Workers’ compensation and various kinds of disability insurance may help you in the event that you become disabled through illness or injury and are unable to work. Disability insurance can include short-term disability, long-term disability, and Social Security Disability Insurance (SSDI).
Workers’ compensation is insurance offered through your employer. If you become ill or injured on the job and during work hours, workers’ compensation will replace a portion of your wages that you will not be able to earn while you are recuperating, and it will cover medical expenses related to your illness or injury.
Workers’ compensation may also compensate you for a permanent injury, such as loss of a limb, and cover the cost of retraining if you are permanently unable to perform your former job. In a worst-case scenario, workers’ compensation will provide payments to the beneficiaries of workers who are killed on the job.
Unlike Workers’ compensation, disability insurance will also cover injuries and illness that occur off the job or outside of work hours. Disability insurance is designed to replace a portion of your income in the event that you cannot work due to a medical condition. Many employers offer short-term disability, and some offer long-term disability as well. Generally speaking, short-term disability will replace a portion of your base salary for a few weeks up to one year; long-term disability will cover part of your lost wages for longer than one year.
You may be able to purchase a supplemental disability policy beyond what, if anything, your employer offers, but you should know that the longer you anticipate needing coverage, the more expensive your policy will be.
Social Security Disability Insurance will also bridge the gap of your lost wages in the event of illness or injury on or off the job, but the application process to receive SSDI benefits is lengthier, and the requirements you must meet to qualify are stricter.
In order to qualify for SSDI, you must meet the qualifications for the specific condition you allege in your application and be completely unable to work for at least twelve consecutive months or suffer from a condition that is expected to result in your death. The requirements to prove your specific condition for SSDI can be found in Social Security’s Blue Book, which outlines the requirements you must meet to prove to Social Security that you are totally disabled as a result of one or more conditions.
Workers’ compensation benefits are based on your earnings for the three months prior to your injury or illness. SSDI benefits, on the other hand, are based on how much you have earned during your entire working life. You are allowed to collect both workers’ compensation and SSDI at the same time, but the combined income you receive from them cannot exceed 80% of your previous income.