Is Social Security disability insurance worth it?

Social Security disability insurance won't cost you anything, but you'll have a very difficult time qualifying for it.

Zack Sigel


Zack Sigel

Zack Sigel

Managing Editor

Zack Sigel is a managing editor at Policygenius who oversees our mortgages, taxes, loans, banking, and investing verticals.

Published March 28, 2018|6 min read

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Disability insurance is financial protection against the risk of losing your income when you’re unable to work due to a disability or illness. Most people who have disability insurance purchase coverage in the form of a long- or short-term disability insurance policy from a private company or from their employer, either as an employer-subsidized plan or through group disability insurance at a discounted premium rate.

Those who become disabled and need coverage but don’t have disability insurance may be eligible for disability insurance offered by the U.S. Social Security Administration. Social Security disability insurance (SSDI) is free to you, like other federal benefits programs, but it is very difficult to qualify for. We don’t recommend relying on Social Security disability insurance unless you’re absolutely certain you can qualify for it, and even then, the coverage it offers may fall too short of private disability insurance coverage for your needs.

Social Security disability insurance pays out a monthly benefit just like private disability insurance. However, private disability insurance is considerably easier to qualify for, because its only stipulation is that you’re so disabled that you can’t work. To qualify for Social Security disability insurance you must be not only unable to work but also completely disabled: it’s not impossible to suffer a disability as severe as an amputation and still see your benefits claim denied because you can still earn an income.

You don’t have to pay premiums or any special charges to receive SSDI coverage, but there are a lot of reasons why SSDI may not be worth it. Read on to learn more about why:

Qualifying for Social Security disability insurance

By far the biggest obstacle to getting Social Security disability insurance is qualifying for it. In 2017, just 35% of claims were approved. That’s because the bar to prove your eligibility is extremely high: you need to show not only that you’re totally disabled, but that you’ve made a reasonable attempt at recovery. That means submitting a documented history of doctors’ office visits and a list of medications – if there’s a chance that could recover or adjust to other work, your SSDI claim will be denied.

The younger you are, the more likely you’ll be rejected for SSDI benefits, because the government presumes you’ll have more time to get better. The complete-disability rule means that even if you’ve suffered a potentially disabling condition as severe as a heart attack, if you can’t prove that it impedes you from working then your SSDI claim could get denied. Such Social Security disability requirements make SSDI very difficult to get approved for.

Every time an SSDI claim is denied, the claimant has the chance to appeal. You will be allowed a hearing with a disability judge, who will look over your documentation and rule on the decision of the Social Security Administration. The process could get dragged out a long time, and it doesn’t ensure coverage.

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Disability insurance is meant to replace your income when you become disabled.

A long-term disability policy is much easier to qualify for. To get coverage, you simply need to be relatively healthy and not too risky for the disability insurance company to insure -- you have the meet the carrier’s definition of disabled.

With long-term disability insurance, you can frequently receive benefits even if you’re able to earn income in other ways. That’s true for SSDI as well, but if your earnings average more than $1,180 per month (as of 2018), you won’t qualify for SSDI benefits because you aren’t considered disabled enough. And if your injury was incurred while on the job, you might have better luck with workers’ compensation instead.

As the Social Security Administration states, “No benefits are payable for partial disability or for short-term disability.” Its strict definition of disability is as follows:

We consider you disabled under Social Security rules if:

  • You cannot do work that you did before;

  • We decide that you cannot adjust to other work because of your medical condition(s); and

  • Your disability has lasted or is expected to last for at least one year or to result in death.

How the SSA determines your eligibility

The Social Security Administration uses five questions to determine if you’re to receive Social Security disability insurance benefits.

  1. Are you earning an income?

As of 2018, if your income exceeds an average of $1,180 per month, you’re not eligible for benefits because the SSA doesn’t consider you disabled. The SSA describes the ability to earn at least that much as “substantial gainful activity.”

  1. Is your condition severe enough to interfere with your ability to do your job?

If it is not, you won’t be eligible for benefits.

  1. Is your condition one of the qualifying disabilities?

The SSA will check your condition against a list of medical conditions sorted by the major functions of the body, such as the musculoskeletal, respiratory, hematological, or cardiovascular systems. These conditions are so severe that you will automatically qualify for benefits if your disability or illness is on the list. The SSA says, “If your condition is not on the list, we have to decide if it is of equal severity to a medical condition that is on the list.”

  1. Can you do your job?

If your condition doesn’t qualify as severe enough by the SSA’s standards, it may still interfere with your ability to work in your previous job. If it does, you’ll qualify for benefits.

  1. Can you adjust to other types of work?

This is the last question on the list, but it’s often the one that frequently causes a claim to be denied. That’s because your age or the severity of your disability may suggest to the SSA that you can do other types of work. Because the income-eligibility threshold is so low, there are many jobs that people with otherwise severe disabilities can do and earn too much to receive SSDI benefits.

Social Security disability insurance benefit amounts

Social Security disability insurance benefits are usually considerably lower than private disability insurance benefits. The average amount of SSDI benefits as of February 2018 is $1,197 per month, which, for most people, can hardly replace the salary they earned before becoming disabled.

Coupled with the low threshold of income you can earn while disabled and still keep your SSDI benefits, and the (albeit low) possibility that your SSDI benefits will be taxable, you may find that private disability insurance benefits are better suited for your coverage needs. Long-term disability insurance is meant to replace the income you earned before becoming disabled — all of it. Benefits come in at around 60% of your previous income, but because they’re not taxed, the amount almost entirely replaces your take-home pay.

However, SSDI doesn’t cost you anything, whereas long-term disability insurance premiums can cost as much as 1%-3% of your salary. So you have to decide whether the paltry benefits of SSDI are worth the “price.” You get what you pay for.

Getting Social Security disability insurance could take years

Another major advantage that private disability insurance coverage has over SSDI is that with the latter it may take years before you start receiving Social Security benefits.

Long-term disability insurance typically has a waiting period (also called an “elimination period”) of around 90 days, and it could be an additional 30 days on top of that before you receive your first benefits check. But Social Security benefits have a six-month waiting period, and that’s if you qualify.

But the qualification process can drag on for years. Many people get denied Social Security disability benefits when they first make a claim. They can then appeal the rejection, which requires setting a hearing date and sitting before a disability judge. Hearing dates may be months in the future, and they don’t necessarily produce a positive outcome for the claimant.

If your disability claim gets denied, there are four levels of appeal, ranging from the Social Security Administration offices to the level of the federal courts. But the more you get denied, the longer it will take to receive disability benefits. And then there is the elimination period.