Disability plans pay a monthly benefit if you're no longer able to work. Social Security Disability Insurance is a common source of disability payments; some individuals may also receive disability payments from individually purchased insurance or coverage purchased through work. Whether or not your disability payments change at retirement depends on the type of disability insurance you're receiving.
Social Security Disability Insurance
SSDI pays a monthly benefit if you meet Social Security's definition of disability. Social Security defines disability as being completely unable to work and that your disabling condition will last at least one year or end in death. You also must have earned the minimum credits required by Social Security; you can earn up to four credits per year of work. The number of credits you need to qualify is based on your age at disability. If you were disabled before age 24, for example, you need six credits that have been earned during the three years immediately preceding your disability. At age 44, you need 22 credits earned during the 10 years immediately preceding your disability. Once you start receiving your SSDI benefit, it continues as long as you're disabled. When you reach your full retirement age, your benefit won't change, but it will be called your retirement benefit rather than SSDI.
Individually Purchased Disability Insurance
Many individuals purchase their own disability insurance to supplement work and Social Security disability benefits. When you purchase your own policy, you can determine for how long benefits are paid. Benefit periods are usually two years, five years or until age 65 or your full retirement age. If you opt for benefits to last through your retirement age, your benefits will end when you reach your retirement age.
Employer Disability Insurance
Your employer may offer disability insurance. There's short-term disability, which typically lasts up to six months. There's also long-term disability, which is similar to individually purchased disability insurance in that the benefit period is determined by your policy. Employers may offer short-term disability insurance, long-term disability or both. Long-term disability benefits generally end no later than your retirement age.
State Disability Insurance
Some states, including California and New Jersey, offer disability insurance. State policies are meant to be temporary -- typically a maximum of 26 to 52 weeks. Temporary disability benefits are paid, in part, based on your income. If you start receiving retirement income, if it's more than your disability benefits, your disability benefits will end.
- Social Security Online: Work Credits Needed for Disability Benefits
- Social Security Online; Effect of Full Retirement Age on Disability Benefits; January 2011
- Metlife: Disability Insurance: Frequently Asked Questions
- SmartMoney; Do You Need Disability Insurance?; Stacey Bradford; September 2008
- Disability Benefits 101: California State Disability Insurance (SDI): The Details
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