If you owe child support, your disability insurance benefits may count as income when the courts determine how much you have to pay.
When you become disabled, your disability insurance pays you benefits to replace your income while you recover or until the benefits period ends. Your disability insurance may be a policy you purchased yourself, or you may receive a group disability insurance policy through your employer. You can also get disability insurance benefits from the Social Security Administration.
If you owe child support, your disability insurance benefits may count as income when the courts determine how much you have to pay. In some states, you may be able to deduct your disability insurance premiums from the income you’re obligated to pay in child support.
There are no federal guidelines regarding disability insurance and child support, and states generally don’t make a big distinction between private disability insurance and Social Security disability insurance (SSDI) when calculating your income for child support purposes.
When listing the types of income that are factored in, most child support laws use the catchall phrase “disability insurance benefits”, which encompasses both types of disability insurance. However, depending on where you live, there may be some important differences.
Private disability insurance includes short-term disability insurance, which you usually purchase through your employer’s benefits program, and long-term disability insurance, which you usually purchase on your own. If you’re interested in learning about the difference, a licensed representative at Policygenius can help you select the type of disability insurance policy that fits both your needs and budget.
When you become disabled and you have disability insurance, the insurer pays you a monthly benefit amount. The benefit is equal to roughly 60% of your pre-tax income.
Each state has its own laws governing what types of income can be used to calculate your child support obligation, as well as other court-ordered supports like alimony. In addition to your salary, wages, tips, commissions, royalties, bonuses, and interest and dividends, states also consider disability benefits as income for this purpose. When a judge determines how much you have to pay in child support, you may be required by law to reveal any disability insurance benefits you receive.
As with other types of income, disability insurance benefits can be garnished if you don’t pay your child support.
Some states allow courts to require you to purchase life insurance to protect court-ordered support, but almost no state requires you to purchase disability insurance. Still, if you live in a state that authorizes courts to require non-custodial parents to purchase disability insurance, you may be able to deduct the premiums from your child support obligation or receive a credit for them.
Social Security disability insurance (SSDI) is open to anyone who’s worked the prerequisite number of years. While it doesn’t cost anything, it has a very strict definition of disability, and also pays a much smaller benefit.
As with long-term and short-term disability insurance, SSDI benefits are factored into your income for the purpose of determining your child support obligation. Likewise, these benefits can be garnished if you fail to make your child support payments.
When applying and getting approved for SSDI takes a long time, many SSDI recipients are also eligible to receive backpay. Back payment is equal to your disability award multiplied by the number of months that elapsed between becoming eligible for SSDI and becoming approved for benefits. This backpay can be used when determining your child support obligation, and it can be garnished just like your regular disability benefits.
Benefits from supplemental security income (SSI), a related program for blind or deaf people who have limited financial resources, cannot be garnished. In some states, qualifying for SSI also reduces the amount of SSDI that can be used to calculate your income. Your Medicare, Medicaid, and assistance from the TANF program are also not affected by child support obligations.
Your SSDI benefits may include dependent benefits, a sum of money given to SSDI recipients who also care for dependents. If you owe child support, some states allow you to apply dependent benefits to your child support payment, leaving you responsible only for the excess amount.
Because qualifying for Social Security disability insurance requires significant financial hardship – earning above a certain amount of income, the threshold for “substantial gainful activity”, can cause your benefits to end – you may be able to get a child support modification that lowers your payments while you’re disabled. You may have to submit the modification in court, but it could save you hundreds of dollars.
Be sure to submit the request as soon as possible, because they take time to process, and you could be stuck paying child support in accordance with the income you earned before you got disabled.
Zack Sigel is a SEO managing editor at Policygenius. He covers personal finance, comprising mortgages, investing, deposit accounts, and more. His previous work included writing about film and music.