Group insurance for
MSBA members

Can't work? Who'll pay the bills?
Important information about disabilities and income protection

Do you consider yourself a careful person? If you're like most people, you've taken the appropriate precautions to protect your home, your auto, your possessions-even your life.

But what about one of the most critical aspects of your life-your income?

No one likes to consider the possibility they'll become sick, injured or disabled to the point they can't bring home a paycheck. But it happens every day, leaving families to struggle as the bills pile up.

Disabilities on the rise

When people work, live and play harder-as we all do today-the chances for incurring a disabling disease or injury also increase. The National Safety Council says nearly one out of five Americans under age 65 will become disabled for five years or more.

And, because Americans now live longer than ever before, age has, and will continue to have, a profound impact on disabilities. According to the National Association of Health Underwriters, there are 3.74 disabilities per 1,000 people ages 45 to 49. This figure increases nearly five times more with age, to 15.18 disabilities per 1,000 among people ages 60 to 64. Plus, if you take a part-time job after retiring, your risk for becoming disabled later in life also increase.

Among the most common long-term disabilities (those lasting longer than three years) are circulatory and heart conditions, back disorders, psychiatric conditions, general sickness and subjective pain. Common short-term disabilities (those lasting less than three years) include normal pregnancies as well as pregnancies with complications, injuries, muscular or skeletal problems, and psychiatric or substance abuse problems.

There's no doubt: The risks are there.

When a disability occurs

If you become disabled, your family finances undergo a sudden change. First, there will be an influx of new medical bills. Your health insurance will cover a portion of the bills, but many will be paid out of pocket. Recuperative or home health care and therapies also may be necessary. At the same time, you'll still be responsible for your regular expenses-mortgage, car payments, groceries, college tuition, and the like. Then, just when you need your income the most, it's put on hold-or maybe even disappears.

It's a frightening scenario if you have no backup plan. Most employers offer some form of sick leave or short-term disability coverage in their benefits package, though not every employee takes advantage of the plan and the plan may not be thorough enough. And, Workers' Compensation or Social Security benefits are available-but they cover only a small portion of your bills.

The good news is that the number of Americans who have some form of disability plan is on the rise. The bad news is that most still have a disability income protection gap. According to the Bureau of Labor Statistics, only 25 percent of employees have any long-term disability protection-and that leaves a significant population unprotected against the unexpected.

How disability benefits work

Generally, disability programs coordinate paying benefits: Workers' Compensation pays first, offset by Social Security, and then an employer or another disability plan kicks in. Here's a look at each:

Workers' Compensation: If you become disabled from a work-related accident, workers' comp pays cash for disability and medical benefits-usually for a short time. Benefits vary per state but are often two-thirds of the state's average wage.

Social Security: To qualify for benefits, you must have worked for a specified period under the system, and be unable to do substantial work for at least 12 months. Only about 30 percent of claims are approved the first time around; 62 percent of denials are overturned in appeal, so payments take some time to "kick in."

Employer Coverage: Many larger companies offer long-term disability protection that, on paper, replaces up to 60 percent of your income for the duration of the disability. Under most employer-sponsored disability plans, taxes and government benefits are deducted from your benefits, reducing the actual benefits you'll see.

Supplemental Protection

The answer to the disability dilemma for most people is supplemental protection, for several good reasons:

• Portability: Individual coverage that you purchase yourself is "portable"-you can take it with you if you change jobs and you won't sacrifice coverage.
• Tax-free benefits: Unlike other forms of disability insurance, many supplemental plans pay benefits tax-free. And, supplemental coverage often pays benefits in cash directly to you, to use for whatever expenses you choose.
• Generous payment schedule: Some plans pay benefits within 90 days (as compared to others that delay payment for up to 180 days).
• Partial payments: Some plans pay a partial benefit if you're only partially disabled-a real plus if you can still do some work.

Special opportunity for MSBA members

Members of MSBA have an opportunity to select a disability plan that offers many of these premier coverage options. Endorsed by MSBA, the MSBA Long Term Disability Plan is a flexible, affordable plan that was developed specifically for members.

For more information, call toll free 1-800-501-5776.

- Last Updated 9/28/03 -