By some estimates, one third of American workers will become disabled for at least 90 days, with the average disability insurance claim lasting about 13 months. A prolonged or permanent disability takes away an individual's greatest financial asset - his or her earning power.
Disability planning issues
- Disability insurance - Provides periodic payments as a result of sustaining a sickness or injury that leaves one unable to work. Components of a disability insurance policy include the definition of disability, the elimination or waiting period before benefits are paid, benefit amount or percentage of income and benefit term.
- Social Security benefits - Under limited circumstances, disability benefits are available to worker.
- Qualified worker must be totally and permanently disabled.
- Unable to perform any type of work.
- Disability must be expected to last for at least 12 months or be expected to result in death.
- Qualification depends on age. Individual under 24 qualifies with just six quarters of work. Ages 24 to 31, individual must have worked at least one half of quarters since age 21. Over 31, worker must have worked a total of 40 quarters and 20 of the last 40.
- Medicare/Medicaid - An individual receiving Social Security disability benefits also are eligible for Medicare benefits. Part A provides hospital, skilled nursing, hospice and home health care services. Part B covers physicians' and outpatient fees.
Social Security disability benefits do not automatically qualify one for Medicaid benefits. Medicaid benefits set by individual states depend upon needs and resources.
Planner must be aware how recommendations might affect disabled individual's qualification for Medicaid and other government programs.
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