Long Term Disability?

[neadods]

The new job has an option to opt in for long-term disability payments. Part of me says "do it, you never know." The other part says "it's an equal gamble that you'll never need it and you could do other things with the money." Dad doesn't have an opinion either way, so I turn to the fount of all knowledge, the friends list.


[Poll #1163699]

Comments

[svilleficrecs.livejournal.com]

Mind if I ask how much we're talking, ball park?

[neadods.livejournal.com]

I'd have to look it up. It's a deduction from every paycheck - under $100, but not by much IIRC.

[drho.livejournal.com]

It depends. If it's a small amount of money that you wouldn't miss (like latte money), it might be a good idea. If it's a substantial amount of money, you might want to shop around before making a decision. Some disability funds (like SSI) probably already cover you and would count the private funds against you.

[faireraven.livejournal.com]

SSI and SSDI only kick in after 5 months of being out of work, and they don't cover short term at all. SSI is needs based, SSDI is disability based (so you may get SSDI but not get SSI if you have assets... such as, her house). Depending upon the level of disability, SSDI can sometimes take several appeals to achieve (although all LTD programs will insist you apply for them so they have to shell out less money, it's subtracted from your LTD payments), and when they do, they're only about 20% of your current income, while LTD is usually 50%-60% of your current income. It's not that LTD counts against you with SSDI, SSDI counts against your LTD! However, nearly every LTD program out there insists you still apply for SSDI, and they make up the difference.

If you're in a car accident where it will take you a year to recover, LTD will kick in after STD runs out. SSDI will only really kick in if there is little chance of recovery. If you look like you'll recover after a year, they'll make you exhaust the appeals process first before they give you one red cent, they figure you'll give up if you're not going to be permanently disabled anyways.

There are few LTD programs that aren't worth the money. They tend to be relatively inexpensive, because so few people are going to wind up using them compared to the number of people putting into them.

[neadods.livejournal.com]

so few people are going to wind up using them compared to the number of people putting into them.

I feel that I'll have ripped myself off if I end up one of the people putting in without ever getting a return - not that I want to need it!

[faireraven.livejournal.com]

Most people don't want to need it.

The point is, better to have the safety net. That's what insurance is for. Most people don't get the fact that yes, you may be pissing your money away because you may never need the benefits.

But if you *do* need the benefits, the benefits FAR outweigh the costs in most cases (except if you get whole life insurance. Then the benefits NEVER outweigh the costs and you just got suckered by someone who is giving your family back less money if you die than they would have had if you'd just put the money in a savings account. Buy term (it's FAR cheaper) and invest the difference).

Many people pay through the nose for health care. Few of the ones who pay for it actually use it (which is why so many people will go without rather than pay through the nose). For those who use it, it's invaluable. For those who don't, it's a waste of money. Problem is, you never know when you're the one who's going to have to use it.

[starcat-jewel.livejournal.com]

Being nit-picky here: we would happily pay thru the nose for health-care coverage... if we didn't need that money to keep a roof over our heads and food on the table. Millions of Americans make that decision by force -- far more, I believe, than those who could pay for it and choose not to do so.

[faireraven.livejournal.com]

In many cases, yes, it's a choice between healthcare and having a place to live, and I don't envy those people that choice.

In many cases it's a choice between healthcare and the current lifestyle. Again, it's a matter of having to choose between parts of your lifestyle and your health if you think about it. Some people will spend huge amounts on their housing (that may be more than they can afford), and skip the healthcare because "they've never needed it, why bother?" Like someone I knew once who spent a lot of money on a two bedroom apartment when she could have lived in something smaller and paid for healthcare to boot.

I'm a little lopsided on the "need the healthcare" equation, though... I have chronic conditions that would have me out of healthcare insurance permanently if I ever let my coverage lapse for more than 62 days. So for me, the healthcare is almost more important than whether I have food on the table and a roof over my head... Because if I let the healthcare insurance lapse and I have a significant issue from my pre-existing conditions, I will lose the food and shelter too, because I won't be able to afford to pay for it myself.

Fortunately for me at this point, it's not a problem, since I'm married and there's another source of income coming in, not to mention another source for healthcare. But I truly feel for those for whom that choice has to be made.

[fan-eunice.livejournal.com]

I said yes, 'cause yeah it's possible you'll never need it but it is invaluable if you do. I believe, but I'm not certain, that long term disability may also keep you on your company health insurance while you use it, which means not facing the hassle of having to deal with possibly losing that or having to switch doctors when you need it most and are least able to deal with it. That'd be the big, huge, advantage of having it right there if that's how your company policy works.

[faireraven.livejournal.com]

LTD doesn't *really* keep you on your health insurance. It depends upon the plan, really. Usually it's up to your company (and they aren't required to do so after the first three months). However, it will help ease the transition to COBRA (COBRA is generally only good for 18 months in general, and up to an extra 12 months above that if you get the extended coverage due to disability. Medicare doesn't kick in until 24 months have passed. The extended COBRA is supposed to be there for people who will never be off disability again).

[travels-in-time.livejournal.com]

You *could* save the money yourself, but would you?

And also, it depends on how much you're talking about. You know whether it'd squeeze into the budget or not; if it would, I'd say go for it.

[calapine.livejournal.com]

I said no, but then realised I am in the UK and you are in the US and possibly, given the health system, I did not tick the most sensible box available.

[neadods.livejournal.com]

There is no sensible option regarding our health care. :/

[fabricdragon.livejournal.com]

i said yes. BUT
how much? can you get it cheaper from your usual insurance? and find out what the regulations are in your state about any other funds you may qualify for....

[faireraven.livejournal.com]

As someone you *know* has surfed the healthcare system inside and out and what disability will mean, unless you're paying through the nose, *take the LTD*. In my case I'd take the up-pay to the higher percentage, too, but you know my reasons behind that. :)

[neutronjockey.livejournal.com]

If it wasn't for having VA disability (any amount) during the last few years (they don't offer LTD...) I would have been buggered. Especially while waiting for SSDI to kick in. It sounds pretty steep...I know some medical plans offer LTD through a combined care kinda thing? Mine was around 80 for both me and Liz per paycheck. Granted it wasn't great but it was there in case.

[ferragus.livejournal.com]

I said yes, but of course it depends on the coverage.

Paying anything to a company that won't pay you if you need it is a bad idea.

See if you can find out how many claims they had filed/honored in the last 1 5 yrs and 10 yrs.

If you can't get that info, consider buying it from a 3rd party.

It's basically a Murphy's law thing, if you decide to get it, you'll never need it. And really is that such a bad thing?

Good luck!

[starcat-jewel.livejournal.com]

IAWTC. I was going to say that, while I checked the "no" button, it really depends on what they offer and how much it costs you; you might be better off putting that money into a separate savings account earmarked for use in the event of a medical condition which leaves you unable to work for more than 6 months (the standard difference between short-term and long-term disability).

[chibiaingeal.livejournal.com]

Unless the policy will transfer with you if and when you leave the job, I'd vote "No."

[neadods.livejournal.com]

No, it won't. And this is a contracting job.

[lagilman]

yes. If you have a safety net of spouse and/or grown kids, you can make other arrangements, but for those of us who're more or less on our own it's a very good idea (if the monthly cost is managageable). Yeah, you could invest the money yourself -- but if memory serves, part of most insurance costs are also a tax deduction...

[raqs.livejournal.com]

No. You should have 6-12 months expenses in cash on hand anyway. I know, most of us don't, but you should, so put the money toward that fund. If you have to go on disability, SS and Medicare will pay a lot, and this won't pay everything anyway. It's a bad gamble.

UNLESS you're over 60 and without a lot of financial resources; in which case it might just make you feel better to have it. But in general insurance is a gamble and most of these long-term disability insurances are not good gambles. At that price, I'd definitely want to know more about all the things it would and would not pay for, and how good a record it has at ponying up.

[lagilman]

You should have 6-12 months expenses in cash on hand anyway

Everyone should, yeah, but that won't be a drop in the bucket if you have to go on LTD or significant medical care. Six months' expenses presupposes normal expenses. Doesn't cover things like rehab therapy, in-house care, or all the various and sundry than can come along with long-term disability, and can overrun normal insurance pretty fast in some cases.

[raqs.livejournal.com]

No, but that covers the gap until LTD or SS benefits kick in. Many LTD plans only pay up to what SS would cover in case it doesn't cover it - that is, even with SS & LTD, you'll still only get 60% salary replacement; the LTD plan only kicks in to top off, or in case you don't somehow qualify for SS payments.

Most work plans provide some LTD included in their employment of you; I would ask about that first before electing additional coverage.

And then the same rule applies to all insurance. It's literally a bet. If you CANNOT afford to have a loss in income at all - if you are the sole support for several children or a whole family and there would be no other way of surviving for any of them, then you should have all the insurance in the world. If you can afford to pay the premium and would sleep better at night knowing you have the insurance, then by all means, pay for it. If it's a question of whether or not you really need it, then keep in mind that at the end of your life when you're most likely to need such money, if you save that money and invest it, $100 per month can be $100,000 at retirement time. That's why I asked (or at least implied that it mattered) how old n. is and that would figure into my calculations.

Disclaimer: not that I know bupkis about n's financial situation or needs.