Social Security Disability Insurance Benefits

For individuals with a long term disability, here is news we recently learned about that could be of particular importance. It deals with social security disability insurance benefits.

Deciding how to move forward after a diagnosis of a long-term disability is a personal matter, but it's important that individuals do as much as they can to understand their financial options, according to Allsup , which represents people nationwide for Social Security Disability Insurance benefits (SSDI).

"No one is going to see your personal situation and circumstances, or your financial position the way you can," said Paul Gada, a tax attorney and personal financial planning director for Allsup. "You have the best perspective on what needs to happen next, but you don't have to go it alone."

Experiencing an injury, chronic illness or disease condition causes stress and worry for individuals and their families. It also places some concerns into sharper focus, including financial decisions and options. "Many people don't see the need for a budget because they have enough money coming in to cover their expenses," Mr. Gada said. "But encountering a disability and having to stop work dramatically alters the picture for people and their families. That's when all the numbers really need to come under the magnifying glass."

To help clarify these concerns, Allsup offers the following information about the role of Social Security disability benefits and financial calculators, which can help families get a better grip on their existing financial situation.

Why You Want SSDI

A diagnosis of a long-term disability generally means the end of someone's working days, but it's not the end of key decisions related to money and financial income, medical treatment or healthcare.

"One of the most important steps you can make is to apply for SSDI as soon as possible," Mr. Gada explained. "This can be a complicated process because it involves documenting your work history and your medical condition. You can make it less stressful on yourself by hiring a representative such as Allsup, to handle those complicated aspects."

Even if someone has a long-term disability insurance plan, there can be a number of benefits to applying for SSDI. These include regular monthly income, medical benefits through Medicare (http://www.allsup.com/Financial-Matters/Managing-Healthcare-Costs/Medicare.aspx) (after 24 months of entitlement to SSDI) and prescription drug coverage. More information can be found at Allsup.com in the section called, "Why You Want SSDI."

SSDI is a payroll tax-funded, federal insurance program. A portion of the FICA taxes you pay are set aside for SSDI (as well as Social Security retirement and Medicare). Social Security disability benefits are designed to provide you with income if you are unable to work due to a disability or until your condition improves, and guarantees income if your condition does not improve. Then once you meet your retirement age - 65 or older - you move from SSDI to Social Security retirement income.

The Social Security Administration's (SSA) definition of disability is different than other programs you may come into contact with through your employer or private insurance. The SSA pays only for total disability. No benefits are payable for partial disability or for short-term disability.

Eligibility for SSDI is based on your inability to work. There are a number of requirements for eligibility, and the SSDI application process can be cumbersome--but it's an option that should not be overlooked. Choosing a representative can help you begin and get through the SSDI process with less stress.

Focusing Next on Finances, Healthcare

"If you know that an expert is handling that part of your financial situation, then you can start to focus on the next steps--handling the bills, covering your mortgage and meeting your healthcare needs," Mr. Gada explained.

There are several financial issues to assess for the coming months, especially knowing that the SSDI process (http://www.allsup.com/About-SSDI/SSDI-Process.aspx) can take someone as long as two years or longer in order to receive benefits. Most people don't have the background of financial planners. But there are a number of ways to evaluate your financial circumstances and get a better picture of where things are headed and, if needed, alter course.

To make this evaluation process a little easier, Allsup offers 11 financial planning calculators (http://www.allsup.com/Financial-Matters/Financial-Planning-Calculators.aspx) on its Web site. Each calculator highlights a specific financial perspective and helps answer key money questions for users. The financial topics include:

• Evaluating the household budget. Setting up a realistic budget may be one of the hardest things for some families, but it becomes critical following a disability. The Home Budget Analysis calculator (http://www.allsup.com/Financial-Matters/Financial-Planning-Calculators/Home-Budget-Analysis.aspx) provides a form to evaluate mortgage, utility costs, food costs and other daily expenses that can add up.

• Increasing cash flow. A long-term disability usually means money will be in short supply, so it's important to understand all available options until SSDI benefits are awarded. This includes evaluating personal resources, support from a spouse and government financial assistance. The Net Worth calculator (http://www.allsup.com/Financial-Matters/Financial-Planning-Calculators/Savings-for-Cutting-Back.aspx) gives a more complete picture of someone's available resources or assets, such as real estate and investments, and liabilities (what they owe).

• Decreasing expenses. Stretching the available dollars and reducing spending can make a significant difference while waiting for approval of SSDI benefits. Over time, a little savings can make a big difference. Try out some cost-cutting methods with the Savings for Cutting Back (http://www.allsup.com/Financial-Matters/Financial-Planning-Calculators/Savings-for-Cutting-Back.aspx) and Benefits of Spending Less (http://www.allsup.com/Financial-Matters/Financial-Planning-Calculators/Benefits-of-Spending-Less.aspx) calculators at Allsup.com.

• Getting a handle on debt. This is a significant challenge for those with disabilities and their families, primarily because two factors have collided: income has become more limited and healthcare costs are skyrocketing. It may pay off to evaluate your current mortgage, other personal debt and payoff strategies, including consolidation. Experiment with possible strategies through the Personal Debt Consolidation calculator (http://www.allsup.com/Financial-Matters/Financial-Planning-Calculators/Personal-Debt-Consolidation.aspx) or Mortgage Debt Consolidation calculator (http://www.allsup.com/Financial-Matters/Financial-Planning-Calculators/Mortgage-Debt-Consolidation.aspx).

One of the rewards when it comes to examining your financial situation is to realize there are a variety of tools available, Mr. Gada said. Consider all the options that may be available, even less likely options.

"It may seem like a drastic step, but some people decide to sell their homes and rent," he explained. "You quickly lower your monthly home payment and maintenance costs, avoid taxes and lessen the burden that comes simply from owning a home."

Other financial tools include refinancing the home mortgage or taking out a home-equity line of credit. Find additional calculators, including help evaluating the impact of one or two incomes, on Allsup.com.

"The situations vary so much between people and their families that there is no one-size-fits-all answer," Mr. Gada explained. "It's difficult because the decision to work has been taken out of your hands. But you have other decisions you can make that will help you get through this time, especially while waiting for SSDI benefits."

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