Posted on Friday, June 21st, 2024 at 4:50 pm
When you’re protecting your health and financial well-being, health insurance is a top priority. Health insurance covers medical expenses like doctor visits, hospital stays, and prescription drugs, helping you manage the cost of healthcare. But what happens if an illness or injury prevents you from working and earning an income? That’s where long-term disability insurance comes in.
Long-term disability (LTD) insurance provides income replacement if you cannot work for an extended period due to a covered disability. While health insurance and LTD insurance offer essential protections, they serve distinct purposes and typically come from different sources. An experienced LTD benefits lawyer can explain the differences and help you make informed decisions about your coverage needs.
The Purpose of Health Insurance
The primary role of health insurance is to help pay for medical care. When you have health insurance, you pay a premium (a monthly fee) to the insurance company. In return, the insurer agrees to cover a portion of your healthcare costs, such as:
- Doctor visits and medical procedures
- Hospital stays and surgeries
- Diagnostic tests like X-rays and blood work
- Prescription medications
- Preventive care, such as check-ups and vaccines
Having health insurance can make healthcare more affordable and accessible. With coverage, you may pay less out-of-pocket for services, have access to a network of providers, and enjoy some preventive care at no extra cost. Health insurance protects you from the full financial burden of an illness or accident.
The Purpose of Long-Term Disability Insurance
In contrast, the primary purpose of long-term disability insurance is to provide income if you cannot work. LTD insurance pays a percentage of your pre-disability earnings, typically 50-70%, if you experience a disability that prevents you from performing your job duties for an extended time.
LTD benefits can help you cover everyday living expenses, such as:
- Rent or mortgage payments
- Utilities and groceries
- Car payments and transportation costs
- Child care and school tuition
- Other bills and financial obligations
Without LTD coverage, a prolonged illness or injury could drain your savings, put your assets at risk, and create significant financial hardship for you and your family. LTD insurance acts as a safety net, ensuring you have a source of income when you cannot work.
Key Differences in Coverage
Health and long-term disability insurance differ in terms of what they cover. Health insurance focuses on medical expenses related to diagnosing, treating, and preventing illness and injury. It does not cover lost income or other financial losses from a health condition.
On the other hand, LTD insurance covers explicitly lost income due to a disability. It does not pay for medical treatment or other healthcare costs. To qualify for LTD benefits, you must meet the policy’s definition of disability, which usually means being unable to perform the material duties of your occupation for the first two years and then being unable to work in any occupation after that.
Differences in Funding and Enrollment
Another critical distinction between health insurance and LTD insurance is how they are funded and obtained. In the United States, health insurance is widely available through several sources:
- Employer-sponsored group plans, where the employer and employee share the cost of premiums
- Individual plans purchased through the Health Insurance Marketplace or directly from insurers
- Government programs like Medicare and Medicaid, which provide coverage based on age, disability, or income
Under the Affordable Care Act (ACA), all Americans must have minimum essential health coverage or pay a tax penalty. Many employers are required to offer health insurance to their full-time employees, so a significant portion of the population has health insurance.
In contrast, long-term disability insurance is not as widely offered or mandated. According to the Bureau of Labor Statistics, only 35% of private industry workers can access employer-provided LTD coverage. Even among those with the option, the employer may only pay part of the premium, leaving the employee to decide whether to enroll and pay for coverage.
Some key points about obtaining LTD insurance:
- Employers are not required to offer LTD coverage, and many do not include it in their standard benefits package.
- Employees may be able to purchase group LTD coverage through their employer, with the premium deducted from their paycheck.
- Individuals can also buy private LTD policies directly from insurers, but these plans may have higher premiums and stricter underwriting standards than group policies.
- LTD insurance is not included in health insurance plans and must be obtained separately.
Given these differences, it is crucial to review your employer’s benefits offerings carefully. If you need access to an affordable group plan, consider purchasing individual LTD coverage.
Getting Help with Long-Term Disability Claims
If you have long-term disability insurance and experience a disabling condition, you must file a claim with your insurer to start receiving benefits. The claims process can be complex and time-consuming, requiring extensive medical evidence and documentation of your limitations.
With our knowledge, skills, and dedication, Capitan Law can be your advocate and ally during this difficult time. If you are struggling to obtain or maintain your LTD benefits, feel free to reach out for help. Call (267) 419-7888 today or use our online contact form to schedule a consultation and learn more about how we can assist you.
