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What Should You Know Before Filing For Long Term Disability Benefits?

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If you've suffered an injury or illness that has left you temporarily unable to work, you may be running out of paid vacation or sick days and wondering what will happen next. For those whose employers offer short term disability insurance as a fringe benefit, additional time off work may be partially or fully paid even after your sick leave is exhausted. Some employers even offer long term disability insurance to provide additional financial protection against extended illness or disability. However, transitioning from short term disability to tong term disability can bring with it some unexpected surprises. Read on to learn more about long term disability to help you decide whether it's in your best interest to take advantage of this benefit.

What may happen when you file for Long Term Disability benefits?

Most short term disability policies are designed to cover a portion of your salary (often 60 percent) for a relatively brief period of time (generally 6 months or less). If you're protected by the Family Medical Leave Act (FMLA), your job should be safe for up to 6 months (or 26 weeks) of absence during a calendar year. 

However, once you've reached the 6 month threshold and your absence is no longer covered under FMLA (or if you work for a non-covered employer), you could face termination if you apply for long term disability benefits. Because many long term disability policies require that you apply for Social Security Disability benefits concurrently, the receipt of such benefits can indicate a severe or long-lasting disability that will prevent you from returning to work in the future. Most employers are reluctant to hold open positions indefinitely if it seems clear you won't be physically or mentally able to perform your job soon.

For those who are unable to ever return to their original place of employment following a disabling injury or illness, filing for long term disability and accepting termination can make good financial sense. However, if you'd like to return to your previous job but just aren't quite ready yet, you may want to investigate some income alternatives that will keep your financial ship afloat while you work out the details.

Do you have any alternatives until you can return to work? 

If you simply need an extra week or two off after the expiration of your short term disability benefits, you may be able to negotiate an unpaid leave of absence. While this won't provide you with the income you'd receive through a disability insurance policy, keeping your old job open may be a much more lucrative prospect in the long run.

You may also want to look into coverage for your expenses from non-job-related sources. For example, if your disability stems from an auto accident, you'll want to investigate whether your auto insurance (or the insurance of the person who hit you) covers lost wages. For those injured or made ill on the job, workers compensation coverage should come into play. In many cases, you may even receive retroactive benefits dating back to your original injury. 

Another option to help cover your living expenses before you can return to work could be your health savings account (HSA), flexible spending account (FSA), or even certain retirement funds. If you've already paid certain medical expenses out of pocket from savings or your STD payments, you should be able to reimburse yourself for these costs from your HSA or FSA. Those who have contributed to a Roth IRA in the past should be able to withdraw contributions tax- and penalty-free. Although you won't be permitted to recontribute the withdrawn funds, this can often be a more palatable option than paying credit card interest or missing an important payment. 

For more information, contact a company like Iler and Iler.