What’s the Difference Between Social Security Disability Insurance and Long-Term Disability Insurance?

People who experience some sort of physical or mental disability that keeps them from working, such as due to an accident or illness, might be able to get financial help from various insurance-based resources. If the accident or illness occurred on the job, the person is likely covered by workers’ compensation, which is a form of insurance that pays medical expenses and partial wage replacement benefits for short-term, long-term or even permanent disability. If the disability was not acquired in the course of employment, other forms of insurance can pay benefits to people who can no longer work. The two main types of disability insurance are social security disability insurance, provided by the federal government, and long-term disability insurance, which is usually either provided by the employer or purchased privately by the employee. This article looks at these two types of disability insurance and how they interact with one another.

Social Security Disability Insurance

Social Security Disability Insurance, or SSD, is a monthly benefit paid by the federal government. To qualify for SSD, you must be totally disabled from working. The Social Security Administration (SSA) provides a very strict definition of disability, requiring that the worker be unable to perform any substantial gainful activity and have a medical condition or severe impairment that is expected to last for at least one year or result in death.

In addition to having a qualifying disability, you must have paid into the system long enough to be eligible to receive disability benefits. A portion of your paycheck every month is deducted and paid into the system, and once you have acquired enough “work credits” by working for several years, you could be eligible. SSA will also require that you have been disabled for about five months before they will consider your application for SSD.

The SSA uses a rigorous five-step test to determine if one is permanently disabled and eligible for SSD. This definition is so strict and the test so rigorous that over two-thirds of SSD applicants have their claims turned down. The acceptance rate is higher for claimants who get an experienced Social Security Disability attorney to help them appeal their denial through the proper channels.

Long-Term Disability Insurance

Long-term disability insurance, or LTD, is optional insurance that not every worker has. Some employers provide LTD as a fringe benefit and pay all or some of the premium, while others offer the coverage but require employees to foot the bill through payroll deductions. Other employers don’t offer LTD insurance at all. Individuals can also purchase LTD insurance on their own if they choose. People who buy LTD insurance privately will find the cost of the insurance depends on their age, health, income, and the nature of their profession. Depending on these factors, private LTD insurance ranges from affordable to cost-prohibitive.

LTD policies are typically either “own occupation” or “any occupation” policies. As the names suggest, a worker with an “own occupation” policy is eligible for benefits if they are unable to work in their current job or field, while the holder of an “any occupation” policy will have to prove that they are disabled from working anywhere. “Any occupation” policies are cheaper but also less valuable than “own occupation.”

Other requirements typically built into LTD policies include requiring that the policyholder was working full-time or at least 30 or 35 hours per week, depending on the specific policy terms. The disability must also be “long-term,” usually defined as three months or six months. LTD policyholders might also have short-term disability (STD) insurance that can protect them for disability periods of shorter duration.

Finally, LTD policies often contain many exclusions, including pre-existing conditions and excluded reasons for the disability such as substance abuse. A claimant must also be in good standing and up to date on premium payments if they expect to make a valid and successful claim.

As with health insurance, life insurance and other types of insurance policies, people who file LTD claims often face resistance from the insurance companies who do what they can to limit exposure by denying claims, underpaying them, or cutting benefits off prematurely. Disabled workers are encouraged to talk to an experienced insurance law attorney in any of these situations for help getting the benefits they are entitled to under their policy.

You Can Have Your SSD and LTD too

SSD and LTD insurance are separate from one another, and there is nothing to prevent you from applying for benefits from both forms of insurance, although LTD benefits will likely be reduced by any SSD you receive. As noted above, however, each form of insurance has its own set of difficulties. SSD is notoriously difficult to qualify for, and LTD insurers often search for reasons to limit or reject claims. To some extent, though, the same evidence of disability will apply to both types of claims, and the fact that you were accepted by one form of insurance could possibly help you in your application for the other.