A friend on Twitter got me thinking about how many people are in the same boat. I hope this helps you, or you can pass it to anyone who can be helped by it.
I speak from the heart when I write this article, I hope it benefits you and your family:
Long term disability insurance was not part of our vocabulary. We never gave it a second thought, all of our employers provided it and we had a vague idea that it was necessary.
We were healthy, young and strong. We did not pay attention to the standard forms that we signed and hence, our mistake. Instead of retiring at a respectable old age with the company and a healthy 401K, we found ourselves immersed in medical appointments, surgery, physical therapy and our income had gone down to 60%. Add to that the infant and toddler and if you can visualize stress flowing off the charts, you have just gotten a glimpse of our lives.
Disability insurance provided by the employer is typically the minimum required by law in some states. In others, long term disability insurance is a voluntary choice and it is up to the employee to pick up the coverage they need.
If you are in a car accident or your house burns to the ground, chances are that you are going to be emotionally distressed, but in the back of your mind, you know that insurance will replace your losses and your heartbreak will be relegated to the family keepsakes that cannot be replaced. Life goes on after a fashion and soon you have a new roof over your head and you get to start over.
However, If you are injured at work and are unable to work ever again due to the fact that you no longer can perform the duties of your job (specially a physically demanding job), you will be receiving zero income almost immediately.
In our case, the insurance company gave us 60% of our income. That is a whooping 40% less income to live on. Furthermore, the contract clearly stated that this income was there until social security kicked in. In fact, through a series of mishaps, Social Security did not kick in until almost 4 yrs later. That 60% had to pay for all medical expenses since "pre-existing" conditions were not covered by medical insurance.
Upon social security coming into place, all retroactive pay from social security went to the insurance company (another little nugget buried in those forms we did not pay attention to) and they stopped paying.
As far as medical coverage, Medicare does not kick in until 2 yrs after receiving social security benefits, so all medical expenses need to come out of that little check every month.
Had we requested additional information from the insurance company, we would have learned that for a small deduction we could have had 100% coverage FOR THE REST OF OUR LIVES from the disability insurance, and that they would not be entitled to any of the retroactive money paid by social security. That means that we would have had the FULL salary check and the social security check in addition (are you ready for this? the almost $200,000 retroactive pay).
As stated earlier, some employers are not required to provide permanent disability coverage, but if they do, the people to check with is NOT your employer's HR representative, but calling the insurance company directly and telling them you want to increase your coverage beyond what your employer offers. Request a meeting and set a time where you can devote your full attention to what they have to offer and you can comfortably afford.
Let me tell you that even if you know next to nothing about insurance coverage, common sense dictates that you don't want to have LESS money that what you have now. This is an excellent starting point to visualize your future financial picture.
Don't let them tell you that you won't need the coverage if you go on Social Security Disability because Social Security pays less than 50% of the income you currently receive and it is highly dependent on how many work credits a person has contributed. To make it even simpler, the average Social Security payment is under $900 a month and many get a lot less. To add insult to injury, there is a maximum amount any family can get. Typically, it is slightly above poverty level or far below.
Imagine yourself healthy, strong and with a full life ahead of you and all of the sudden you need to live on less than $900 a month, or less, and are riddled with pain and constant medical appointments. If you are married, chances are that your spouse will bear the financial and emotional brunt of making ends meet while providing the best quality of life you and your family can have.
The Spousal Caregiver is expected that he, or she, will make ends meet and adjust accordingly. Unfortunately, there are too many variables in our loved one's conditions that keep the playing field from being level or fair.
Chronic conditions come with a host of unexpected crisis and upheavals that cause emotional stress and empty wallets. Complications and the progression of illness and disability has forced many to loose their homes and downgrade the living standards substantially.
In a perfect world we could live on love, but it is a fact that we need money for everything; a roof over our heads, food on the table, clothes for the family, cars and insurance, utilities, etc. These things are not going to disappear or be reduced to anyone's current income level. Therefore, it is important to maintain your income levels as high as possible in the event of a major loss due to disability or illness.
I urge you to check your coverage and crunch the numbers. I urge you to not put it off, because this should not happen to you.
This happened to us and we were in our mid 30's. The financial hell and the decisions we have had to made are not wished upon anyone.
Thank you for listening.
Wishing you PEACE
The Naked Patient The Naked Spouse
The Naked Doctor
Image: Medicare By Arturoportilla at en.wikipedia [Public domain]