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Disability insurance replaces a portion of a person’s income when they are unable to work due to a non-work-related injury or illness.
Employees who cannot work due to a disability might be eligible to receive benefits.
There are two major types of disability insurance: short-term and long-term.
Disability insurance policies can cover individuals own occupation or any occupation. “Own occupation” policies protect individuals who are unable to perform the substantial and major duties of their specific job. In contrast, an “any occupation” policy provides disability payments only if an individual is incapable of performing work of any kind.
When researching disability insurance benefits it is best to talk to several insurance companies. Here are some good questions to ask about disability policies:
Workers’ compensation. Five states and one Commonwealth offer employer funded disability insurance programs for workers with non-work related injuries and illnesses. These are California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico. Workers’ compensation provides disability insurance for work-related injuries and illnesses in all states.
Social Security Disability Insurance. The Social Security and Supplemental Security Income disability programs are the largest of several Federal programs that provide assistance to people with disabilities. While these two programs are different in many ways, both are administered by the Social Security Administration and only individuals who have a disability and meet medical criteria may qualify for benefits under either program. Social Security Disability Insurance pays benefits to individuals and certain members of their family if they worked long enough and paid Social Security taxes. Supplemental Security Income pays benefits based on financial need.
ERISA. Your company’s disability insurance benefits may be covered under the Employee Retirement Income Security Act (ERISA).