-occupation-v-any-occupation/
  3. http://www.investopedia.com/terms/g/guaranteed_renewable_policy.asp
  4. http://www.360financialliteracy.org/Topics/Insurance/Disability-Insurance/Noncancelable-and-Guaranteed-Renewable-Policies
  5. http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp
  6. http://www.forbes.com/sites/ashleaebeling/2013/09/24/5-myths-about-disability-insurance/#7e2c5c3c2f61
  7. http://www.consumerfed.org/pdfs/ltdbrochure.pdf
  8. https://www.trustedchoice.com/health-insurance/coverage-types/short-long-term-disability/
  9. http://www.daveramsey.com/blog/four-must-have-insurance-policies
  10. http://whitecoatinvestor.com/disability-insurance-to-cola-or-not-to-cola/
  11. http://www.investopedia.com/terms/r/residual-benefit.asp

tags: disability insurance, insurance, disability

What If I Can’t Save Enough to Reach my Retirement Goals?

What If I Can’t Save Enough to Reach my Retirement Goals?

Sep 2021

You just ran the numbers on your retirement and realized that you aren’t going to be able to save enough to make it happen. Don’t panic: There are still things you can do to better your situation, especially if you’re willing to be flexible about your plans and your lifestyle.

The first step is to determine exactly where you are. In retirement, you may have income from a number of sources:

  • Social Security
  • Pensions
  • Investment income
  • An inheritance
  • Earned income from a side hustle

Next, estimate the likely cost of your future monthly expenses: rent or mortgage, utilities, automobile payments and insurance, credit card and loan payments, food, health care (insurance plus out of pocket) and emergency repairs. A good way to capture these categories is to look at your credit card statements and checkbook and list everything you’re spending on now. If you haven’t kept track of this on paper, most online bank and credit card services offer easy access to your transaction history.

Leave out or lower your estimate for anything you won’t spend as much on when you’re retired (your commuting cost should go down, for example). Now, what about potential costs for travel, hobbies and other post-retirement fun? Will you set aside money to give to grandchildren or other relatives in the years ahead?

Once you have your monthly income and expense estimates, compare the two. Are you still coming up short?

If you don’t have enough income to cover your projected expenses, there are some things you can do. But first, there are some things you should definitely NOT do:

  • Panic.
  • Shift into higher-risk investments to try to capture higher returns.
  • Decide your head hurts, avoid thinking about it altogether and assume your health and career will allow you to work long enough to make up the difference.

Here are some things you CAN do:

  • Make catchup contributions to an IRA. The tax code allows workers over 50 to make extra, pre-tax contributions to boost their savings.
  • Re-think your lifestyle. Do you really need to live on a golf course? Maybe you could live near a golf course and be just as happy.
  • Take on a side hustle to create a little extra income. This could be something that’s been a hobby – tying fishing flies, restoring old cars, or knitting comforters. Or work a few hours a week at a friend’s business. Be aware, however, that your earnings may have implications for your taxes and Social Security benefits. Because the tax code governing what portion of benefits can be taxed is complex and subject to change, you should talk to an accountant or financial advisor well versed in that part of the code.
  • Do you have two cars? Maybe one would do. Or perhaps you can do just fine with a used model with a reputation for reliability and longevity.
  • Downsize. Move to a smaller house or condo, and if you’re single, maybe take on a roommate.
  • Consider relocating to a lower-cost area. The cost of living in Knoxville, TN is about 17% below the national average, and there are plenty of other places below the norm: Cheyenne, WY (-8%), Green Bay, WI (-10%) and Sherman, TX (-14%) are just a few.
  • Tap your home equity to pay expenses.
  • Consider a reverse mortgage. However, be aware that the reverse mortgage products offered by various lenders are wildly different in their terms and risks. Look at this very, very carefully before committing.
  • Delay taking Social Security benefits. Waiting until at least your full retirement age boosts your monthly check significantly; your monthly benefit will increase by about 0.67% for each month you delay past your full retirement age, and will add about 8% for each full year you wait until you reach age 70. Your full retirement age depends on your year of birth. Use the calculator on The Social Security Administration website to figure all of this out for your particular situation based on your personal earnings record.

But before you do any of these things, the most important step you can take is to talk to your financial advisor. Because they deal with the intricacies of the tax codes and Social Security every day, they can help you steer clear of landmines and set a course to that bright retirement you’ve been dreaming of.

Sources:

1. https://www.forbes.com/sites/investor/2017/06/09/what-to-do-when-you-havent-saved-enough-for-retirement/#368f06f06e20

2. https://www.aginginplace.org/are-there-taxes-on-social-security-for-seniors/

3. https://www.ssa.gov/planners/retire/1955-delay.html

4. https://www.kiplinger.com/slideshow/retirement/T047-S001-cheapest-places-where-you-ll-want-to-retire-2019/index.html

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