FAQ’s About Disability Insurance in California
Any person who experiences a disabling injury needs to know about the various options available for disability insurance. In some cases, this insurance is provided by employers. However, some injury victims may need to rely on Social Security Disability Insurance (SSDI) provided by the federal government, though this can be difficult to qualify for. Lastly, private disability insurance policies are available for purchase from several companies. Here, we want to answer some of the most common questions related to disability insurance in California.
What is disability insurance?
Disability insurance, regardless of where the payments come from, is a form of income protection that pays a claimant a portion of their income if they cannot work due to a disabling injury or illness. The amount of income the insurance replaces and how long the payments are made will vary depending on the types of disability insurance in question.
What are the different types of disability insurance?
There are various types of disability insurance that a person may be entitled to. This can include short-term disability insurance (STDI) that could pay up to 80% of the claimant’s gross monthly income, but this typically only lasts for three to six months. Long-term disability insurance (LTD) could pay up to 60% of the claimant’s gross monthly income for anywhere from two years until the date of regular retirement. Both STDI and LTD are often provided by an employer and/or the retirement plan the employee has.
Social Security Disability Insurance (SSDI) is typically available to anybody for free from the federal government, but this only covers those who have sustained a severely disabling injury or illness and are completely unable to work. It is very difficult to qualify for SSDI.
Lastly, there are various types of private disability insurance policies available to individuals, and these plans can help fill coverage gaps left by insurance carriers and life insurance policies. However, these policies must be purchased separately by individuals before the disabling condition occurs.
What are the benefits you can receive?
Short-term disability insurance will typically cover anywhere from 60% to 80% of the base salary of a disabled individual. However, this type of insurance will only be available for a few months or maybe up to a year. The good news is that STDI typically pays out fairly quickly after the disability begins.
Long-term disability insurance will typically only replace 40% to 60% of the base salary of the claimant. These benefits will end when the disability ends, though they can last for years at a time, even up to the retirement age, depending on the policy. LTD is typically paid after a waiting period of 90 days after the disability begins.
If a person is set to receive SSDI benefits, the amount they are paid each month will be based on their average lifetime earnings before the disability began. It is important to point out that this payment has nothing to do with how severe the disability is or how much current income the claimant receives. Additionally, if the claimant receives any disability payments from other sources, such as from an employer or a private insurer, their SSDI payments will likely be reduced.
What is the difference between workers’ compensation and disability insurance?
When a person sustains a work injury, they may be entitled to various types of financial assistance. This includes workers’ compensation and short- or long-term disability benefits.
Workers’ compensation benefits apply only to work-related injuries or illnesses. Disability benefits are available to individuals for both work-related and non-work-related medical conditions. Disability benefits may also be available even if a person sustains a work-related injury, but workers’ compensation benefits will not be available for non-work-related incidents.
It is important to point out that an individual will not be able to receive both workers’ compensation benefits and disability benefits at the same time. There is an offset in these cases, where one benefit will reduce the other.
Workers’ compensation will cover medical benefits, temporary wage loss, and permanent disability benefits in some instances. Disability benefits will only cover a certain percentage of lost wages caused by a disability.