Thursday, September 5, 2013

Disability is an Insurance Payout, Not a Handout

I want to correct a misconception about disability payments.  I continue to encounter folks who think that people on disability are scamming, defrauding, cheating, or getting a free ride.

If you own a car, you most likely have car insurance and you pay for that insurance.  If something happens to your car, you get some money from your insurance company depending on the type of insurance you purchased to cover the damage or loss.

The same is true for homeowners or renters insurance.  If you pay the premiums (money out of your pocket) and suffer some type of loss, your insurance company will pay you some amount of money depending on your coverage.

The same is true for disability insurance.  If you pay out-of-pocket for short-term or long-term disability insurance through your company or an insurance company like Hartford or AFLAC, and for some reason become unable to work, your insurance company will pay you some amount of money for lost wages depending on your coverage.  The amount of the payout is usually a small percentage of what you got in your paycheck.

If you work for a company and get a pay stub, you've probably noticed that money is taken out of your paycheck for taxes and "FICA."  If you become unable to work, you may be eligible for Social Security disability (a national disability insurance policy established in the 1930s), which will pay you about 33% of your salary (rough estimate).

People who are drawing disability payments are not receiving free handouts.  They are receiving insurance benefits for which they've paid premiums.  The amount of money they receive is a much smaller percentage of the salary they used to receive when working. Insurance companies don't want to pay out if they can avoid it, so the process for drawing benefits is rigorous and can take a lot of time.  

People can qualify for disability payments even if their medical condition is invisible to you and they appear to be healthy when you see them.  There are many disabling invisible illnesses, but that's another story. 

Please keep an open mind if you catch yourself believing the common misconception that all people on disability are freeloaders.  We're not.

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