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Preparing In Case Of Disability: Long Term

If You Are Still Working

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While you are working is an excellent time to start planning for the possibility that you may become disabled and unable to work.

Examine Your Benefits

Benefits at work can be the bedrock of planning for anyone with a serious medical condition. Now, well before you may need to rely on them, is the time to make sure you have the right benefits in your package. If you don't have the right benefits, you will have time to get them.

To find out what benefits you already have, see your Employee Handbook. If you don't have one, look to see if one is on the company's web site. If not, ask for a copy from your employer. To see what benefits you should try to get, see: Benefits At Work.

If you have not disclosed your health condition at work (in which case we advise you read our article about Disclosure), consider a reasonable cover for the request, such as telling your employer that you have an obnoxious (friend)(family member) who is (an insurance person)(a financial planner) who is insisting on reviewing your benefits for you with the hope of selling you something.

Focus on obtaining the benefits you need to pay your medical bills, give you a regular income, and protect what you have accumulated over the years, in that order. Insurance coverage to meet these needs that is purchased individually generally requires medical underwriting. You may not qualify because of your health condition.

If your employer doesn't offer the benefits you need, this may be the time to consider changing jobs to an employer that does offer what you want. You are protected against job lock by the Americans with Disabilities Act so a new employer cannot ask about your health condition, and by HIPAA to be sure there are no gaps in your health coverage during a job change if you follow the terms of that law.

To learn more, see Seeking New Employment, HIPAA.

Get An Advisor

If you haven't already, search out at least one person at work who is in a position to give you advice to help you get what you need from your employer and to decide when to take different actions, such as going on disability.

To learn more, see Advisor.

Look for Co-workers Who Are Or Have Been On Disability

In addition to an advisor, keep your eyes open for other people in your company who go on disability or who have been on disability.

Speak with them about tips they learned about your employer and various personnel from their experience of going on disability.

  • Did your employer stick to the rulebook or go beyond it, or have trouble even meeting the minimums?
  • If your employer went beyond what is required by law or the benefit plans, what were the circumstances? Are they similar to yours?
  • How can you get the same treatment?

If you haven't disclosed your health condition at work, you don't have to disclose it to find out about another person's experiences. If you do disclose your condition to a co-worker, let each person you speak with know that you haven't told your employer or other co-workers, so they don't inadvertently say anything if they speak with other people at work. Unlike your employer, there is no legal requirement for co-workers to keep your health condition a secret.

For more information, see Americans With Disabilities Act.

Increase Your Earnings Or At Least Your Real Earnings

Do whatever you can to increase your salary, your Real Earnings (what you really earn per hour versus what you think you earn), and job status.

More money will likely give you a greater amount of assets in case you need to live on them. Greater job status will possibly provide additional benefits.

To learn more, see Real Earnings.

Keep Funding Your Retirement Plan

It may sound counterintuitive, but now is the time to put as much money as possible into your retirement plan -- especially if your employer matches your contributions.

  • Taxes will be postponed until a time when they might be lower than when you're working.
  • Money will be there to withdraw if you become disabled, probably without penalty.
  • Money in a retirement plan is exempt from creditors.
  • Any contributions your employer matches serve as an increase in your compensation.

See Retirement Planning for more about saving for retirement and to get a better understanding of your particular plan.

If You Have Disability Insurance 

Check the benefit amount to see if it is sufficient for your needs if you become disabled. Keep in mind that if the employer pays the premiums, disability income is subject t to income tax. (It is arguable that if you at least pay the premium for the last year before becoming disabled, the income will not be subject to income tax).

If the benefit is not sufficient, ask your employer if you can increase the amount of the benefit.

If You Have Life Insurance

Find out if you can increase the death benefit. Even if your beneficiaries do not need the increased amount, if your life expectancy becomes shortened, you may be able to sell the policy and get the proceeds while you are alive. The process is known as Viatical Settlement or Life Settlement. For information, see the documents in "To Learn More"

Look For Mental Health Assistance

Even if you have never needed professional assistance with psychological issues before, you should know that a major life change, such as moving from employment to disability, can have dramatic effects on your psychological health and may require some short term counseling.

Plan for it when reviewing your benefits package. For more on the psychological impact of leaving work, see Planning for the Possibility of Disability in the Short Term.

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