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Professionals often need so many different types of insurance that it can be challenging to understand just what types of coverage you have and where you may be vulnerable to gaps in coverage. Disability insurance is one of those areas.

The Social Security Administration provides disability insurance to individuals who pay tax under the Federal Insurance Contributions Act (FICA), but professionals often elect to purchase private individual disability insurance policies or take advantage of group disability insurance offered through an employer. It is important to understand the differences between private disability insurance coverage and SSA disability programs to determine your needs and ensure that you will be appropriately protected in case the onset of a physical or mental disability prevents you from working in your chosen profession.

Benefit Amounts May Be Much Lower with SSDI

One of the most important differences for professionals—particularly those who operate a private practice—is that the benefit amounts available through Social Security Disability Insurance (SSDI) are usually much less than the benefits that may be available through a private disability insurance policy. SSDI amounts are calculated based on a formula that involves lifetime earning averages, and the benefits are capped at an amount that is likely to be far less than your average monthly work income. If you are relying on SSDI and a disabling condition such as back pain prevents you from working, it may be next to impossible to maintain your home and business without drawing down substantially on savings.

By contrast, private disability insurance benefits will often pay 70% of the income you were earning at the time you became unable to work, which could provide significantly more regular income while you are recovering. It is important to review the details of your policy to understand the way your benefits would be calculated. Generally, a disability insurance policy with higher benefits payments will also have higher monthly premiums.

SSDI is Only Available for Long-Term Disabilities

The federal SSDI program will only pay benefits for disabling conditions that are expected to last for at least a year or lead to death and it can take considerable time to qualify for and begin receiving benefits.. Private disability insurance, on the other hand, offers the option of short-term coverage in addition to long-term policies. You may be eligible to receive benefits under a short-term disability insurance policy soon after you stop working, and the benefits may continue until you become eligible for benefit payments under a long-term disability insurance policy. Putting these two types of coverage together provides a security net to ensure that you have a continuous stream of income when you are unable to work.

It May Be Much Easier to Qualify for Benefits Under a Private Disability Policy

For several reasons, professionals often find it considerably easier to obtain disability benefits through private disability insurance than through SSDI.

Broader Range of Disabilities Covered

Private disability insurance policies have different standards of eligibility for benefits than the Social Security Administration. The categories of disabling conditions can be much broader so that you qualify to receive benefits under a private policy even though you’d be denied benefits by the SSA because your condition is not on their list and they refuse to recognize the evidence you’ve provided about the effect your condition has had on your ability to work.

Own Occupation vs. Any Occupation

In addition to the fact that private policies often recognize more disabling conditions, the standard for proving that you are unable to work due to your disability often differs substantially. To receive benefits through SSDI, you need to conclusively demonstrate that you are unable to perform any type of gainful employment. If you’re a medical professional, such as a nurse anesthetist, for instance, and suffer from a stress-related gastrointestinal condition that prevents you from performing your profession, the evaluation team at Social Security might determine that you are able to work at other jobs, such as greeting people at the entrance to a store, and that for that reason, you are not eligible for SSDI benefits.

Many private disability insurance policies pay benefits if you are unable to work in your own profession, even if you are capable of other forms of employment. This is a critical difference for professionals because the amounts you would earn through simple, non-stressful employment will be only a small percentage of what you need to keep up with regular living expenses. 

Private policies can differ quite a bit in this regard, so it is important to pay attention to the details. Some policies will pay benefits long-term if you are unable to work at your own occupation, some will only pay if you are unable to work at any occupation, and other policies are a hybrid. These hybrid policies might pay benefits for a limited period of time, such as two years if you’re unable to work in your chosen profession, and benefits would continue after that period only if you’re unable to work in any occupation.

Procedural Differences

The process of demonstrating your eligibility to receive disability benefits will generally be less complex with a private policy than when applying through the SSDI system. SSDI is operated as a joint enterprise between the federal government and individual states, with multiple layers of bureaucracy. It takes extensive time for agency employees to review and evaluate claims, and applicants often need to undergo a hearing with an administrative judge before they will be approved.

Processing a claim through private disability insurance usually proceeds at a much faster pace. However, the importance of gathering persuasive evidence before filing a claim is just as critical when dealing with private insurance. Private insurers often deny claims that should be paid, so it can be helpful to work with a disability insurance attorney when filing a claim or appealing a denial of benefits. Insurance companies try to keep profit margins high by paying as few claims as possible. An insurance attorney understands the evidence and arguments that insurers find persuasive and knows when an insurance company is operating in bad faith in refusing to pay benefits.

Duration of Benefits

With private disability insurance, the terms of the policy you purchase will determine how long you can receive benefits. Short-term disability policies may start paying benefits after only a few days, but they usually only pay benefits for a few months. Long-term policies may pay benefits until you reach retirement age, or they may specify the benefits will only continue for a maximum period that could be as short as just two years. SSDI benefits may continue until you reach retirement age. When receiving either type of benefit, you will probably need to be reevaluated periodically to prove that you still suffer from a condition that prevents you from working.

Help with Private Disability Insurance Claims

While it may be easier to qualify to receive disability benefits through private disability insurance than through the SSDI program, and the benefits you can obtain will usually be much greater, it can still be difficult to get your application approved. The legal team at Seltzer & Associates has decades of experience helping professionals overcome the hurdles put in place by insurance companies to obtain the full amount of benefits to which they’re entitled when a disability prevents them from working.

If you’d like to discuss a disability claim with one of our attorneys, contact us now for a free consultation by calling 888-699-4222 or connecting through our website.