The elderly population of America is healthier as compared to the past but whether they are as wealthy or not, that is the question!
The aging population is more prepared for their retirement years as compared to their predecessors. They plan their retirement savings accordingly and continue to work till the time their health allows them.
Many people delay their retirement and continue to work beyond the registered retirement age of 65, as it increases the income but might have adverse effects on their health and a person might file for long-term disability after 65 due to health issues.
Health issues can arise at any age but when a person pushes the body to a limit and overdoes it, then he has to face the consequences. It is often observed that elderly people continue to work ambitiously to get added incentives in the income after retirement which may lead to health problems resulting in a long-term disability.
To address this issue, long-term disability insurance plans often end their coverage as soon as an employee reaches the age of 65. This becomes a big void in the income protection of the individuals who want to continue to work after the age of 65 yet they become disabled.
What is long-term disability coverage?
Long-term disability coverage is a plan which provides the employees a complete income replacement in case of any illness or serious injury which makes them unable to meet their ends. The coverage provides income to the disabled employee to pay off the debt and medical bills as well as meet the financial obligations.
Coverage plan for long term disability after age 65
Long-term disability coverage is a significant benefit given to employees by employers. The main aim is to protect the income of the elderly population if they become disabled while on the job or any occupation related to their job.
The long term disability coverage provides an income of about 50% to 75%, as the earnings from pre-disability tenure can be obtained in case of any terminal illness or injury.
The LTD coverage plays a vital role in supporting the family of the disabled person, along with managing everyday tasks such as medical treatments, utility bills, and the maintenance and payment of other assets.
The LTD coverage is worn off once the employee reaches the registered age of retirement i.e. 65. After the age of 65, a person works according to his wish, it is not a requirement to work after 65. The elderly citizen continues to work to maintain a lifestyle without any obligations once he retires completely.
Life without coverage of long term disability after age 65
There are significant consequences faced by an individual if he is not covered by the long-term disability plan after reaching the age of 65. Without the LTD benefits, the elderly individual has no other option but to rely completely on the pension he receives from the former employment as well as the stimulus money from social security.
There are other assistance programs available as well to assist the retirees but they are not insignificant amounts to make the ends meet or to maintain a particular lifestyle. The situation gets worse if the retired person also faces some kind of disability that is not under any coverage and he is forced to keep on working. There should be long-term disability benefits granted to retirees or elderly people to maintain a healthy lifestyle or enough benefits should be provided to cover their medical expenses.
Long term disability coverage – Not mandatory after the age of 65
The mandatory age of retirement prescribed by the federal government of America is 65 which means that a person can ask for retirement or can continue to work depending upon their health and other financial matters. However, the long-term disability coverage plan ends at the age of 65, and employees who wish to continue working are not covered by this plan, so if they face any illness or disability during the employment; they might not receive anything. This leaves the employees struggling to cap the wide gap between their LTD insurance and their extended health issues after the age of 65.
Under certain circumstances, a person can apply for long-term disability after 65 years and the government grants them the insurance plan to cover their financial obligations on their behalf. You need to claim the LTD and for that, you need to submit your medical report, as well as the employment record to attain the LTD coverage after 65.
To be on the safe side, long-term disability coverage needs to be studied beforehand to know completely where you stand to attain it. Currently, two different kinds of LTD coverages differ according to the circumstances.
Types of long term disability coverage
There are two types of LTD coverage plans; one is their occupation and the other is any occupation. Both define the term disability differently.
- Own-occupation long term disability coverage:
This particular type of LTD coverage defines disability as “inability to work” at the workplace. According to this coverage plan, you can get long-term disability benefits If you are unfit to work at your occupation but you can work at any other job.
- Any-occupation long term disability coverage:
This type of coverage defines disability as the inability to do work or perform at any given occupation. This disability coverage plan is harder to claim benefits as the terms and conditions are stricter. The person is supposed to prove to the issuing body that he is unable to work at all!
Is long-term disability coverage different from other disability coverage plans?
Long-term disability coverage is different from other disability benefits such as the social security disability benefits.
The social security disability benefits take more time to get the applications approved compared to the long-term disability coverage. More than 61% of applicants are rejected on the first round by the SSI because of the strict measures.
Social security provides a stipend of just above $1000, which might not be enough to fulfill your basic monthly needs therefore another option is needed to make the ends meet.
Long term disability coverage versus short term disability coverage
Many employers offer short-term disability coverage which is usually termed for 3 to 6 months, and in some cases, it is extended to a maximum of 1 year. The long-term disability coverage is for a lifetime and it doesn’t end at any given time.
How much does a long-term disability coverage plan cost?
A long-term disability coverage plan can cost you anywhere between 1% to 3% of the annual salary, depending upon the terms and conditions of the coverage plan as well as your salary. For instance, if you are earning $50,000 annually, then you will be paying around $500 to $1500 for your long-term disability coverage plan per year.
Long-term disability coverage plan rates largely depend upon age, health, and various other factors. The long-term disability insurance coverage offered by the company or the employer largely differs from what is offered by the federal government plans or other companies.
The claim of Long term disability after 65
Like any other disability plan, this one will also have a long schedule of benefits offered by the company. The details will be told to the individual and the payment schedule will also be discussed along with many other important things.
The schedule of benefits is very important to be read thoroughly as it will determine for how long you will be eligible to receive long-term disability benefits after you become disabled.
This differs from company to company. Some companies offer long-term disability coverage till the age of 65 and usually, the coverage ends within a few months after you turn 65. On the other hand, few companies take into account the age when you become disable and according to that, they devise your schedule of benefits.
The schedule of benefits might state that if you become disabled at the age of 65, you will continue to receive the long-term disability benefits for the next eighteen months or further according to the terms and conditions signed and approved by both parties at the time of the contract.
Even though the eligibility for the tenure of the long-term disability coverage plan may vary from company to company, the application process is more or less the same regardless of the age you apply for it.
A coverage plan for long-term disability after age 65 is worth investing in; to keep in mind the uncertain future. It is the best option to get yourself covered for at least 5 years to bridge the gap between the retirement pension and the stimulus payments from the federal government under the banner of social security.