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Are You Prepared for a Disability?

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If you believe the hordes of studies that take on the subject of human behavior, you have probably noticed a consistent trend: What Americans think and what Americans do are two very different things and our ideas about our uncertain future are no exception.

A 2010 study found that when it comes to our health and how it affects future employment, we have some rethinking to do in our lives. According to the study, 86% of those who were polled believe there is more they can do to protect themselves from the possibility of an illness or injury affecting their ability to work but only 36% are actively taking those steps. You might be thinking that it sounds a lot like our attitudes about weight loss, smoking and some of our other bad habits but what can we do about it?

The study and a 2009 study has more to reveal. As much as you may say that you hate your job and hate working, if you’re like most Americans, you might not like your job but you feel that it’s your purpose or duty. 63% of those asked said that they live to work compared to 36% who said they work to live. Even if we grumble about it most of us believe that our jobs are part of our purpose but that isn’t translating in to action.

That doesn’t mean that we’re lazy and unmotivated. It could be a sign that Americans don’t know how to protect themselves from the uncertainties. Here are a few ways to become one of those who take active steps to address this problem.

Overall Health

Yet another survey shows that nearly two thirds of employers have programs that address employee health and well being but only 18% of workers identified these programs as a way to address their long term health needs. Ask your employer about these programs but more importantly, take steps in your own life to be more healthy. You’ve heard it before and it’s hard to do but a 30 minute brisk walk every day seems like a better option than a lot of doctors later on.

Disability Insurance

Many employers offer disability insurance at a discounted rate and some pension plans have it automatically built in to your benefits. Disability insurance will pay you around 60% of your salary should you become disabled in some way. Expect to pay between 1% and 3% of your salary for this coverage.

Address Your Head

A surprising 92% of people asked said that they have a healthy balance between work and personal life. If you’re one of the 8% (does 92% seem a little inaccurate to you) who doesn’t have a good balance, not addressing it could be hazardous to your health. Even though it seems counterintuitive, convince yourself that taking a break won’t put you nearly as far behind as you might think.

Control Your Leverage

Debt in America is out of control and most Americans agree that they need to get a better hold on their finances. The less debt you have, the more able you will be to weather the storm of an illness or injury. Remember that every time you take on new debt, you’re making a bet on your future. The problem with this kind of gamble is that there is no payoff if you’re right.

Have you heard some of this before? If these studies are correct, Americans have heard what they should do to protect their future earning power but they have, so far, not put it in to action. Don’t wait until New Years to make the resolution. Even one small step is better than nothing.

{ 11 comments, please add your thoughts now! }

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11 Responses to “Are You Prepared for a Disability?”

  1. Strebkr says:

    Have you ever done any posts about disability insurance in general? I have had life insurance for quite some time, but I am beginning to think that I am probably more at risk for a disability then a lethal car accident or something like that.

    • tbork84 says:

      I have supplemental disability insurance, and it isn’t terribly expensive per month. I look at it as an extra buffer in case something were to happen. I would suggest looking into it with whoever you are using for insurance now and shop around just like you would for any other kind of insurance.

    • Shirley says:

      If you intend to carry a supplemental disability or hospitalization ins policy, be very sure that it is one that pays in addition to (not along with) any other policy that you may have and that it pays directly to you.

  2. Robert says:

    I would say that most “think” that they are covered for a disability by SSDI and LTD by an Employer. But the reality is that they will take a major “hit” on their long term finances/savings.

    Become disabled and unable to work at your normal job on a permanent basis. STD and LTD through employment would cover for a while and insurance coverage would pay medical bills.
    But what if it turned into a major disability where one could not return to work? Medical would turn into Cobra, that is expensive and eventually runs out, and then one would need to look at SSDI and Medicare [and actually file for it early]. But there are waiting periods for those to kick in. Meanwhile savings and other assets would need to be accessed.

    So what if your employer provided disability has paid for lost wages? But many policies written today have a coordination of benefits clause in them, where if one is later eligible for Social Security Disability, the Disability through an Employer is offset by SSDI. They are not always stacked – one does not get SSDI and LTD.

    From one company’s Website that coordinates Companies’ LTD, Worker’s Compensation, and tohers against SSDI and similar benefits:

    “”XYZ Company offers a comprehensive suite of services designed to help companies take advantage of the savings that result from properly coordinating employee benefits and workers’ compensation programs with Social Security Disability Insurance (SSDI) and Medicare.

    We have helped hundreds of employers, group health plans, state and municipal governments, disability and workers’ compensation insurance carriers, third-party administrators, and law firms significantly increase overpayment reimbursement dollars and reduce their group health, long-term disability (LTD) and workers’ compensation plan liability.”"

    From what little I have read, to be properly protected, one would need a private LTD policy that can be stacked and does not have a coordination of benefits clause.

  3. JPA says:

    Thanks Tim. Indeed the moat between what people say and what they do is a wide one.

    One specific area to highlight is long-term care (LTC) insurance. 70% of retirees will need LTC before they die. 9% own insurance for it.

    Its critical to buy LTC insurance because its the ONE kind of care Medicare does not pay for after 90 days (the average LTC need is 3 yrs).

    Some of the readers here may not be retired but their parents likely are. And if their parent has an unexpected stroke or injury, the cost for LTC will likely come to the kids unless the parent has the needed insurance/significant savings.

    • Strebkr says:

      I’m asking this from a purely legal responsibility point of view and completely ignoring the relationship between parent and child, but what do you mean when you say “the cost for LTC will likely come to the kids unless the parent has the needed insurance/significant savings.”

      If the parents had nothing, but the child had significant assets there is no way for LTC costs to come back on the kids. Essentially isn’t this what Medicaid covers?

      *This isn’t about what a child should do, its purely about the legal/financial responsibility of a child with assets and a parent with nothing.

      • Shirley says:

        This is what we found when my parents were in failing health:

        You are right… this is what Medicaid covers, but only if the patient has no financial means (as you said) and not that many convalescent hospitals accept over a certain number of Medicaid patients. Once the patient has begun to improve in health or physical ability, they must be moved to a personal care unit rather than a convalescent hospital within a certain amount of time.
        Personal Care Units cost $5,000 or more per month and are not covered.

        Thank goodness my parents had substantial savings for just this purpose.

  4. JPA says:

    Here’s the MATH:

    According to the WSJ and Center For Retirement Research at Boston College the average person between the ages of 55 and 64 should have:

    $320,000 in their 401k/IRA (if they earned a modest income)

    What do people actually have?

    $78,000

    So you will likely fall along this path as well (401k participation rates for the next generation aren’t any better than the current retirement generation – seems we don’t learn).

    Who will pay for your retirement if you fail to plan? The Government? Pick up a newspaper and take a guess where social programs are going in the next 20 years…

    In the end it will be your family that helps your financially. Maybe not directly your kids, but someone will surely suffer.

    Here’s the PRACTICAL SIDE:

    Most parents will fund their college kids education at the expense of retirement. Its a fact. Yes, from a mathematical standpoint they shouldn’t…but they still do.

    Short term needs almost always trump long-term financial goals.

    So, what this article lacks is specific ways parents can balance both goals:

    1. Exhaust the scholarship path – looked at it already? Really? Have you? Have you applied to hundreds of scholarships. Look here:
    http://www.iwillteachyoutoberich.com/blog/the-1-day-iwillteachyoutoberich-entrepreneurship-boot-camp/

    2. Friends and Family – in my experience, Aunts, Uncle and Grandparents are willing to help out financially with two things: health costs and education costs. Maybe they can pitch in a bit.

    3. Lower Cost Schools – what is the true value of going to a higher brand institution vs. a state school? I personally think its worth it, but it depends on what your child wants to do and what schools are available in your state.

    4. Working In College – This can be a good way to pay off loans faster and to give your kid a sense of responsibility and ownership

    Help your kids. For sure. They will benefit wildly from their education. But put your considerable brain power to finding out what levers your can pull to make it financially worthwhile.

    • JPA says:

      This was a comment for another blog post that I accidentally copy and pasted here ;) Sorry! If I could I would delete.


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