Checking Your Benefits Safety Net

Back to Living with Hepatitis C

What’s the Condition of Your Benefits Safety Net?

Part 1 – Income
Jacques Chambers, CLU, Benefits Consultant

It is a natural tendency to resist planning for the possibility that something bad may happen. It’s not a pleasant thought, especially when diagnosed with a condition as serious as Hepatitis C. Down deep, there may even be a fear that planning for a problem starts some cosmic wheels in motion that will cause it to happen.

However, preparing for the possibility is not only prudent, but can be practically lifesaving, if your medical condition does worsen. While it helps to think positively about your condition, that shouldn’t stop you from knowing what help will be available, “just in case….”

Dealing with a serious medical condition is not easy, especially when first diagnosed. However, it is important to review your benefits as early as possible to see what protection is in place in case your health deteriorates to the point where you need them.

Just making a benefit review can relieve stress and let you focus on your medical condition. If done early enough, a review may point out areas that can be improved before they are needed.

This doesn’t have to involve a deep analysis or thorough understanding of all of your benefits and insurance. You should know the answer to some basic questions.

“If I become unable to work:

“How much income will I have to live on and where will it come from?

“How will I keep my health insurance and pay for it?

“What will be available if I have a sudden need for cash, for home repairs, alternative medical care, etc.?”

Finding the Answers

The information to answer these questions will be found in your benefits literature. If you have purchased life, health, and/or disability insurance you need to dig out your insurance policies.

If, however, you are like most people, you receive your benefits through your employment. When you were first hired, you probably got several small booklets or one big book that told you all about your benefits. If you can still locate that book, you’re the exception. Most people have long forgotten about it.

Even if you have your original benefits information, you will need to update it. You need to know what the current benefits are, not what was in force when you were hired. You have a legal right to these “Summary Plan Descriptions” as they are called. You can get them by writing to your employer, the Human Relations Department or whoever handles the benefits with your employer, and requesting copies of the “Summary Plan Descriptions” of all your employee benefits.

Many hesitate to do this for fear that it will “raise a red flag” and the employer will suspect something about your condition, even though a federal law (ERISA) gives you a right to these any time you request them. However, “casually” including a reasonable explanation for your request will defuse most questions and suspicions. Reasons for wanting the Summary Plan Descriptions include:

You are doing a financial review (suggested by a finance show on CNN or MSNBC or Cartoon Network) and the Summary Plan Descriptions were mentioned as important documents to have and you can’t find your old ones;
You are finally getting around to doing some estate planning and the estate planner said he/she needed them; or
(my personal favorite, and it really does work) Your new neighbor (or brother-in-law or nephew) is an insurance agent and is pestering you to buy insurance and you want to show them that you already have what you need. Everyone is sympathetic to this one.

Give one of those reasons in passing in your request letter, and “no flags will be raised.” Once you receive the literature, you are ready to review your safety net.

Income

If you become unable to work, you will need income to live; rent, mortgage payments, food, utilities, and other bills don’t stop. This income will come from disability benefit payments. The primary sources are Social Security Disability (SSDI), a disability insurance policy and/or disability benefits from work which includes sick pay, Short Term Disability, and Long Term Disability Insurance.

Most people receive a Statement from Social Security each year a few months before their birthday. The Statement shows your earnings over your working career, your projected retirement benefit, other information, AND an estimate of how much you would receive if you become disabled. If you don’t receive one or have lost yours, you can order another by completing a request for a Statement at http://www.ssa.gov/mystatement/. Provide some basic information and a Statement will come in the mail in about three weeks. Remember, the Social Security Disability benefit does not start until you have been disabled (not working) for five months.

Review the other disability plans. How long will you receive your full pay under sick leave? What is the waiting period before Short Term Disability starts? Before Long Term disability starts? What percentage of salary do they pay? Does that include any overtime or commissions you’ve earned? The answers to all of these will be in the policies or Summary Plan Descriptions.

If you live in California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico, you probably participate in a state mandated short term disability plan that will pay benefits for 26 to 52 weeks. Each program has a website with information about the plan.

Trying to put together the income information from all these sources can be overwhelming. It will be easier to understand if you draw a timeline and list, month by month starting with the first day of disability, just what your income will be each month and where it will come from.

For example, your sick leave days may be used up when you go out on disability and Short Term Disability doesn’t start until you’ve been disabled for at least one week. In that case, the first month will only show three weeks of benefits from the Short Term Disability plan.

When assessing probable income from Long Term Disability and Social Security, remember that most employer provided LTD plans include the Social Security payment as part of the percentage they pay.

Once you have completed the timeline for twelve to twenty-four months, the benefits will probably remain constant for the remainder of the disability.

It is important to understand that no disability benefit plan will pay you the same income when you are disabled that you received when you were actively working. Once you see how much your income will be reduced, you may want to do some hypothetical budgeting to see just how dramatically your standard of living may be altered. If early in the diagnosis, it may be possible to opt for higher benefits at an open enrollment or to start building your savings.

Next Month:

Maintaining Your Health Insurance and Paying For It: Building or Finding a Cash Reserve

Confused about applying for disability? Click here

[Jacques Chambers, CLU, and his company, Chambers Benefits Consulting, have over 35 years of experience in health, life and disability insurance and Social Security disability benefits. For the past twelve years, he has been assisting people with their rights, problems, and other issues concerning benefits and disability. He can be reached at jacques@helpwithbenefits.com or through his website at: http://www.helpwithbenefits.com.]

Back to Living with Hepatitis C