But one day, after riding his bike 20 miles, he awoke to find he could not walk. He had broken a disc in his sleep.

He was out of work for several months following back surgery, and would not have qualified for workers’ comp because the injury didn’t happen at work.

However, Bucci had the foresight to purchase supplement disability insurance, which “pulled me out of the fire,” Bucci said. “You need some protection. You have to have six months’ pay in the bank, and I’m sure there are a lot of people who don’t have it. Without disability insurance, I’d have lost all my savings and might not have been able to rebuild them.”

At 63, Bucci could have tapped his 401k, but didn’t need to, thanks to the income from the disability insurance.

Myth No. 4:
My Employer Would Pay Me
Many people assume their company would pay them if they were too sick to work.

Five states — California, Hawaii, New Jersey, New York, Rhode Island — and Puerto Rico require employers to provide short-term disability coverage through payroll deductions. It’s just an option for employers in other states.

Short-term disability coverage would provide you with a percentage of your income for about three months in most cases. Usually you get 100% of your salary for the first two weeks, and then the payment drops to about 60% of your income for another 24 weeks or so.

Long-term disability coverage usually kicks in after a waiting period, which can be six months or longer, and generally pays 40% to 60% of your income for longer periods.

Only about 37% of workers have short-term disability insurance through their employer. The percentage is even lower — 29% — for workers who have long-term disability insurance through work, according to the U.S.Bureau of Labor Statistics. Even if you have some coverage through your employer, that coverage isn’t forever.

If you are disabled and receive disability insurance through your employer, you can lose that coverage if you’re out of work for 12 weeks to six months. Employers are required to hold a position open for you until then — and can cover you with disability insurance until then — but after that, they can dismiss you. If your disability coverage comes solely through a company plan, you can find your benefits shut off.

“Disability is governed in part by state and federal regulation, and in part by the generosity of the employer. There are laws on the books that most companies would hold a position open anywhere from three to six months,” said Bramson of MassMutual. “But after that, you are no longer employed, and you no longer have long-term disability insurance. A lot of consumers do not understand that.”



By the Numbers

29%
Percentage of all employees covered by long-term disability insurance through work

$3.8 Million
Lost wages of a worker earning $50,000 who is disabled at 25 and never able to return to work

50%
Percentage of home foreclosures caused by an unexpected disability

70%
Percentage of American workers are not covered by long-term disability insurance

Sources: Social Security Administration, American’s Health Insurance Plans, Norton’s Bankruptcy Law Advisor, JHA Disability Study; National Safety Council, Life and Health Foundation for Education, The Council for Disability Awareness Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6