How Disability Income Insurance Can Help Protect You

Mar 27, 2012
By SFLCAuthor

We depend on our paychecks to cover our expenses: groceries, housing, transportation—and those are just the basics. When a person is unable to work due to a disabling injury or illness, the financial impact of lost paychecks can be devastating.
An income interruption due to a disability isn’t something you can afford to ignore. According to the Social Security Administration, more than one in four 20-year-olds will become disabled at some point before they retire. And 50 percent of working Americans would suffer financial issues in less than a month if they lost their paycheck. Twenty-five percent would have problems immediately—within a week—according to the Life and Health Insurance Foundation for Education (LIFE Foundation).
Here are some steps you can take right now:

Help protect your paycheck

When the unexpected happens, disability insurance can help. Disability insurance essentially replaces a portion of your income—generally about 40–60 percent—if you can’t work due to accident or sickness, says Matthew Tassey, CLU, ChFC, LUTCF and past chairman of the LIFE Foundation. “Disability insurance should be a priority,” he says. “We always have expenses.”

Find the right fit

There’s no one-plan-fits-all approach to disability insurance. Some employers offer disability coverage, whether long-term or short-term, so check with your company’s benefits manager to see if you have coverage, and if so, what that coverage provides. If you don’t have it, you can purchase an individual plan.
Some terms to know when shopping for disability insurance:

• Elimination period: Refers to the length of time you need to be disabled before you receive payment.
• Benefit period: Refers to the length of time benefits will last.

“The quicker the money comes your way and the longer it pays, the more expensive it is,” Tassey says. And he points out that, on average, a 30-year-old non-smoking healthy male can receive $1,000 a month up to age 65 for about $30 a month. His benefits would begin after 90 days.

Learn more

In recognition of National Disability Income Insurance Month in May, the LIFE Foundation has created a website that explains the basics of disability insurance, contains video testimonials from real people and provides calculators for determining how much insurance you need and estimating your lifetime earnings. You can also calculate your personal disability quotient online.

The information in this article was obtained from various sources. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. The information is not intended to replace the advice of a qualified professional. Nor is it intended to effect coverage under any policy. State Farm makes no guarantees of results from use of this information. We assume no liability in connection with the information nor the suggestions made.

WebMD: Leading Causes of Disability

By R. Morgan Griffin
WebMD Feature

Reviewed byLouise Chang, MD

 

Your odds of becoming disabled before you retire are about one in three. That might be higher than you expect. You might also be surprised by the most likely causes of disability.

"People tend to think about disability in terms of catastrophic events, like a terrible car accident that leaves you paralyzed or in a nursing home," says Richard Frank, PhD, deputy assistant secretary for disability, aging, and long-term care policy at the Department of Health and Human Services in Washington. "They don't think about disability caused by things that are less dramatic and much more common."

Conditions such as arthritis, back pain, heart disease, cancer, depression, diabetes, and even pregnancy are some of the leading causes of disability in the U.S.
Here's the rundown of the most common disabling conditions -- along with advice about how you can protect yourself from the costs of disability.

Common Conditions that Cause Disability

• Arthritis and other musculoskeletal problems. These are the most common causes of long-term disability. They make up as much as a third of all disability cases. Arthritis is probably the biggest single cause. About one in three people say that arthritis affects their ability to do their jobs in some way, according to the CDC. Other muscle and joint problems -- bad backs, bones that never mend, bad hips -- are common causes of disability too, says Matt Tassey, past chairman of the nonprofit Life and Health insurance Foundation for Education (LIFE).
• Heart disease and stroke. While we tend to think of cardiovascular disease in terms of sudden medical events -- like a heart attack or stroke -- it's often a chronic condition. People live with heart disease for years or decades. It can severely limit their ability to work. Studies estimate that heart disease is now the reason for 17% of all health costs in the U.S.
• Cancer. While cancer itself can be disabling, treatments such as surgery, radiation, and chemotherapy can also make it difficult to work.

"Cancer is the fastest-growing cause for disability claims," Tassey says. Why? In part, this reflects a rising rate of cancer, he says. It could also result from more effective treatment. "We're doing medical miracles today," he says. "People are living much longer after a cancer diagnosis than they once did."

• Mental health problems. You might think of disability as physical, but mental health problems can make work difficult or impossible. Depression, bipolar disorder, and other conditions can be as disabling as any physical illness. Mental health problems are the most common reason that people file for Social Security disability, Tassey tells WebMD.
• Diabetes. As a cause of disability, diabetes is rising fast, Tassey says. Along with obesity, it's linked to a number of serious health problems, like heart disease. Diabetes is a costly disease to manage too, in part because of the drugs and supplies. Typically, treating it without health insurance costs between $350 and $900 a month.
• Nervous system disorders. This category includes a number of conditions -- multiple sclerosis, Parkinson's disease, ALS, epilepsy, Alzheimer's disease, and other conditions that affect the brain or nerves. MS is a leading cause of disability in young adults. It most often appears between ages 20 and 40.
• Pregnancy. You might not think about pregnancy as a disabling condition. Since most women in the U.S. don't get paid maternity leave, it effectively is. The Family and Medical Leave Act offers up to 12 weeks of unpaid leave. However, it isn't available to many women who are self-employed, work at small businesses, or who haven't worked long enough with an employer to be eligible. Some employers and a few states offer women short-term disability payments for pregnancy. The rest have to get by using sick days and vacation.

Long-term disability caused by pregnancy is relatively rare. Women who wind up needing bed rest while they're pregnant or who suffer from complications afterward -- like postpartum depression -- can face serious financial stress.

• Accidents. Although surveys show that people assume accidents are the most likely cause of disability, they are actually the cause of less than 10% of disability cases. This category includes not only accidents at home or on the road, but accidental poisoning too.

What You Don't Know about Disability and Medical Costs

People tend to have only a vague -- and often wrong -- idea about what might happen if they become disabled, says Barry Lundquist, president of the Council for Disability Awareness in Portland, Maine.

Here are some of the common notions people have about how they'd cope with the costs of unexpected disability.

• I'd use vacation time. That might work for an injury that heals quickly. But Lundquist points out that your time off might be used up in a month or less. The average length of a long-term disability is 2 1/2 years.
• My health insurance covers disability. You might be right. Are you sure? Many people have only a vague idea about what their health plans cover.
• My spouse's job will protect us. If you and your spouse both work, your household will at least have some income if you had to stop working. Even so, does your spouse really make enough that it wouldn't be a problem to lose your entire salary? For many people, the answer is "no."
• Social Security and Medicare will cover me. Social Security disability benefits are hard to get. Half of all people are declined when they first request them. The average payment is under $1,100 a month. Medicare doesn't cover long-term care unless it's deemed medically necessary. Medicaid does cover long-term care, but only for low-income people.
• Workers' compensation will cover me. Only 10% of disability cases are caused by eligible on-the-job injuries, says Lundquist.
• I don't need much to get by. Becoming disabled adds extra costs for health care, medical supplies, and support. "People don't realize that it costs more to be disabled than it does to work," Tassey says.

Protecting Yourself from the Medical Costs of Disability

"If you can't work and lose your income, your whole world can fall apart quickly," Tassey says. "If they stopped being able to work, most people are only about 90 days away from bankruptcy." Studies have found that medical problems play a role in more than 60% of bankruptcies and half of all foreclosures.
What can you do to guard against the risks of disability and high medical bills? Here are some tips from the experts.

• Go over your health insurance policy. Don't just assume your coverage is good. Read the booklet your insurer sends. Ask your benefits advisor at work if you have questions. Settling health insurance issues is important before you get sick. Although the Affordable Care Act of the health care reform law will prohibit insurers from denying people coverage because of preexisting conditions, it won't take effect for adults until 2014.
• Get disability insurance. Experts say that anyone who depends on her salary needs disability insurance. See if you can get it through work. You should purchase it as soon as possible. Trying to get disability insurance when you're older -- or diagnosed with a health problem -- is a lot more difficult.
• Look into long-term care insurance. It's not right or affordable for everyone. But long-term care insurance will cover some of the costs if you become disabled and need home health care or a stay in a nursing home.
• Improve your lifestyle. Do what you know you should be doing: Exercise regularly, eat a healthy diet, lose weight, reduce stress, and get enough sleep. Improving your lifestyle could dramatically reduce your risk of heart disease, diabetes, cancer, and many other conditions. Even if you already have been diagnosed with a health problem, changing your habits can still have a big benefit.

Nobody likes to think about becoming sick and disabled, but everybody should. Take an honest assessment of your risks and do what you can to reduce them. You can't prevent disability -- life is uncertain, after all -- but you can minimize the danger.

"Your income pays for everything -- your mortgage, your savings, your kids' college, and your retirement," Lundquist says. "Your ability to work is your greatest asset. You should do what you can to protect it."

USA Today.com - Cancer's Growing Burden: The high cost of care

Very important article by Marilynn Marchione, Associated Press

Updated 2/27/2012 2:49 PM

http://www.usatoday.com/news/health/story/health/story/2012-02-27/Cancers-growing-burden-the-high-cost-of-care/53271430/1

Is Your Health Insurance Plan Strong Enough To Handle Cancer, Heart Attack or Stroke?

Originally Posted on February 28, 2012 | Leave a comment

i

Rate This

Yesterday, I read an article from The Associated Press. It was entitled, “Cancer’s Growing Burden: The High Cost Of Care.”

The post tells the story of a lady who was forced to spend the money she had inherited from her mother to pay for life-saving treatment for cancer.

I find the financial cost of cancer doubly sad. I watched as my grandfather died of lung cancer and have lost 4 members of my immediate family to Huntington’s disease. I know the mixture of fear, grief and stress that invades the entire family when a debilitating disease attacks one member.

As an insurance agent, the only thing that I can do is to help prepare families for the financial hit that comes with cancer. I am not able to do away with the emotional stress that comes with a major disease but by using different insurance plans, I am able to help people avoid the financial stress that comes with disease.

The only catch is that I have to work with people before anyone gets sick. While the precautions below are wise investments for anyone, I especially advise them for people who have a genetic history of serious disease in their family.

MAJOR MEDICAL INSURANCE

This type of insurance is the most comprehensive type of insurance available. It will help pay for most of your medical bills if you contract a serious illness.

However, Major Medical insurance does not pay everything. It will only pay a portion of your new expenses if you are diagnosed and treated with a disease.

Unless you are able to pay for the new expenses out of your savings, can qualify for government help or are willing and able to accept charity, you may need to use a combination of the insurance types below.

CRITICAL ILLNESS INSURANCE

Critical Illness insurance typically will pay a lump sum of cash directly to you in the event you are diagnosed with cancer, heart attack, stroke or any of the other covered critical illnesses.

I have not found any Critical Illness plans that cover Huntington’s disease but have found a couple that will cover Alzheimer’s. There are links to information from three different insurance companies that offer Critical Illness insurance on the Critical Illness tab of this blog. The information that is found in the brochures is for Texas. If you live in a different state, the plans may or may not be similar.

The video, however, is educational in nature. The information in it is good regardless of the state in which you live.

Critical Illness insurance is typically not very expensive. If you have a good Major Medical plan, you only need enough Critical Illness insurance to pay for what your Major Medical does not. If there is no limit on the pharmacy benefits in your Major Medical policy and you would not be inclined to try “experimental” treatments, you should be fine with a minimum benefit equal to your policy’s maximum out-of-pocket cost sharing.

If your major medical plan has a limit on prescription drugs or you would be inclined to try “experimental” treatment, you would be wise to increase the benefit amount you request.

LONG TERM CARE INSURANCE

Many diseases take a long time to recover from. They leave their victims with functional problems for several months. Major Medical insurance will only pay for medically necessary bills. It will not pay for a family member to take off work to care for you or provide the money necessary to hire an aide. For that you will need a special type of insurance called Long Term Care.

There are many options that insurance companies offer when you first apply for insurance. All of the options have a major effect on the type of policy you get. Take the time to study what is available before you buy. If you get it right at the time of your application, you should not have any problems at the time of your claim.

DISABILITY INCOME INSURANCE

Major Medical insurance only provides money to pay for medically necessary bills. Long Term Care insurance only pays if your ability to function is compromised. Critical Illness insurance will pay cash directly to you but only if one of the covered critical illnesses are diagnosed.

The one thing that is certain is that none of these types of health insurance will pay the bills that you are already responsible for while you are sick and out of work.

The sick days you are allotted at work are to protect you if you have to miss work because of an accident or mild fever. They are not sufficient to cover you if you are laid up indefinitely with a cancer or stroke.

Social Security Disability Income does not start until you have been out of work for at least 6 months. That assumes that you qualify for SSDI right away. Many people do not. I have seen it take as long as 18 months for someone to start getting disability payments from Social Security.

Until SSDI payments start, you are on your own to pay your mortgage, car payment, groceries, etc. If you do not have a sufficient “Rainy Day” savings account, a short-term Disability Income plan can provide a stream of money for up to two years. It can allow you to pay your bills while you wait for the SSDI beaurocracy to work.

If you do not want to rely on Social Security Disability Income, you will probably want to look into long-term Disability insurance. It is even more expensive than short-term Disability but if you have it, you do not have to be concerned about Social Security’s beaurocracy.

SUMMARY

In the event of a serious illness, Major Medical insurance is not enough. You will be glad you built an entire health insurance portfolio to include Critical Illness, Long Term Care and Disability insurance.

Source:  http://theinsurancebarn.wordpress.com/2012/02/28/is-your-health-insurance-plan-strong-enough-to-handle-cancer-heart-attack-or-stroke/

Medical Bills Major Cause of Bankruptcies

Medical Bills Major Cause of Bankruptcies

Most Americans are just one illness away from bankruptcy – even those with healthcare insurance. Unfortunately, there are millions of other Americans who don’t have the cash to cover their medical bills. Hospitals expect quick payment and offer insured patients little flexibility if they have difficulty paying bills. Those unpaid bills are sent to collection agencies, and damage the individual’s credit history for years. The crisis in American healthcare is not restricted to emergency rooms where uninsured people wait – often for long periods of time — for care.
In fact, a study has estimated that as many as 62.1 percent of all bankruptcies are due – at least in part – to medical expenses that the person simply cannot afford to pay. And, according to the study’s authors, that might well be a conservative estimate.
“Unless you’re a Warren Buffett or Bill Gates, you’re one illness away from financial ruin in this country,” said Steffie Woolhandler, M.D., of the Harvard Medical School. “If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that’s the major finding in our study.”
Yet, 75 percent of the people with a medically-related bankruptcy had health insurance. “That was actually the predominant problem in patients in our study — 78 percent of them had health insurance, but many of them were bankrupted anyway because there were gaps in their coverage like co-payments and deductibles and uncovered services,” Woolhandler said. “Other people had private insurance but got so sick that they lost their job and lost their insurance.”
Even patients who have coverage “may not be protected from high out-of-pocket costs when they are diagnosed with cancer,” according to a report by the Kaiser Family Foundation and the American Cancer Society. In addition to high insurance premiums, those costs may force patients to amass debt as they attempt to pay for the care they need — or postpone or skip lifesaving treatment. “Having insurance increases people’s ability to access care,” said Mark Rukavina, an expert on medical debt and the executive director of The Access Project, a Boston-based healthcare advocacy group. “The good news is that they get the care, but the bad news is it’s unaffordable.”
The days of Cadillac health plans are pretty much over,” said Peter Cunningham of the Center for Studying Health System Change in Washington, which found that 20 percent of American families have problems paying medical bills. More than 44 million Americans currently are paying off medical debt, the Commonwealth Fund said, an increase over the 37 million in 2005. Two years ago, Congress reported that 30 million Americans of working age had been contacted by a collection agency for unpaid medical bills. One survey asks how people have been affected by their unpaid medical bills. “Two-thirds of people say … they’ve had problems paying for some of the basic necessities — food, rent, mortgage, clothes, basic stuff,” Cunningham said. “They’ve put off major purchases. They’ve taken money out of savings or borrowed money. An increasing number consider filing for bankruptcy.”
Although it’s not yet known how the Patient Protection and Affordable Care Act (ACA) will impact medical bankruptcies, a study from Massachusetts since its healthcare reform became effective in 2006 offers scant good news. The study, which was published in the American Journal of Medicine, determined that between early 2007 and mid-2009, the share of all Massachusetts bankruptcies with medical grounds fell from 59.3 percent to 52.9 percent, a 6.4 percent decrease. Because there was a sudden rise in total bankruptcies during that period, medical bankruptcy filings in the state rose from 7,504 in 2007 to 10,093 in 2009.
According to the study’s authors, “Even before the changes in healthcare laws, most medical bankruptcies in Massachusetts – as in other states – afflicted middle-class families with health insurance. High premium costs and gaps in coverage – co-payments, deductibles and uncovered services – often left insured families liable for substantial out-of-pocket costs.”
“Despite a marked decline in the un-insurance rate in Massachusetts since the implementation of health reform, the proportion of bankruptcies that occurred in the wake of medical problems has not decreased significantly, and the absolute number of medical bankruptcies has actually increased by one third,” said David U. Himmelstein, M.D., from City University of New York School of Public Health, and the study’s lead author.

Clinical Significance: Most Medical Debtors were Well Educated and Middle Class

Thu Jan 05, 2012 at 09:12 AM PST

Medical bills cause 62 percent of bankruptcies

by Joan McCarterFollow

Share16

permalink

58 Comments

A study released Thursday [pdf] by the American Journal of Medicine finds a huge increase—nearly 20 percent—in medical bankruptcies between 2001 and 2007. Sixty-two percent of all bankruptcies filed in 2007 were tied to medical expenses. Three-quarters of those who filed for bankruptcies in 2007 had health insurance.

Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001. […]In 2007, before the current economic downturn, an American family filed for bankruptcy in the aftermath of illness every 90 seconds; three quarters of them were insured.
Since 2001, the proportion of all bankruptcies attributable to medical problems has increased by 50%. Nearly two thirds of all bankruptcies are now linked to illness.
How did medical problems propel so many middle-class, insured Americans toward bankruptcy? For 92% of the medically bankrupt, high medical bills directly contributed to their bankruptcy. Many families with continuous cover- age found themselves under-insured, responsible for thou- sands of dollars in out-of-pocket costs. Others had private coverage but lost it when they became too sick to work. Nationally, a quarter of firms cancel coverage immediately when an employee suffers a disabling illness; another quarter do so within a year. Income loss due to illness also was common, but nearly always coupled with high medical bills.

Note that this is data from 2007, before the great recession began, meaning the picture has likely become more bleak in the last five years. Also discouraging is the evidence that just having health insurance is no magic bullet. Costs for prescription drugs, hospitalizations and the need for chronic care for conditions like multiple sclerosis, diabetes, heart disease and psychiatric illnesses—even with insurance—were the most frequent causes for medical bankruptcy, with hospital costs leading.
The Affordable Care Act will address some of these issues, but certainly not all. Health care reform that gets at the biggest drivers of costs still has to be addressed. It won't happen in the current political climate, not with a Republican-controlled House and a Senate in paralysis because of the minority's obstruction, not to mention an extremely robust health care industry lobby.

Originally posted to Joan McCarter on Thu Jan 05, 2012 at 09:12 AM PST.