Long-Term Care vs. Long-Term Disability Insurance: Understand the Difference
The number of people 65 and older is projected to double to 98 million by 2060—to an estimated 24 percent of the American population. Understandably, we need more care when we are older and our risk of disability increases, more people are starting to think carefully about their insurance needs. Long-term care insurance and individual and group long-term disability insurance can provide peace of mind by covering the potential financial needs of growing older.
That said, long-term care and individual or group long-term disability insurance aren’t just for the elderly. Accidents happen and sometimes we wind up needing long-term care earlier than we expected.
Long-term care and individual or group long-term disability insurance policies offer much different protections. Often disabled people may also require long-term care and as a result, individual and group long-term disability insurance often get confused with long-term care coverage. However, long-term disability (individual and group) and long-term care policies provide different benefits.
What Is Long-Term Care Insurance?
Individual and group long-term care insurance covers expenses related to care that you may need when you cannot or need extra assistance caring for yourself. Long-term care insurance kicks in when a person can no longer perform at least two of six “activities of daily living” such as basic hygiene, dressing, eating, using the bathroom, getting in and out of bed, or walking around.
A long-term care policy will generally pay for the costs and expenses associated with necessary care that isn’t covered by most health insurance policies. This could include in-home nurse visits, extended stays in a nursing home or rehabilitation facility, hospice care, or any other expenses incurred to perform these activities of daily living.
What Is Individual and Group Long-Term Disability Insurance?
Unlike a long-term care policy, individual and group long-term disability insurance pays an income-replacement benefit. In other words, individual and group long-term disability insurance covers the loss of income as a result of a long-term disability that interferes with your ability to reliably perform the important duties of your occupation with reasonable continuity and in the usual and customary way.
You can use the benefits paid from your individual and group long-term disability coverage for whatever living expenses you need, and it isn’t limited to medical or daily care. Individual and group long-term disability insurance typically covers 50 to 60 percent of your income before you suffered your disability.
A Side-by-Side Comparison of Long-Term Care and Long-Term Disability Insurance
Certain types of insurance seem so similar and yet are fundamentally different, so a chart comparing the various features may help explain them.
| Long-Term Care Insurance | Individual and Group Long-Term Disability Insurance | |
| What it covers | Expenses related to long-term care: nursing home, in-home care, assisted living, adult day care | Covers 50 to 60 percent of your income; policyholders may use individual and group long-term disability benefits in any way they deem appropriate |
| Triggering event | The policyholder is no longer able to perform at least two of the following six “activities of daily living:”
|
Once you are unable to perform the material and substantial duties of your occupation, long-term disability insurance provides coverage after your elimination period ends |
| Age | Generally from the age of majority forward | Generally only provides coverage until age 65 or normal retirement age |
Keep these two fundamental differences in mind:
- Individual and group long-term disability covers your income, while long-term care covers out-of-pocket expenses for long-term care.
- Long-term care can provide coverage at any age, while individual and group long-term disability generally provides coverage only until age 65 or normal retirement age.
The Cost of Long-Term Care Insurance
Long-term care insurance can be expensive when compared to other types of insurance products—the average annual premium for long-term care coverage is $2,300. In addition, the premiums can and do go up in time. In the mid-2000s, long-term care premiums skyrocketed because insurers failed to accurately estimate the number of valid claims they would have to pay. The industry may claim that it doesn’t expect similar increases in the future, but nothing is certain, and that makes budgeting for this type of coverage difficult.
Long-term care, however, can cost far more than your premiums, as the national average is about $50,000 for a 12-month stay in a long-term care facility.
With long-term care insurance, policyholders can decide how much insurance they want to purchase, such as day benefits and the length of time the benefits would cover. Obviously, the policy becomes more expensive as the benefits and coverage period increases.
Finally, companies determine long-term care premiums by a policyholder’s age and health. Younger purchasers will get a better rate than older purchasers and married policyholders pay less than single purchasers.
Individual and Group Long-Term Disability Considerations
Individual and group long-term disability insurance are frequently called the most unused type of insurance. However, it covers what is most important for most people, their incomes. For most Americans, a disability that prevents them from earning a living would create immediate financial hardships.
Individual or group long-term disability insurance makes the most sense for those people who have at least 10 to 15 working years ahead of them. They aren’t close to retiring, and their income is likely their most valuable asset. As a result, a long-term disability could devastate their financial futures and their families.
If You’re Shopping for Coverage…
Insurance brokers and agents can offer a compelling case for why you need long-term care or long-term disability coverage, or maybe both. They can explain to you how the policies work, what they cover, and your premiums.
But what are they not telling you?
They are likely selling a particular product, and won’t tell you when other insurance companies offer better coverage for the same price. Or maybe they’re not telling you what this policy won’t cover, leaving you to figure it out in your moment of need.
A top-rated disability attorney or stellar ERISA lawyer at DarrasLaw can help you decide exactly what kind of coverage you need, make sure you understand the policy, and explain all of the fine print. DarrasLaw can provide you with objective advice because we don’t sell insurance.
Or If You Already Have Coverage
The first thing many people discover when they need to make a valid claim is the complicated nature of the claim process. The next thing they learn is that insurance companies protect themselves by wrongfully delaying, denying, and terminating benefits to policyholders who have dearly paid their premiums for years. An experienced disability attorney or top-rated ERISA lawyer can help you navigate the process and get the insurance benefits you are entitled to recover.
What Those With Mental Health Concerns Should Know About Short-Term Disability
Statistics from the National Alliance on Mental Illness (NAMI) reveal that mental health conditions are far from uncommon.
In fact, NAMI has made the following eye-opening determinations concerning mental health issues in America:
- One in five adults will experience some type of mental illness.
- Roughly one in 25 adults live with a serious/chronic mental illness.
- 75 percent of all serious/chronic mental illnesses symptoms become evident by age 24.
Given the staggering numbers above, questions often arise as to whether short-term disability provides adequate mental health coverage or no coverage at all.
Does short-term disability cover chronic mental illness?
Private short-term disability insurance does not typically cover serious/chronic mental illness.
A typical short-term disability policy might contain language indicating the following: “Benefits will not be paid for losses caused by or resulting from mental or emotional diseases or disorders of any kind.”
Those with conditions like clinical depression, bipolar disorder, or schizophrenia should consider looking for income protection elsewhere.
What about temporary acute mental health episodes?
Group short-term disability insurance generally does not cover temporary acute mental health episodes. That’s because these issues are considered to be the sort of emotional disorders specifically excluded by the policy language.
A temporary acute mental health episode includes everything from anxiety and depression to situational stress.
Does this mean a person with mental health concerns can’t ever look at short-term disability?
Not necessarily. Experts indicate that short-term disability coverage may be helpful in situations involving psychotropic drugs. Many drugs have potentially serious side effects that could impair a person’s ability to work.
Consider how some psychotropic medications cause weight gain, which can lead to the onset of diabetes or hypertension. These medication side effects are physical conditions that short-term disability might cover.
It’s important to note that the size of a policy’s monthly benefit may have to be smaller. The reason is that the more coverage sought, the more complete the underwriting process and the higher the premiums.
What Other Options Are There?
The good news is that group short-term disability benefits are not the only option for financial support if a mental illness prevents you from performing the essential functions of your occupation. There can be other options available that allow you to take the time you need away from your professional duties while still getting financial help.
While you are never guaranteed any of the following, they are certainly options that might be worth looking into.
Social Security Disability Insurance
Employer-sponsored disability insurance is not the only source of benefits for individuals of working age with disabilities. The Social Security Administration (SSA) provides public benefits to qualified individuals with disabilities if they need to take a hiatus from their occupations.
The SSA has a guide that spells out eligible disabilities, including mental illnesses.
The following are the nine categories of mental disorders under the SSA listing of impairments.
- Intellectual disorders – These conditions manifest before age 22, and they result in substantially below-average intellectual functioning. These conditions might stem from birth injuries or defects, and they can cause significant deficits in adaptive functioning abilities. Patients often have difficulty finding employment in which they can ever perform occupational functions.
- Neurodevelopmental disorders – Such disorders tend to set in during a child’s developmental years and curb the child’s normal development, either cognitively or physically. In some cases, however, medical professionals fail to diagnose neurodevelopmental disorders until the child reaches adulthood and experiences problems in educational or occupational pursuits.
- Autism-spectrum disorder – Patients on the autism spectrum can have a wide range of functioning abilities, but many experience deficits in their development regarding communication skills (verbal and nonverbal), social interaction, imaginative activity, symbolic activity, and more. Patients often have patterns of behavior, activities, and interests that are repetitive, restricted, or stereotyped. Some might have their development or acquired skills halt or decline as they grow up.
- Neurocognitive disorders – These disorders cause a marked decline in an individual’s cognitive functioning, which can impact their occupational abilities either slowly or surprisingly quickly.
- Depressive, bipolar, and related disorders – Such disorders can have a range of effects on patients, including depressed, irritable, expansive, or elevated moods, a loss of interest in activities they usually enjoy, and a general clinical decline in an ability to function in everyday life, including professional environments.
- Anxiety and obsessive-compulsive disorders (OCD) – While everyone experiences some anxiety in their lives, such disorders result in heightened and uncontrollable anxiety or fear. Patients can regularly experience symptoms with little to no warning, which might include excessive and irrational worry, fear, apprehension, and more. Individuals with anxiety disorders might practice avoidance or triggers, including places, people, thoughts, or activities, which can include circumstances of their professions.
- Personality and impulse-control disorders – Patients diagnosed with these disorders can experience involuntary patterns of behavior that can be maladaptive and inflexible, and these patterns can be enduring and pervasive and affect every aspect of their lives and relationships.
- Schizophrenia spectrum and psychotic disorders – These disorders can result in highly disorganized thinking and behavior, including hallucinations or delusions. Patients might not be able to hold an organized conversation or might have catatonic bouts, which can substantially impact their abilities to function in daily and professional life.
- Somatic symptoms and related disorders – People with such disorders experience physical ailments, symptoms, and manifestations that they do not intentionally create or fabricate, though medical professionals cannot explain or diagnose the source of the physical condition or another environmental circumstance. Both the physical symptoms and mental effects can impact a patient’s professional abilities.
Each category presented by the SSA comes with its own set of information and proof that a patient must demonstrate to qualify for benefits. Simply having a diagnosis is not enough, but a benefits applicant must also show that their disorder interferes with their ability to perform any occupational duties. There is information available online regarding the application process and requirements.
Paid Family and Medical Leave
Federal law includes the Family and Medical Leave Act (FMLA), which provides employees with the right to take leave from work if they have medical issues, need to bond with a new child, or need to care for a family member with medical issues. While this leave can protect your job for up to 12 weeks per year if you need to take a break due to mental illness (for qualified employees), it does not require that your employer pay you during your leave.
However, some states offer paid family and medical leave to employees in addition to unpaid leave under federal law.
You might qualify for paid leave if you live in one of the following states:
- California
- District of Columbia
- Hawaii
- Massachusetts
- New Jersey
- New York
- Rhode Island
- Washington
- Connecticut (beginning in 2022)
- Oregon (beginning in 2023)
- Colorado (beginning in 2024)
While not everyone has access to paid medical leave, this type of benefit does help many employees in states that provide paid leave. The amount of time you are eligible to take away from your profession might not be long enough, but it can buy you some valuable family time while you determine your next options, if needed.
Unemployment Benefits
If you need to stop working in your occupation because of a mental illness, you might naturally wonder whether you can apply for and receive unemployment benefits. This depends on your situation and where you live and work. Each state has different unemployment laws and requirements, which generally include that you can work and are ready to accept a new employment offer. Further, you need a valid reason to stop working, or your employer must terminate your employment (but not due to misconduct).
While most states recognize that a serious health condition—including mental conditions—can be a valid reason to leave your employment, many people face roadblocks with the requirement that they are ready to accept and perform new employment. You might have to recover from your mental illness or treat it to a degree where you are ready to return to the workforce before you might qualify for unemployment.
If you are interested in learning more about your options for financial assistance if you cannot perform your occupational duties due to mental illness, speak with a trusted disability attorney at Darras Law today.
Contact a Top-Rated Long-Term Disability Lawyer or Experienced Long-Term Care Insurance Attorney at DarrasLaw Today
DarrasLaw is an award-winning, nationally recognized litigation firm that focuses on individual and group long-term disability and long-term care insurance. We help our clients get the coverage they need, and we fight the insurance companies who wrongfully delay, deny, and terminate valid claims.
If you have questions about group short-term disability insurance—as it relates to mental illness—contact our disability attorneys. Don’t wait.
The legal team at DarrasLaw is experienced in dealing with group short-term and long-term disability cases. There is no risk involved in contacting DarrasLaw. If you have short or long-term disability insurance questions, our legal team is here to help. Call us at (800) 898-7299 or contact us online.