You need to consider many things when on or applying for long-term disability benefits. Because of your challenging health situation, you may not clearly identify or understand your options and plan accordingly.
Once you qualify for disability insurance benefits (often a tough fight to start with), you need to worry about other things. Health insurance is a significant concern if you are no longer working.
You are on long-term disability for a reason. You are dealing with a major medical condition that keeps you from working for an extended period. This is not a time when you can afford to lose health insurance. Similarly, you should not opt for a bare-bones health insurance plan to save money. That decision can and will return to hurt you, which you will regret.
Money Can Be Tight, but You Need Health Insurance
However, you may also find yourself in a difficult financial situation. Health insurance may not cost more because of your condition – but it will generally cost a lot. You may lack ample money when you are on disability. You will still need to pay your bills, but you cannot afford to lose health insurance. In fact, after your food and shelter, place health insurance at the top of your list of bills you need to pay.
You Will Likely Lose Employer-Sponsored Coverage
The bad news is that your employer will likely not pay for your health insurance when you are on long-term disability. Their only legal obligation is to keep paying your health insurance while you are on medical leave.
Employees with health insurance through an employer-sponsored group plan may keep it while on leave under the Family Medical Leave Act. However, FMLA only lasts for 12 weeks, and the law only covers about half the employees in the country.
When your insurer approves your application for long-term disability, you will leave your employer’s payroll because the requirement for granting your benefits is that you cannot work at your current job.
Employers Would Most Likely Cut Off Your Benefits
Sometimes, the employer will keep paying for your health insurance premiums, but that is not because of any legal obligation. They may do this out of kindness to you because of your situation.
For example, if you were sick with a long-term illness, your employer may feel bad about cutting off your health insurance when you need it the most. Although it is the exception rather than the norm, some employers can operate out of a spirit of kindness.
However, health insurance and other employee benefits can cost an employer tens of thousands of dollars annually. Most companies will not continue paying these premiums if you longer work at the company. Employers have their cost pressures, and they will cut your health insurance coverage as a matter of policy.
You Can Pay for COBRA Coverage
You can obtain coverage in several ways when you lose your health insurance from work.
The first way is through COBRA. This acronym refers to the Consolidated Omnibus Budget Reconciliation Act of 1985. The law allows you to continue your health insurance coverage when you leave a job.
While you cannot continue your benefits when you leave a job if the company fired you for gross misconduct, since you are out on disability, the exception does not apply to you.
When you leave your job, your employer must offer you the ability to continue your benefits through COBRA. Since your employer will no longer pay for your benefits, they will not lose anything by offering you that right.
COBRA Usually Lasts for 36 Months
COBRA is not an indefinite solution. Depending on the circumstances, you can continue your benefits for 18 or 36 months. The federally guaranteed portion of COBRA is 18 months, while some states may allow an additional coverage period of up to 18 months. If you qualify for SSDI, the federal period for COBRA can extend to 29 months,
COBRA Will Cost a Lot of Money, Which You May Not Have
The major drawback to COBRA: It’s prohibitively expensive. The employer no longer subsidizes your health care coverage, so you will pay the full sticker price. The insurance company can charge you up to 102 percent of that monthly premium. How much you pay depends on the plan that your employer provides you.
When you are on long-term disability benefits, you may receive up to 70 percent of what you earned before you were disabled. Some policies may pay less.
You will face financial difficulties by earning less money and paying more for your health insurance. Accordingly, you may choose not to pursue COBRA while you receive long-term disability benefits.
Thanks to the passage of the Affordable Care Act, fewer people will opt for COBRA these days.
You Can Get on Your Spouse’s Health Insurance From Their Job
You may get on your spouse’s health insurance policy if you are married and their job offers that option. While you will ordinarily have to wait until Open Season to enroll in a group health insurance plan, you can take advantage of a special enrollment period if you lose coverage from your job.
If your spouse has affordable coverage from their job, you may find it offers the best option for you. Their health insurance plan must cover you without regard for a pre-existing condition.
You Can Purchase Coverage Through an ACA Marketplace
You can purchase health insurance coverage through the Affordable Care Act marketplace. Similarly, you can apply for health insurance under a special enrollment period if you lost your existing health insurance coverage.
The ACA marketplace in your state will base health insurance premiums on your income. Since your disability reduces your income, you may qualify for a subsidized plan. An ACA plan can not deny you coverage based on a pre-existing condition.
The options available to you depend on your state. Some states may have more robust marketplaces than others. Never consider a skinny health insurance plan because you will end up on the hook for far more expenses than you can afford.
You Can Possibly Qualify for Medicare Coverage
Some long-term disability insurance companies will require you to apply for Social Security Disability Insurance. If you qualify for benefits, the insurance company will reduce your benefits by the amount of SSDI you receive. Not everyone qualifies for SSDI, but you have a better chance if you have already persuaded a private insurance company to grant your disability claim.
One main benefit of qualifying for SSDI is that you can eventually receive Medicare coverage. First, you will need to wait out a 24-month qualifying period. You can pay for a subsidized health insurance plan through the ACA marketplace during that time. You do not have to be 65 to qualify for Medicare.
Medicare Costs Money, but It Can Help
While your Part A coverage will not cost you anything, you will still need to pay for your Part B and Part D coverage (doctor’s office visits and prescription drugs). You may consider a supplemental plan to cover your out-of-pocket costs, which can cost a lot of money—Medicare still passes many expenses onto enrollees and some cannot pay those costs.
Medicare can help, but it does not answer all your health insurance needs. Still, your monthly insurance can cost less than your contribution when you paid your portion of employer-sponsored health insurance. It will certainly cost less than COBRA and possibly even less than what you will pay in the insurance marketplace.
Do Not Go Without Coverage—You Do Not Have To
If you lose your health insurance, explore your options. You may pay less than when you worked. Review all your options before you make any decisions.
The Affordable Care Act will make your life somewhat easier. Health insurance will cost less and insurers will not deny you coverage. Still, you may need to deal with a new health insurance company.
Sit down with a Medicare planner or ACA navigator when getting coverage. They can go through with you what you may need to cover extra expenses and provide you with the most coverage when you need expensive medical treatment.
Learn Your Options so You Can Make Your Best Decisions
You need the best health insurance coverage you can afford to pay for medical treatments. You must know all your potential options. In addition, you must understand all the rules associated with each program.
For example, if Medicare is your long-term option, you should know what it covers and what you will have to pay in cost share. This way, you can plan financially for your future.
A Long-Term Disability Insurance Lawyer Can Help You
While a long-term disability insurance attorney does not help you plan your coverage, they can point out available options and things you may not have considered.
An attorney can educate you. One significant benefit an attorney can provide is that they can guide you through the process.
In addition, your long-term disability insurance attorney can prepare your claim in a way that will give you the best chance of the insurance company approving your benefits. You can expect your initial application to receive heavy scrutiny from a for-profit company with every motivation and reason to deny your claim. An attorney understands what documentation you must include along with the justification and narrative accompanying your claim.
The long-term disability process can be complex. You do not have to handle it alone if you do not choose to do so. An experienced ERISA attorney knows the process and what you must think about during this difficult time. They can also deal with the insurance company on your behalf. You can call a lawyer for a free consultation and obtain legal representation on a contingency basis, where you do not need to pay your attorney anything upfront.
Seek Legal Help for a Long-Term Disability Claim
Figuring out your health coverage while on disability is a challenging matter. However, you must first obtain the disability benefits you deserve if you cannot work. Filing a disability claim involves a complex process that often ends in an initial denial of benefits. Claimants have a much better chance of success when they hire the right legal representation.
If a disability prevents you from working, you need financial support. If you have an employer-sponsored disability insurance policy, getting benefits can be a necessary but uphill battle. Fortunately, there is help available for you and your household to obtain disability benefits.
Do not wait to discuss any concerns regarding a disability claim with a long-term disability attorney. Give yourself peace of mind today.
Following graduation from Loyola Law School in New Orleans in 1990, Price McNamara served as a Federal Judicial Law Clerk to the Honorable John M Shaw, Chief Judge, United States District Court Western District of Louisiana.
Mr. McNamara founded J. Price McNamara ERISA Insurance Claim Attorney, and began putting his past experience to work for the injured and disabled clients he now represents against the insurance companies in personal injury and long term disability and other insurance disputes in both federal and state courts