How to apply for disability insurance

If you’re young and healthy, the idea of a disability preventing you from working might seem far-fetched. Yet approximately one out of four 20-year-olds will become disabled before age 67, according to the Social Security Administration.¹ So, regardless of your current health status, it can be helpful to understand how to apply for disability insurance and how different types of disability insurance programs work. This article can provide a helpful overview of the process for claiming disability benefits and how the main categories of disability insurance programs work:

1. Government programs, e.g., Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)

2. Private disability insurance for individuals, either for short-term or long-term disability coverage

3. Group disability insurance through the workplace, either for short-term or long-term disability coverage

Disability coverage can be short-term or long-term

There are two main types of disability coverage you can apply for: short-term disability (STD) benefits and long-term disability (LTD) benefits. As the names imply, these provide coverage for different lengths of time, and they’re often used in conjunction with one another.

• Short-term disability insurance typically provides coverage for around 3-6 months or until you recover, and these policies often offer a rehabilitation component to help you get back to work. Because they're short-term, these policies usually have a short waiting period before benefits kick in, such as a two-week elimination period (i.e., the period before your benefits start following when you file a disability claim).²

• Long-term disability insurance can provide coverage for much longer periods, ranging from a couple of years to retirement, depending on the policy you choose. However, these policies have a longer elimination or benefits waiting period than short-term policies, often around three months.³

Government disability insurance programs

If you become disabled and cannot work due to an injury or illness, you may qualify for state or federal government assistance depending on the nature and severity of your injury – and where you live.

At the state level, five states — California, Hawaii, New Jersey, New York, and Rhode Island — as well as Puerto Rico, have STD insurance programs.⁴ Exact benefits vary, but these programs are designed to provide benefits for months, not years.

At the federal level, disability coverage comes primarily from the Social Security Administration through two programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).⁵ Both can provide LTD benefits, but they differ in several areas, including who qualifies and benefit amounts.

What is Social Security Disability Insurance?

Social Security Disability Insurance (SSDI) is a government disability insurance program that provides monthly benefits to those with qualifying long-term disabilities. This coverage is part of your Social Security benefits, and you pay into the program through payroll taxes. Benefit payments are based on your work history; typically, you need at least 10 years of work experience to qualify for SSDI.

The average monthly SSDI benefit for disabled workers is $1,537.03.⁶ SSDI eligibility goes up until your full retirement age (67 for those born in 1960 or later), at which point you should start receiving Social Security retirement benefits.⁷

What is Supplemental Security Income?

Supplemental Social Security Income (SSI) is another type of federal disability insurance program that provides additional assistance to those with a disability, who are legally blind, or who are 65 or older and have limited income and assets.⁸

Unlike SSDI, your work history — or lack thereof — does not factor into your eligibility or benefit amount. Instead, your financial situation determines how much assistance you receive. On average, an SSI recipient gets a monthly benefit of $697.89.⁹

A strict definition of disability

The Social Security Administration (SSA) has a strict any-occupation definition of disability that covers a specific and limited set of severe medical conditions listed in the SSA’s Blue Book. That means that SSDI only pays benefits for long-lasting or permanent medical issues that make you incapable of doing any work— not just in your current field, but in any type of employment. And while SSI benefits aren’t directly tied to your ability to work, benefits are only given for a mental or physical condition that is expected to last at least 12 months or result in death, and which leaves someone unable to engage in what’s known as substantial gainful activity (SGA).¹⁰

How to apply for government disability insurance benefits

If you're making a claim for a government disability insurance program, you can go to the relevant agency’s website, e.g., the Social Security Administration for SSDI or SSI. You can also schedule a phone or in-person appointment with the SSA. If you are applying for state disability benefits, contact the Department of Labor or Employment in your state for details on how to apply.

When applying for SSDI or SSI – and most state programs – you'll need to provide information such as:

• Your Social Security Number (SSN)

• Proof of your age, like a birth certificate

• Names and contact information for any doctors, caseworkers, hospitals, and clinics that have taken care of you

• Medical records from all of these healthcare workers

• Any relevant laboratory tests and results

• Names and dosages of any medicine that you are taking

• An explanation of your work history, including a job description

• Your most recent W-2 form or a copy of your federal tax return

Once you submit an application for SSDI or SSI, you should know that the approval process won’t be quick: it typically takes around 6-8 months to receive a decision.¹¹ However, state disability programs for short-term coverage tend to provide benefits in a much shorter timeframe.

Limitations of government disability insurance programs

State-level STD plans tend to be comparable to private STD plans – and in fact, most states allow employers to purchase a state-compliant plan for their employees from a private insurance company. As for federal SSDI and SDI, while these programs can help those who aren’t able to earn enough due to a mental or physical condition, they can have limitations compared to a private LTD plan, including:

• Limited benefit amounts

• Long wait times to receive benefits

• Limited ways to qualify for benefits

Getting private disability coverage from an insurance company

For those who want additional financial protection in the case of experiencing a disability, private insurers also provide different types of disability insurance, which can provide broader coverage and higher benefit amounts. Some ways to obtain private disability insurance include:

• Through an employer: Your company may have a group plan for STD (and sometimes, LTD insurance), which can provide replacement income if you're unable to work and earn a paycheck. With group plans, your employer often pays all or at least some of the premiums on your behalf. The benefit amount is typically a percentage of your regular salary, for example, 50% or 60% of weekly or monthly earnings. Keep in mind, however, that your disability insurance is tied to that employer, so if you change jobs, your employer-provided coverage ends.¹²

• As an individual: Individual disability income insurance is also an option for those who do not have access to this benefit through their employer, as well as for self-employed individuals. Even if you receive some disability coverage through work, you might still buy your own individual disability insurance plan, for example, if you're a high-income earner looking for more comprehensive financial wellness. Also, individual coverage is "portable," meaning it stays with you if you change jobs or leave to start your own business.

• As a small business owner: Many small business owners purchase individual disability insurance policies to protect their income, but more comprehensive disability insurance for business owners is also available. In addition to providing personal income protection, these policies can also cover other business expenses such as loan payments, and even provide funds to help buy out a business partner's share if they have a lasting disability.

Comparing individual disability insurance to government programs

Private disability insurance and government disability insurance can both help provide payment if you lose the ability to work, but they differ in several key areas – especially when it comes to long-term coverage. Individual disability income insurance is designed to protect your income if you cannot work due to illness or injury. Private disability insurance typically:

• May cover more types of disability: Government programs tend to have strict and narrow parameters around who qualifies for these benefits. As we’ve already noted, SSDI benefits are only paid for complete and total disability.
  Private disability insurance, however, works similarly to other types of private insurance policies like life insurance in the sense that you're purchasing a financial product that can be configured to your needs. For example, many private disability insurance policies provide coverage if you just can't work in your own occupation, as opposed to requiring that you to not be able to work in any occupation.

• May cover more lost income: SSDI and SSI benefits can vary based on your situation, but there are hard caps that can make it challenging for many people to recoup much of their lost income. For example, the maximum SSDI monthly benefit is $3,822 per month¹³, and the average is less than half of that.
  Private insurers can have different maximum benefits, but you can generally find higher limits. With private LTD insurance, for example, you can expect plans to pay as much as 60 of your monthly income.¹⁴

• Can be customized to your needs: Government disability insurance policies are more one-size-fits-all in terms of what they cover, whereas private disability insurance policies can often be customized to your needs.

• For one, you can customize benefit amounts. If you're trying to figure out how much disability insurance you need, consider your monthly fixed expenses like housing, car payments, insurance, etc. Government benefits might not provide enough to cover these areas so that you can close the gap with private disability insurance.

• Guardian disability insurance policies can also provide coverage to help with student loan payments, and you can customize your policy with riders to add more support if you face issues like cancer or a critical illness.

Private disability insurance claims

The process can differ slightly depending on the provider and the type of coverage. In general, though, making a disability claim involves filling out some paperwork about your disability either online or via a physical form that can be e-mailed, mailed, or faxed.

In any case, your application will likely require information about your employment, salary, and the details of your condition, like a description of your symptoms and when those first began, as well as details about the care you're getting for your disability. Your employer and/or physician may also have to complete some paperwork about your disability, or your insurer might reach out to them on your behalf (and with your permission) after you submit your initial claim.¹⁵

How to get an individual disability policy

STD coverage is often included in an employee benefits package. If it's available, you should make sure you're signed up: You could obtain lower group coverage rates, and your employer may pay for a portion of the cost (or even cover STD premiums 100%).¹⁶ However, many employers don't offer individual LTD plans — and even if your employer does, the features and benefits may be limited. ¹⁷

If you are concerned that SSDI and/or SSI disability benefits would not support your lifestyle, speak with a financial professional to get the comprehensive LTD policy you need (or fill in the gaps of your workplace LTD with a supplemental plan). Make sure that the professional is familiar with the specifics of buying an individual disability policy – If you don't know one, a Guardian financial professional can help you. Give your financial professional as much information as possible about your financial situation and concerns so that they can start looking into disability insurance coverage options for you.

The application process will be similar in many ways to that for life insurance. Expect to provide the following types of information:

● Age

● Gender

● Location

● Occupation

● Income

● Health history

Depending on the provider, type of plan, and your situation, the underwriting process may also involve a phone interview and a medical exam.