Top Financial Steps to Take on Disability

By John P. Schmoll | February 19, 2016

Going on disability, whether it be short or long-term, is a challenging and often stressful experience. Many things can potentially be impacted, from your health to your job to your finances. If you are disabled on the job, you may think you can count on disability benefits through the Social Security Administration (SSA). You can’t count on that as a possibility. According to the SSA, over 2.4 million individuals filed for benefits in 2015 though only 775,000 were approved. With that in mind, you may wonder what financial steps you need to take on disability. It will depend on the situation though following are some of the general things to consider.

Find Out What Coverage You Have

When you’re about to go on disability you first need to determine what kind of coverage, if any, you can access. The most common coverage for many will be through The Family and Medical Leave Act (FMLA). FMLA is available through qualifying employers and offers up to 12 weeks over a single 12-month period. There are a few things to remember with FMLA. Some employers will require you to use any paid leave (vacation and sick days) you currently have, as the initial part of the 12-week period. They also may require proof of a serious medical need. (For more, see: Types of Social Security Benefits.)

It doesn’t stop there. If you have disability insurance, you will need to determine what's required to take advantage of benefits. If you believe you'll need longer disability coverage, you will want to reach out to the Social Security Administration. "Contact the Social Security Disability office in your state. You may qualify for benefits if you expect your condition to last more than one year, and you are not able to work at any job,” says Kevin Haney of Growing Family Benefits.

This work may seem overwhelming. Don’t let that hold you back as it’s vital to best prepare yourself for your time on disability. Haney also points out the possibility to upgrade your health insurance through special benefits available to those with lower incomes or those who meet certain qualifications. (For more, see: What Are the Maximum Social Security Disability Benefits?)

Cut Unnecessary Spending

One thing is certain when you go on disability, your finances will be impacted. It’s likely you won’t be bringing in the same level of income so you will want to prepare for that eventuality. Key in that is cutting your spending and living by a relatively modest budget. “Cut all unnecessary expenses. Your income is about to plummet, and your medical expenses may explode. This is not the time for extras like cable TV, smart phones, etc.,” Haney says.

This may seem harsh. It's not. It's meant to help you weather the financial storm you may face while on disability. If you're prepared, it will help mitigate the fallout though the key is to watch over your spending so as to not end up in a worse situation. (For more, see: Top 6 Features of a Great Disability Policy.)

Take Advantage of Benefits

Depending on the community you live in and professional or social associations you’re a part of, you may qualify for additional benefits. This will vary based on your location, specific situation and need. Haney points out that some states offer additional temporary coverage or possible unemployment coverage if your spouse loses their job while caring for you. In short, there are numerous avenues for assistance if you seek them out.

What to Do Prior

You may not always know when you’re going to need to begin disability. The best way to counteract that is to prepare for it to happen. If it does then, you'll be better prepared. If not, you'll be that much better off. (For more, see: Emergency Funds That Are Right for Your Tax Bracket.)

That can range from having a fully funded emergency fund to purchasing disability insurance coverage when healthy. “Buy a disability insurance policy while you are healthy. You will not qualify once you are already sick, hurt or pregnant. New policies exclude preexisting conditions for at least one year,” says Haney. It may be viewed as an unnecessary expense, though the last thing you want is to be in a situation where you need coverage but don’t have it because you didn’t want to spend the money to get it when you were healthy.

Read more: Top Financial Steps to Take on Disability | Investopedia http://www.investopedia.com/articles/financial-advisors/021916/top-financial-steps-take-disability.asp#ixzz40sIIDqkT 
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