Social Security Disability Insurance combine to leave people with disabilities struggling to secure financial footing.
People with disabilities are consistently experiencing a higher rate of unemployment, and those unable to return to work due to their disabilities may face years of waiting before receiving their Social Security Disability Insurance benefits
The Allsup Disability Study: Income at Risk shows that for the first quarter of 2009, people with disabilities experienced an unemployment rate 56 percent higher than people without disabilities. Specifically, the unemployment rate for the first quarter averaged 13.4 percent for people with disabilities, compared to 8.6 percent for people with no disabilities, according to non-seasonally adjusted data from the U.S. Department of Labor.
The gap in the unemployment rate narrowed as unemployment among people without disabilities continuing to climb throughout the first quarter while dropping slightly in March for people with disabilities. However, people with disabilities consistently continued to experience higher rates of unemployment.
The Bureau of Labor Statistics also reported that during March, nearly one in four of the unemployed had been jobless for 27 weeks or more.
"In six months' time, a person with a progressive disability can go from being a job seeker to being unable to work," said Paul Gada, personal financial planning director for the Allsup Disability Life Planning Center. "Having a disability and no job can result in even higher stress levels. Many people also are facing limited economic resources for needed healthcare or medications. This combination puts people with disabilities at a significant financial risk."
The Allsup Disability Study: Income at Risk also shows that during the first quarter of 2009, the number of people with disabilities unable to work and applying for Social Security Disability Insurance climbed by 17.4 percent. Meanwhile, based on Allsup's analysis of the Social Security Disability 2008 backlog, more than 1.4 million people had applications pending. The average time to receive an award was more than 2.5 years (942 days).
"These delays in benefit decisions are creating extremely difficult financial situations for hundreds of thousands of people nationwide," said Gada.
Securing Future Income
Seeking SSDI benefits is something that many people with disabilities try to avoid at all cost. However, if they lose their job and their condition continues to worsen to the point that they cannot get another job, they realize they can no longer afford to live without disability benefits they are owed. People with progressive conditions such as diabetes, heart disease and chronic obstructive pulmonary disease (COPD) may find themselves in this position.
"We know that people with disabilities and unable to work will tap into their retirement accounts and home equity, sometimes depleting them well before they receive any SSDI benefits," said Gada. "Given the recession, these resources are already diminished."
As a result, Gada urges people unable to work due to a disability to become educated about the requirements for seeking SSDI benefits. They also need to clearly understand the specific details of SSDI program provisions designed to help improve their financial future. Among the income-securing benefits of SSDI are:
Regular monthly income: SSDI is a regular monthly payment and provides annual cost-of-living increases. The average monthly benefit for a disabled worker was only $1,062 in March; significantly less than most people able to work full time could earn.
Medical and prescription drug benefits: Regardless of age, 24 months after a person's date of entitlement to SSDI benefits, he or she is eligible for Medicare.
COBRA extension: Securing healthcare coverage prior to being eligible for Medicare is essential. People receiving SSDI benefits may be able to extend the length of their COBRA benefits an additional 11 months; the American Rescue and Recovery Act further extends benefits for some unemployed.
Long-term disability benefits: People with private long-term disability insurance may be required to seek SSDI by their provider. Complying with this requirement could help protect their ability to receive long-term disability income.
Protected retirement benefits: SSDI ends at retirement age when recipients transition to Social Security retirement benefits. SSDI entitlement "freezes" Social Security earnings records during a person's period of disability. Because the years in which a person collected SSDI benefits are not counted when computing future benefits, Social Security retirement benefits may be higher than if the earnings were averaged with those years of zero earnings.
Dependent benefits: Dependents under age 18 of people receiving SSDI benefits may be eligible for benefits.
"The better informed people with disabilities are about the SSDI process, the better positioned they are to make decisions about their financial future," said Gada.
Reference: Allsup, Belleville, Ill., is a leading nationwide provider of financial and healthcare related services to people with disabilities. Celebrating its 25th anniversary in 2009, Allsup has helped more than 110,000 people receive their entitled Social Security Disability Insurance and Medicare benefits. Allsup employs more than 550 professionals who deliver services directly to consumers and their families, or through their employers and long-term disability insurance carriers.
For more information, visit www.Allsup.com.
The information provided is not intended as a substitute for legal or other professional services. Legal or other expert assistance should be sought before making any decision that may affect your situation.
Editor's Note: Details on the Allsup Disability Study: Income at Risk are available at www.allsup.com/portals/4/allsup-study-of-income-at-risk.pdf.