Planning for job accommodations and disability income

What is disability insurance?

If your symptoms become so severe that you cannot work, you will lose your source of income. Disability insurance protects you from this loss by paying you a portion of your previous income.

Find out about the disability insurance available to you and set up your plan as early as possible, ideally before any of your symptoms make it difficult to work. 

Sometimes people start to have severe symptoms and must leave their job or reduce their hours before they get disability coverage and qualify for benefits. This causes them to lose critical income and health insurance coverage. 

Learn what’s needed to have a successful claim so you can gather important information while you’re still working, just in case you ever need to file.

There are many types of disability insurance. On this page, we’ll cover these 4:

• Short-term disability 
• Long-term disability
• Social Security through the Social Security Disability Insurance (SSDI) program (also called Disability Insurance Benefits, or DIB)
• Social Security through the Supplemental Security Income (SSI) program

Specific information, such as the definition of disability and the amount you’ll be paid while on disability, depends on the plan. Read your plan policies carefully. Although Social Security programs are the same for everyone, short- and long-term disability policies vary from one policy to the next. 

Short-term disability (STD)

• Often available through your employer
• You’ll usually get payments of between 20% to 60% of your usual income (you may be able to pay extra for a higher portion)
• Usually starts to pay you 1 to 30 days after you become disabled
• Often lasts 3 to 6 months
• You’ll still have health insurance through your employer

If your employer doesn’t offer STD, you may be able to buy a plan through an insurance company like Aflac. Learn about plans at Aflac.com. In this case, you’ll have to qualify on the basis of your health. If you already have a hypersomnia diagnosis, the plan may not cover you for this condition.

STD policies give financial help for short-term absence from work, such as due to accidents or complications in pregnancy. For long-lasting (chronic) conditions leading to possible permanent absence from work, long-term disability insurance is likely to be a better investment.

Long-term disability (LTD)

• Often available through your employer
• You’ll usually get payments of between 20% to 60% of your usual income (you may be able to pay extra for a higher portion)
• Usually starts to pay you 30 days to 1 year after you become disabled 
• Often lasts 2, 5, or 10 years, or until retirement
• May require you to also apply for SSDI or workers’ compensation programs and lower your LTD benefit by the amount you get from these other programs

Types of LTD policies: 

• Own occupation — defines disability as the inability to work at your own regular occupation
• Any occupation — defines disability as the inability to work at any occupation 
• Hybrid — may include the “own occupation” definition of disability for the first few years, and then changes to “any occupation” 

An “own occupation” policy protects you better than an “any occupation” policy. For example, if you’re an accountant who can no longer work as an accountant, an “own occupation” policy would pay you benefits. An “any occupation” policy would not pay you benefits if you could do any other type of work, even if your income from that work was much lower than you made as an accountant.

What’s the difference between private LTD and LTD through my employer?

Private LTD policies are also called individual LTD policies because you buy them yourself, without help from your employer. They’re usually better than employer LTD policies in several ways, but there are some downsides.

Private LTD policies often have coverage that’s more flexible to your situation

• More likely to be “own occupation” or “hybrid”
• More likely to offer a higher portion of your usual income
• Often offer policy add-ons (riders), such as:

  • Partial disability, which pays you a portion of your full benefits if you’re no longer able to work full-time but could still work part-time
  • Longer “own occupation” time periods
• Portable (you can take it with you) when you change jobs, including changing to self-employment
• May cover a portion of your income when you’re between jobs
• You pay premiums with income that already has taxes taken out of it, so any LTD benefits you get are tax-free 
• Can supplement LTD through your employer, giving you better coverage
• Less likely to subtract any SSDI or workers’ compensation payments from your LTD benefits

Private LTD coverage is more likely to pay your claim and pay it quickly

Private LTD isn’t regulated by ERISA (Employee Retirement Income Security Act), which governs most employer-funded group insurance plans.

• ERISA laws strongly favor the insurers and usually make it more difficult and time-consuming for you to get your benefits.
• If you become disabled, having a private LTD policy can mean you wait just weeks or months for your private policy benefits instead of waiting years for employer policy benefits. ERISA-governed employer LTD policies and SSDI benefits are more likely to involve lengthy appeals and legal battles. 

Private LTD policies have some downsides

• Often cost more
• Usually require you to qualify on the basis of your health, so it’s a good idea to buy your policy when your health and treatment are at their best

To learn more, visit NOLO’s web page “Differences Between ERISA and Individual Long-Term Disability Plans.” 

What should I do if a private LTD insurer wants to exclude my hypersomnia disorder?

If you already have a diagnosis of idiopathic hypersomnia (IH) or a related sleep disorder, it’s possible that your private LTD policy will exclude that diagnosis. Your policy won’t pay benefits if you can’t work because of any diagnosis listed in your policy as excluded.

Even if the policy excludes your sleep disorder, you may still want to consider buying a policy because it would cover other disabling conditions that are very common:  

• The 3 most common reasons for LTD claims are musculoskeletal disorders (such as arthritis), cancer, and injuries
• Today’s 20-year-olds have a 1 in 4 chance of being out of work for at least 1 year (before normal retirement age) because of a disabling condition
• Visit the nonprofit Council for Disability Awareness’s “Disability statistics” web page to find out more about the chances of becoming disabled

What should I do if my application for private LTD is denied?

Ask for partial approval, even if you’ve already decided you won’t buy the policy. This way, you won’t have a history of a denial, which can keep you from being approved for LTD coverage in the future. 

Should I pay my LTD premiums with pre-tax or after-tax dollars?

It depends on your financial situation. 

• If you pay premiums with pre-tax dollars, any future benefits will be taxed. This costs less now but gives you lower benefits. This is usually how LTD through your employer is paid — LTD premiums are paid before taxes are taken out of your paycheck.
• If you pay premiums after taxes have been taken out of your paycheck, any future benefits will be tax-free. This costs more now but gives you higher benefits. This is usually how private LTD is paid.

Social Security Disability Insurance (SSDI) Benefits 

You may qualify for SSDI if you’ve worked and paid Social Security taxes for a certain amount of time — usually 5 out of the last 10 years (there are exceptions for younger workers under age 31). 

If you qualify for SSDI, you’ll:

• Get a monthly benefit payment, which is based on how much you made while you worked
• Have to wait 5 months after your disability starts before getting your first payment
• Get Medicare health insurance 29 months after becoming disabled (2 years after you get your first payment)

To find out how much your benefit amount would be, visit ssa.gov’s my Social Security.

For more information, visit the SSA web page on Disability Benefits: How You Qualify. 

How does SSDI work?

As you work and pay Social Security taxes, you earn up to 4 quarters of coverage (QC) for each year. A QC is the basic unit for determining whether you’re insured under Social Security. For 2024, you’ll earn 1 QC for each $1,730 that you earn, with a maximum of 4 QCs per calendar year. As soon as you earn $6,920 in 2024, you’ll already have your maximum 4 QCs for the year. This is true whether you earned that amount over months, weeks or even days. (To see the earnings needed in other years, visit SSA’s “Quarter Of Coverage” web page.)

To qualify for SSDI, you need to be fully insured by Social Security and have earned at least 20 QCs during the last 10 years. (Younger workers may qualify with fewer QCs.) The 20 QCs don’t have to be all in a row. 

The SSDI program may also be available to the disabled adult children of a worker who is either eligible for SSDI, retired, or deceased. This benefit is available even if the disabled adult child has never worked. For more information, visit: 

• The SSA’s web page section “Adults with a Disability that Began Before Age 22” 
• Our web page “Financial tips for dependent adult children with sleep disorders”

Social Security: Supplemental Security Income (SSI)

You may qualify for SSI if you haven’t worked long enough to qualify for SSDI. To qualify, you have to prove that you are disabled and have limited income and financial assets. 

If you qualify for SSI: 

• You’ll get a monthly payment, and the amount varies by person and by state
• You’ll get Medicaid health insurance the month after you qualify for benefits

For more information, visit the SSA web page on Supplemental Security Income.