When it comes to disability benefits in New York State, there are two main programs that individuals may be eligible for: Social Security Disability Insurance (SSDI) and Long-Term Disability Insurance (LTD). While both programs provide financial support to individuals who are unable to work due to a disability, there are important distinctions between them. In this article, we will explore the differences between SSDI and LTD in New York State, including eligibility requirements, benefit amounts, and tax implications.

SSDI Social Security Disability Insurance

Social Security Disability Insurance (SSDI) is a federal program that provides disability income to individuals who have worked and paid Social Security taxes. To be eligible for SSDI, you must meet certain criteria:

  1. Work history: You must have worked for a certain period of time and paid Social Security taxes to be considered “insured” and eligible for SSDI benefits.
  2. Medical condition: You must have a medical condition that meets the Social Security Administration’s definition of disability. This means that your condition must prevent you from engaging in substantial gainful activity (SGA), and it must be expected to last for at least one year or result in death.
  3. Inability to work: You must be unable to perform any substantial work due to your disability. This includes both your previous job and any other work that you could reasonably be expected to do.

If you meet these criteria, you may be eligible for SSDI benefits. The amount of your monthly benefit is based on your lifetime average earnings covered by Social Security. SSDI benefits are typically paid starting six months from the onset date of the disability, but no more than 12 months prior to the application.

Long-Term Disability Insurance (LTD)

Long-Term Disability Insurance (LTD) is a private insurance policy that provides income replacement for individuals who are unable to work due to a disability. Unlike SSDI, which is a federal program, LTD is offered by private insurance companies. Here are some key points to understand about LTD:

  1. Coverage: LTD policies are typically purchased by individuals or provided by employers as part of a benefits package. It is important to note that not all employers offer LTD coverage, so it is essential to check if this benefit is available to you.
  2. Eligibility: Each LTD policy has its own eligibility criteria, which may vary from one insurance provider to another. However, in general, you must meet the policy’s definition of disability and be unable to perform the essential duties of your occupation.
  3. Benefit amounts: The amount of LTD benefits you receive depends on the specific policy you have. Typically, LTD policies provide a percentage of your pre-disability income, usually ranging from 50% to 70%. These benefits are usually subject to a monthly maximum.
  4. Waiting period: LTD policies often have a waiting period, which is the length of time you must be disabled before you can start receiving benefits. Waiting periods can range from 30 days to a year, so it’s important to understand the terms of your policy.

Comparing SSDI and LTD in New York State

While both SSDI and LTD provide financial support to individuals with disabilities, there are several important differences between the two programs in New York State. Let’s take a closer look at these differences:

  1. Source of benefits: SSDI is a federal program administered by the Social Security Administration, while Long Term Disability Insurance (LTD) is a private insurance policy provided by insurance companies.
  2. Eligibility requirements: SSDI eligibility is based on a combination of work history and medical condition, as determined by the Social Security Administration. LTD eligibility is determined by the specific policy’s definition of disability, which may vary.
  3. Benefit amounts: SSDI benefits are based on your average lifetime earnings covered by Social Security, while LTD benefits are typically a percentage of your pre-disability income. The specific percentage and maximum benefit amount vary depending on the LTD policy.
  4. Waiting periods: SSDI benefits have a waiting period of six months from the onset date of the disability, whereas LTD policies often have their own waiting periods, which can range from 30 days to a year.
  5. Tax implications: SSDI benefits may be subject to federal income tax depending on your total income. On the other hand, LTD benefits are generally taxable if the premiums were paid with pre-tax dollars.

Does Social Security Disability Insurance Pay More Than Long Term Disability Insurance?

In general, long term disability insurance offers larger monthly benefits than Social Security Disability Insurance.  SSDI benefit amounts are determined in accordance with a complicated and weighted benefit distribution formula based on your average indexed lifetime earnings.  While the amount of your benefits under SSDI vary from one individual to another based on their individual circumstances, it is unusual to receive more than 50% of one’s pre-disability income in Social Security disability benefits.  Long Term Disability Insurance (LTD), by comparison, typically provides 50-70% income replacement, depending on the terms of the LTD plan and the amount of coverage selected.

Tax Implications of SSDI and LTD Benefits in New York State

Tax implications in New York State are different for SSDI vs. LTD.  Some key points to consider include:

  • SSDI benefits: In New York State, SSDI benefits are not subject to state income tax. However, they may be subject to federal income tax if your total income exceeds certain thresholds. The amount of your SSDI benefits that may be taxable depends on your filing status and total income.
  • LTD benefits: LTD benefits are generally taxable if the premiums were paid with pre-tax dollars. This means that if you paid for your LTD policy through your employer with pre-tax dollars, the benefits you receive will be subject to federal income tax. It’s important to consult with a tax professional to understand the specific tax implications of your LTD benefits.

Remember, the information provided in this blog post is meant for general informational purposes only and should not be considered tax, legal, or investment advice. Individual situations vary widely. You should always consult personally with a qualified professional who can provide specifically tailored advice based on your unique circumstances.

Social Security Disability Lawyers in Syracuse, NY

Navigating the complexities of SSDI and LTD benefits in New York State can be challenging. Long term disability benefits work together with Social Security disability benefits in order to provide income replacement when you suffer a serious disability and not able to work.  The process of applying for and receiving SSDI is lengthy and complex. It is important to apply for benefits as soon as possible, and not wait. Even if you may not think you qualify for Social Security Disability benefits, or you don’t think you will be out for work for very lengthy period of time, your Long-Term Disability Insurance plan will in all likelihood require that you apply. As a result, if your application is approved, your benefits can be significant, as we have seen.

If you have had your SSD application denied, or if you are unsure how to proceed in applying for benefits, we urge you to call us for a free case evaluation.  SSDI and LTD benefits can be confusing. We invite you to contact the experienced Syracuse Social Security Disability lawyers at McMahon Kublick PC to arrange for a personal consultation.