Many Missourians purchase private disability insurance to guard against an unforeseen illness or injury that could limit or destroy their ability to work. Most of these persons are also eligible to file claims for Social Security Disability Insurance benefits. In this post, we will provide a summary comparison of the two types of insurance plans and a description of how they may fit together.
The biggest difference between private disability insurance plans and SSDI is the definition of "disability." As we have noted many times in prior posts, a person must be "totally disabled" to be eligible for SSDI benefits. Total disability is defined by the Social Security Administration as the inability to engage in "substantial gainful activity" for a period of at least 12 months. Substantial gainful activity is, in turn, defined as the ability to earn more than a specified amount per month (in 2016, that amount is $1,130 for persons who are not blind and $1,820 for blind persons. Private disability insurance policies contain many different definitions of disability, but most of them are more liberal than the SSDI requirement of total disability. Also, private plans may allow payment for a partial disability, whereas SSDI does not provide any benefits for partial disability. Another difference between the two types of insurance is the larger payments that may be available under private insurance if the insured is willing to pay a large enough premium.
One obvious question is what happens when a person's SSDI eligibility if he or she is covered by a private disability plan. The answer usually depends upon the language of the private insurance policy. SSDI benefits are paid regardless of whether the claimant has a private disability plan, but many private plans required the insured to apply for SSDI benefits before any benefits are paid by the private insurer; also, SSDI payments may be deducted from any benefits due under the private policy.
Anyone who is contemplating filing a claim for SSDI benefits and who is also a beneficiary under a private disability insurance policy may wish to consult an attorney who specializes in handling SSDI claims for advice on the terms of the private policy and the extent to which SSDI benefits may reduce the amounts payable under the private policy.
Source: FindLaw, "Private Disability Insurance v. SSDI," accessed on June 6, 2016