Late last year, my wife gasped: “What’s wrong?” She saw me hunched at the computer, the online bill pay program flickering, my face blank and my hands limp in my lap.
“It’s gone,” was all I could say. Years of mounting debt, tens of thousands of dollars of it, had disappeared in five minutes. It was beyond belief, and I just sat staring at the screen.
Our financial deliverance was a big retroactive check for my wife’s first years of disability. After receiving the check, I sat down immediately to pay off the credit cards that we had run up since she had to stop working.
That’s right. We paid our debts. We had borrowed to pay huge, persistent medical bills, used credit cards to buy groceries and medicine when paychecks couldn’t stretch far enough, and I worked extra jobs to juggle the payments.
I hope he did not have to pay income tax on the disability payment. I don’t know the particulars of their situation, but Social Security disability is generally taxable income. Even private disability insurance income may be taxable, depending on who paid the premiums. If your employer paid the long term disability premiums, any payments you receive are taxable, if you paid them but with pre-tax income, the payments are taxable. If you paid the premiums with post tax (net) income, then the benefits are not taxable as income (Disclaimer, I’m not a tax lawyer, don’t rely on this as legal advice, etc. etc. :)).
I’m familiar with this since my wife has been disabled for several years. We were fortunate enough that she had purchased private disability insurance with post tax income. So, her monthly disability check is not taxable. After years of effort, my wife was finally declared disabled by SS in 2008 (that’s a whole other story, had to sue, with assistance from the private insurance company). However, since she was a stay at home mom prior to going back to work, we found out she did not have enough “work credits” to get any SS disability payments (she can get Medicare). This actually was to our benefit, since if she received any SS disability payments, her initial big, retroactive check for several years would have all gone to the private insurance company (they generally pay a monthly benefit less any other disability income) AND we would have had to pay income tax as well.
I’m told by my contacts in Social Services that government disability claims are [i]automatically[/i] denied the first time, regardless of whether they are valid claims or not. The scary thing is, they don’t make any bones about this fact. You can ask them at any time, and they will tell you the same thing. This is something that private insurance companies are forbidden to do (in theory).
Off-topic discussion on SS disability – web elves please delete if you feel the need to. My wife met more than one of the required reasons to be declared permanently disabled, but, as you indicated, SS seems to automatically deny. The lawyer assigned to our case by the private insurance company said this is common unless you are : 1) a drug addict, 2) a quadriplegic, or 3) morbidly obese. The private insurance company hired a professional SS disability processing company to help prepare and file the SS disability claim paperwork. My wife was denied on the initial application and the appeal application. Didn’t matter how much supporting medical information was provided by her team of doctors (each one verified the neurological illness, treatments, what her limitations were, etc.). The third time was after the lawyer was involved, and the lawyer fully expected this to be settled by SS without a court hearing since it was a “no brainer†that she was permanently disabled . At the last, this had to finally got to a hearing before a judge.
I’m thankful that I make a very good living so we can afford the several thousand $’s per year in insurance co-pays we have. I have excellent insurance through my work, but co-pays and deductibles add up quick if you have to use the insurance often. I don’t know how Timothy, and other families like them, handle the bills from a catastrophic illness, accident, or a chronic debilitating disease.