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The ending of short-term disability insurance or long-term disability insurance does not need to be the end of such financial support. You have other options, including federal programs that can provide benefits. Let’s take a look at what happens when disability ends.
What happens when short-term disability ends?
When short-term disability ends, you have two choices. Head back to work if you’re well enough, or apply for additional disability coverage if needed.
Short-term disability coverage typically runs nine weeks to a year and provides partial income replacement for qualified recipients unable to work due to an injury or illness. When the coverage period ends, the patient may move to long-term disability coverage if they’re still too injured or ill to work. Switching from short-term to long-term disability coverage is not automatic, and patients need to apply. The waiting period for long-term disability coverage can be up to a year, so it’s worth applying as soon as possible, well before the short-term benefits cease.
The waiting periods for long-term disability insurance often match the benefit periods of short-term disability policies. Let’s say a short-term disability policy has three months of coverage and long-term disability insurance has a three-month waiting period. After three months, the patient would move from short-term to long-term disability coverage—provided they have their paperwork done early enough to avoid a gap and are approved.
“These two benefits work together to give you one experience,” says Joseph McDonald, a partner at McDonald & McDonald, an Ohio-based law practice specializing in disability insurance. “Think about it like a relay.”
What happens when short-term disability ends early?
In some cases, a short-term disability plan will cease making payouts before the length of the term is complete. The most common reason is that the insurance company hasn’t received enough medical evidence that you’re ill or injured and unable to work. Therefore, visit your doctor regularly during your short-term disability period and provide reports to your insurance company. If a short-term disability plan ends prematurely and you don’t know why, follow up with your provider to find out.
“You may need to appeal the termination,” says Erin Bradshaw, chief of mission delivery at the Patient Advocate Foundation. “If it ended [because] the allowable period has been exhausted, then a long-term disability plan, if available, is the next step.”
What happens when long-term disability ends?
A long-term disability policy may last for as little as six months to several years. Sometimes, a policy can last as long as a patient’s retirement age, typically 65.
However, even if you already have a long-term disability policy, within a few months of coverage, the insurance company will likely require you to apply for the federally funded Social Security Disability Insurance (SSDI) program. Because of this, SSDI may be the next step for your disability coverage.
“Most [long-term disability] plans require an application to Social Security and will help with the process,” Bradshaw says. “Long-term disability policies provide an offset, which means any benefit paid by SSDI will reduce what’s paid out by the long-term disability.”
For example, say you qualify for $2,500 each month from your long-term disability plan. You apply for SSDI and receive $2,000 monthly from the Social Security Administration. That $2,000 gets subtracted from the $2,500 you are getting from your long-term disability plan. After this reduction, your long-term disability plan would now pay you $500 per month, which, when added to the SSDI amount, would give you a monthly disability benefit total of $2,500.
SSDI benefits terminate at 65 (or sooner, if you can return to work). That said, your next step is to apply for federal healthcare benefits. “SSDI will put you on track for [retirement-age] Medicare healthcare benefits and sometimes Medicaid based on income (and) assets,” Bradshaw says.
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