American Disability Insurance

Meaning of disability

Disability means an illness or injury whether physical or mental, which prevents you from performing your regular and customary work. Disability also includes elective surgery, pregnancy, childbirth, or other related medical condition. It can also mean a physical or mental condition that limits a person’s movements, senses or activities. There are many types of disability some of which includes; intellectual, physical mental and sensory disability. In this article, we shall discuss American disability insurance.

Meaning of American disability insurance

American Disability Insurance is a class of insurance policy that makes provision for a short-term income replacement benefits to eligible workers in the United State of America. It does not provide job protection, but only monetary benefits. However, your job may be protected through other Federal or State laws in the US such as the Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA)

The FMLA is a United State’s labour law requiring covered Employers to provide employees with job protection, unpaid leave for medical and family reasons. It also provides employees with up to 12 weeks of unpaid, job-protection leave per annum. And it further requires that their group health benefits be effective during the leave.

In essence, the FMLA is to help employees balance their work and family responsibility by giving them the opportunity to take unpaid leave for specific family and medical reasons. It equally seeks to accommodate the legitimate interests of employers and promote equal opportunity for men and women. Its application is to all public agencies, all public and private elementary secondary schools and companies with 50 or more employees. These employers must provide an eligible employee with up to 12 weeks of unpaid leave each year for any of the following reasons;

In the event of taking medical leave from work when he is unable to work because of a serious illness or injury;
For placement with the employee of a child for adoption or foster care;
Event of child birth or nursing of new born child;
To care for a close family member with a serious health issue.

However, note that employees are only eligible for leave if they have worked for their employer for at least, 12months or 1250 hours over the previous 12 months at least. This is applicable where the company employs up to 50 or more employees within the distance of 75 miles

Social Security disability insurance

Social Security disability insurance (SSDI) is a federal program that provides payouts to some disabled U.S. workers and their families. However, this is only after a drawn-out application process that can take three to five months. Over 60% of applications are denied at the first application level and the average payout is just over $1,000 a month, so it’s not worth relying on. This is the reason why so many people opt for a private disability policy.

State Disability Insurance in America

A good number of states in America provide their own short-term disability insurance plans that either employers pay for, employees pay for through deductions from their wages or both.

The following States in America offer state disability insurance, also known as temporary disability insurance and they include:

New Jersey
Hawaii
California
Hawaii
New York
Puerto Rico
Rhode Island
New Hampshire
District of Columbia
Colorado
New jersey
New York
Washington
Oregon
Connecticut

It is however, noteworthy that you cannot buy state disability insurance policy through an agent or broker. And its benefits are not generally payable for more than one year. This is because it is for a short term

Similarly, because state disability insurance benefits are for short-term, you are advised to purchase long-term disability insurance to enable you get the most protection. This is notwithstanding that you already have state disability insurance.

Workers’ compensation as part ADI

Workers’ compensation is a type of insurance that an employer is required to have in every state that pays out if you become injured at work. However, you will have to note that worker’s compensation is not a substitute for disability insurance. Nonetheless, it offers much less coverage. The only thing to bear in mind is that the benefits from workers compensation can only accrue if the injury occurred at your work place

Alternatives to disability insurance

One alternative to disability insurance is a form of self-insurance. Self-insurance refers to a situation where you insure yourself through keeping a fund to cover possible losses or medical needs rather than buying an insurance policy and expecting an insurance company to reimburse you for the loses. It is not actually insurance per say, but refers to using your savings to fulfil your financial needs.

This savings can replace your income in the event of an illness or disability, and you are unable to work.

For so many people who do not have enough money to save, this may not be a good alternative to disability insurance.