Is Disability Insurance the Post-Unemployment Check? Not for Many

Guy in a wheelchair - disability insuranceAs the jobless run out of unemployment benefits, many may be turning toward the Social Security Disability office hoping to find some relief. Officials report that initial claims are up from 2.5 million in fiscal year 2006 to 3.25 million in fiscal year 2010 -- a 30% jump during the recession.

But filing a claim doesn't mean that financial relief is just a few tall stacks of paperwork away. Social Security Disability insurance is one of the really hard assistance nuts to crack; the screening process is so stringent that it even makes qualifying for a mortgage these days look easy. Only about 40% of those who apply get approved in the first step. And that step takes three or four months to process, although the program has a list of 88 diseases and conditions on a sort of fast-track system to speed up the process for those with the most serious needs.Still, many who are running out of unemployment benefits have been looking frantically for ways to support themselves and their families and some have lit upon the various health conditions that they suffer from as perhaps a way to keep themselves financially afloat.

The Catch-22 here is that to qualify for unemployment benefits, they needed to have been actively looking for work and ready, able and willing to accept a job. To qualify for Social Security Disability, they have to prove just the opposite: that they are too disabled to work in any job that exists in the national economy -- not just one at the level they previously held. You may not be able to manage the bank branch anymore, but can you greet shoppers at Wal-Mart from a chair?

As a general qualification rule, you must have a medical condition or combination of conditions that are expected to last at least one year or result in your death. Monthly payments, based on a formula of previous earnings and length of time worked, average $1,068. About 8.3 million people were collecting benefits in February, the most recent data available. There are auxiliary payments for the spouses and minor children of workers who qualify.

That's about the end of the good news. Before you apply, be prepared to supply detailed documentation of all diagnosis and treatments tried by all your doctors.

More information can be found here.

Gregg Rosen, president and co-founder of the American 99ers Union, an umbrella group that advocates for the long-term unemployed, attributes the spike in the number of disability claims among the long-term unemployed to "the disease of unemployment." Unemployed workers aren't looking for a way to feed at the public trough, he said, the stress of being unemployed has been proven to affect their health adversely, and that's what we're seeing with the increase in claims.

"I began to hear, maybe eight to 10 months ago, about people developing serious medical or mental health conditions associated with the long-term stress of looking for work," Rosen said. Rosen lost his six-figure executive salary a month before he turned 40 in 2008. At the same time, he watched his investment portfolio disintegrate in the Bernie Madoff scandal.

Science stands behind the assertion that unemployment is an unhealthy condition. Studies have shown that the long-term unemployed report eating more junk food and less healthy fruits and vegetables -- a pattern that ultimately leads to more health problems.

The recession has also increased how long people are staying on temporary total disability, or workers' comp as it is commonly known. According to the National Council on Compensation Insurance's latest figures, the mean duration of benefits jumped from 123 days for injuries that occurred in 2006 to 141 days for injuries that occurred in 2009. Unemployment during that period went from 4.6% to 8.7% nationally.

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