Private Disability Coverage for People with Cancer
Disability insurance is different from health insurance.
You (or your employer) pay premiums to keep the policy in effect.
Your disability insurance only pays you if you become unable to work and you meet the policy’s definition of disabled.
Cancer can be a costly illness
The costs of cancer treatment and its related expenses can add up and deplete a person’s savings. This can lead to a search for money to pay for needed treatments. It’s important to look at all your options.
If you are still working, or are on leave from your job, don’t quit until you find out about possible benefits. Read Working During Cancer Treatment to find out about legal protections, get the most out of your benefits, and some factors to consider in deciding your next steps.
Do you have a disability policy or disability benefits through your employer?
If you get to the point that you cannot work, find out if your employer has a long-term disability insurance policy before you leave your job. This type of policy often replaces 60% to 70% of income. If you find out you are covered under such a policy, read it closely. Find out the definition of disabled (according to your policy), the monthly benefit amount, the benefit period, the waiting period, and whether you must pay taxes on the money you get.
Some companies also have short-term disability coverage to help replace income during part or all of the waiting period of the long-term disability policy.
A number of people also take out their own individual disability insurance policies and keep them in effect throughout their working career.
If you don’t have disability insurance, read about SSDI (if you’ve worked a lot in the past) or SSI (if you’ve only worked a short time.)
If you do leave your job, you’ll also want to line up your health coverage ahead of time, so that there are no gaps. See If You Can’t Get Health Insurance at Work for more on this.
Are you disabled?
The definition of disability can vary quite a lot. Here we’re talking about people who might still get an income when they are unable to work by receiving disability benefits. In that context, the tightest definition of disability is that a person is unable to do any kind of work. This is called total disability. In contrast, a very broad definition of disability may let a person get disability payments when they can’t do their usual kind of work.
Individual disability policies use their own definitions of disability. Disability insurance policies might also require that the disability be permanent or expected to last for a minimum length of time before they will pay. You must meet the definition of disability as defined by your policy in order to qualify for income.
Disabled people who don’t have disability insurance (see below) may qualify for certain government programs if they meet other requirements. These include Supplemental Security Income (also known as SSI) and Social Security Disability Insurance (also known as SSDI). SSI offers benefits to people with low income who are disabled, blind, or elderly. Children who are blind or disabled may also get SSI benefits. SSDI offers benefits to workers and certain members of their family if workers are unable to work for at least a year due to a serious illness..
What are the downsides to disability insurance benefits?
- If you have an individual disability policy, you must pay premiums until the insurance company allows you to stop.
- Your disability income might affect qualifying for government benefits.
- Long-term disability payments might not begin until 3 to 6 months after you’re disabled. Check your policy for details.
- If you qualify for disability benefits from more than one source (such as an individual and a job-based policy), or if you have other sources of income while you’re disabled, one or more of the payers may reduce or “offset” your benefits.
- You might have to pay taxes on your disability income. Check with the Internal Revenue Service or your tax advisor.
If you apply for disability, you should get an answer within 45 days
The Department of Labor, Employee Benefits Security Administration, adds this about disability applications:
Disability claims must be decided within a reasonable period of time, but not later than 45 days after the plan has received your claim. If, because of reasons beyond the plan’s control, more time is needed to review your request, the plan can extend the timeframe up to 30 days.
The plan must tell you before the end of the first 45-day period that more time is needed, explaining why, any unresolved issues and additional information needed, and when the plan expects to render a final decision.
If they ask for more information, you will have at least 45 days to supply it. The claim then must be decided no later than 30 days after you supply the additional information or the period of time given by the plan to do so ends, whichever comes first. The plan administrator may extend the time period for up to another 30 days as long as it notifies you before the first extension expires.
For any additional extensions, the plan needs your consent. The plan must notify you if your claim has been denied before the end of the time allotted for the decision.
What if my disability application is denied?
If your application is denied, the plan administrator must send you a written notice with a detailed explanation of why your claim was denied and how you can appeal the decision.
Included in the notice must be the plan rules, guidelines, or exclusions (such as medical necessity or experimental treatment exclusions) used in the decision or tell you how you can ask for a copy from the plan. The notice may also include a specific request for you to provide the plan with additional information in case you want to appeal your denial.
What if I don’t have disability insurance?
If you have limited income, you may qualify for a number of need-based programs. See Programs and Resources to Help With Cancer-related Expenses.
Besides the American Cancer Society, other sources of information and support are listed below.
US Department of Labor, Employee Benefits, Security Administration (EBSA)
Toll-free number: 1-866-444-3272
Information on employee benefit laws (including disability benefits)
Financial Planning Association
Offers free information on personal finance, answers general financial planning questions, makes referrals to FPA members who are Certified Financial Planners™, and sets up free financial planning services to qualified people and families in need
Internal Revenue Service
Toll-free number: 1-800-829-1040
Has answers to tax questions, tax forms, and referrals to free tax help for those who qualify. You can find a list of tax deductible medical expenses at www.irs.gov/publications/p502/ar02.html
Last Medical Review: November 18, 2015 Last Revised: March 7, 2016