Costs of Long-Term Disability & The Social Security Benefits Application Process / Payout – Lessons From Personal Experience

The following post is by MPFJ staff writer, Kelly Gurnett. Kelly runs the blog, Cordelia Calls It Quits, where she documents her attempts to rid her life of the things that don’t matter and focus more on the things that do. You can also follow her on Twitter and Facebook.

More than 9 million Americans are currently on or applying for Social Security Disability benefits due to long-term illnesses and medical conditions. And my husband is one of them.

In April of this year, his Fibromyalgia (a neurological disorder that manifests itself in a myriad of unpredictable symptoms) finally got the better of him, and he had to stop working for good. He’d been powering through his symptoms for a while as they got progressively worse, but finally it got to the point where he just couldn’t do it anymore. When he finally sat me down and said he’d reach his breaking point, I knew he was right.

There was no question whether or not he should stop being a hero and apply for disability; the only question was how on earth we were going to afford the process and everything that comes with it.

Applying for Benefits

The disability application process, on average, can take anywhere from 2-3 years.

It’s pretty much a given that your first application will be denied. In fact, our disability attorney actually told us to make our initial application on our own and just keep him in the loop, since there was no point racking up attorney’s fees when he already knew we’d be denied. Once we are denied, then he’ll take over for the appeal.

I understand that people try to take advantage of the system, and that the government needs to be stringent to keep this from happening. But sometimes the red tape put in place to keep out scammers winds up hurting those who really do qualify. I recently watched my sister’s boyfriend, who was in Hospice care with terminal cancer, battle the endless information requests and double-checks of a process that didn’t believe he merited disability status. So I knew going in that this wouldn’t be a quick or easy road for us.

For anywhere between 2-3 years, we’ll be surviving on one income, plus all the costs that come from having a disability and undergoing the application process. It can be incredibly overwhelming. Which is why I wanted to share with you what we’ve learned so far, so that if you or a loved one are considering applying, you know exactly what you’re in for.

Loss of Income (and Potential Gain of Debt)

You can’t work during the Social Security Disability application process—which, as we’ve seen, can be quite long. So, from the moment you decide to apply (and you should do it sooner rather than later due to the time period), you should brace yourself for a long haul without one of your income streams. If you live with a spouse, partner, roommate, or family, you can rely on their incomes to at least cover some of the household expenses. But you’re still one full income short, and that’s never easy.

A former coworker whose brother also suffers from Fibromyalgia told me that, over the course of his brother’s application and appeals process, he racked up so much credit card debt just trying to meet monthly expenses that he wound up having to declare bankruptcy. This situation is, unfortunately, more common than you’d like to think.

Drastically Reduced Income Once You Do Have Benefits 

Even if you are granted benefits, it hardly solves all your financial problems. The amount you’re awarded depends on how long you’ve been working and how much you’ve earned over that period, but it will only be a percentage of what you were used to bringing in each month. You can use these calculators to see how much you would receive. After you have received Social Security Disability Insurance for 2 years (there are ways to qualify for Medicaid in the interim – click here to learn more) you will automatically qualify for Medicare coverage, which helps a little, although your spouse and any children will still have to find their own coverage.

There is no hard and fast rule of thumb for calculating benefits, as the Social Security Administration (SSA) uses “a complex weighted formula.” According to the site, Disability Secrets, “Most SSDI recipients receive between $300 and $2,200. The average SSDI payment in 2013 is $1,132. The maximum disability benefit in 2013 is $2,533.”

Should you decide you want to try taking on a part-time job once you’ve been granted benefits, there’s a cap on how much you can earn per month. This amount is currently $750. If you wind up earning more than $750 per month, there’s a process of various “trial” and “extended” periods during which the government basically waits to see if you can sustain that level of earnings for a substantial period of time. When your earnings stay too high for too long, you lose your benefits.

With my husband’s condition, most part-time jobs won’t work for him. He’d be great working in a movie or video game store, but he can’t stand for very long and gets tired after being “on call” for too long. He could deliver pizzas, but then (as with pretty much any part-time job), you’re on a set shift schedule, and his symptoms are so unpredictable he’d wind up missing too many assigned days and would inevitably be fired.

If he is able to find something he can realistically do, he’ll probably try to—but our household income will still be considerably less than it was when we were both working full-time.

Medical Expenses

Having a disability or lifelong medical condition, by its nature, means you’ve got more the average amount of medical costs. Since my husband’s condition exhibits itself in a wide range of nebulous symptoms—from muscle pain to heat sensitivity to exhaustion to nausea—he has a number of specialists, frequent check-ins with his primary doctor, and a list of prescriptions so long we have to write them down so he remembers to take them on time.

These things are not cheap, even with insurance. My husband has several doctors’ visits a month, at a cost of $30 a pop under our copay. He needs to have blood work and other tests done, and (as aforementioned) is on a ridiculously long list of medications. One new experimental drug he’s trying costs $150/month with insurance. (Although we found out after he bought his first month’s supply that the manufacturer offers a discount if you can get your doctor to prescribe three months’ worth at a time.)

Oh, and that insurance coverage we have? Since I’m a freelancer and we used to get our coverage through my husband’s employer, we’re now getting COBRA coverage at an out-of-pocket cost of $808 a month. That’s nearly how much he used to bring home in a two-week pay period. But, with a condition like his, not having any coverage is out of the question. And the way New York State health care works, the cheapest independent coverage we could find for two people wasn’t much cheaper than COBRA and only covered emergency situations (not regular doctor’s visits or prescriptions)—which was basically worthless to us.

Begin to see how easy it is to go bankrupt during this process?

The Application Process Itself and Attorney Fee Structure

In the appeals process, the government is extremely tough on you as they try to prove why you do not qualify for disability. For instance, you will have a court hearing with a federal “career expert” who will try to testify that you could technically do certain jobs, even with your disability.

This “expert” is often operating from a handbook that has not been updated since…well, let’s just say that our attorney was representing a client in the early 2000s who was told he could be a “phonograph repairman.” (I kid you not.) The running joke between my attorney and his staff is that they could wheel a client in on a hospital bed, hooked up to life support, and the “career expert” would still tell them that he could work as a stamp licker. To get through the red tape, anticipate road blocks like this and know how to get around them, having an attorney on your side who is well-versed in the appeals process is your best bet.

We don’t have to pay our attorney any fees upfront (except for occasional disbursements like postage if he needs to send something via Certified Mail to Social Security). After all is said and done, if my husband is awarded benefits, our attorney will get a percentage of his awarded amount (25%), to be capped at $6,000. So technically, nothing out of our pocket, although our initial awarded amount will be reduced. Once he’s gotten his fees, however, any future payments we get from Social Security will be 100% ours.

Benefits will be retroactive to when my husband applied, which will help us greatly if and when we do receive them but doesn’t do much for us now—or over however many months (or years) it will take to qualify for them.


What Can You Do to Prepare Yourself? – Emergency Funds and Private Disability Insurance!

Some disability situations—like a car accident or a sudden diagnosis—can’t be planned for. But others, like my husband’s, you might be able to see coming.

As I talked about in a previous post, we both knew in the back of our minds that eventually the time would probably come when he would have to stop working. But neither of us expected it would happen so soon, and my husband kept the severity of his decline to himself so he wouldn’t worry me. So we weren’t prepared for it to happen as soon as it did.

Start an Emergency Fund!

If you or your partner has a medical condition you can foresee leading to disability, start putting money aside for an emergency fund now. It can help soften the blow when you stop working and carry you through some of the lean times during the application process.

Sign up for Private Disability Insurance

Also be sure to sign up for disability insurance. My husband qualified for short-term disability insurance through his employer, so we’re fortunate enough to be eligible for 6 months of benefits so long as his doctor provides regular updates on his condition. The amount we get is only a fraction of what his salary used to be, but at least it’s something. Once those 6 months run out, we’ll have to find some way to cover that extra gap in our income.

When it comes to short-term private disability coverage (like we have), it usually maxes out at 6 months, and it takes much longer than that on average to have your Social Security Disability application approved, so using both in conjunction is rarely even an issue. If you purchase long-term disability insurance, it’s up to your individual policy whether they’ll pay out if you’re getting SSDI, but it does not affect whether SSDI will pay you. So yes, you can receive SSDI and payments from a private long-term disability plan, and it won’t affect how much you receive from SSDI. The government will not take that into consideration when determining your benefits.

The costs of short- and long-term disability insurance plans vary. Most will cost you between 1-3% of your gross income. In our case, we were paying I believe $20-something per month (which came straight out my husband’s paycheck). But, you’d need to check to see if your employer offers this benefit (if not, you’ll have to pay for it privately) and what the specific details are.

Finally, when you do file for benefits, I’d recommend going the route we are and making your first application on your own. Setting up a no-cost initial meeting with an attorney who can answer any questions you might have can help, but there’s no point in paying extra fees until you get to the appeals point and really do need expert help. The initial application is largely a matter of filling out a lot of paperwork about your condition. It’s a pain in the neck, but it isn’t something you need a law degree to do.

And please, please be careful about which attorney you hire. The big-name disability firm we called first—who we knew of because their name is plastered over every possible advertising medium in our area—told us they wouldn’t even talk to us until my husband had been out of work for a full 12 months. (Although when I asked, “How are we supposed to survive those 12 months?” they were more than happy to transfer me over to their bankruptcy department!) When our current attorney was not only willing to meet with us just 2 weeks after my husband lost his job, but told us upfront there was “no point lining his pockets” until we needed his help with an appeal, we knew we’d found one of the good guys.

Bottom line? Nothing to do with a disability—from its financial repercussions to the daily toll it takes on you and your loved ones, both physically and emotionally—is easy. But, if you arm yourself with the right information and make smart decisions, it is possible to make it through the process. Be willing to make some serious budget cuts, be patient, and don’t lose hope.

How about you all? Have you or a loved one applied for disability benefits? What advice would you give others from your experience?

Share your experiences by commenting below! 

***Photo courtesy of

About the Author Jacob A Irwin

Hi folks! My name is Jacob. I am the owner and operator of My Personal Finance Journey. I started this blog in January of 2010 and have enjoyed the journey ever since. Since finishing up graduate school in Virginia in 2014, I have been working in biopharmaceutical development in Colorado. You can read more about me and this site here​. Please contact me if you have any questions!

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Leave a Comment:

Ms. Rants says August 21, 2013

Why would you be “lining [your lawyer’s] pockets” when the fees are contingency? My lawyer doesn’t charge any fees until I win – she said that’s federal law. Also, you mentioned that if you have SSDI then you’re eligible for Medicare, but I believe you’re eligible only after you’ve been on SSDI for 2 years, so you may want to check on that for planning purposes.

I think you’re right about needing to save up in advance. A lot of people don’t do that, even when they know this could happen, and they’re really stuck. It’s especially tough if you’re the only income earner. I would suggest that those with two incomes make a plan to only live on one income. That way, the second income can be saved for “just in case” and then, if one spouse has to stop working, they’re already able to live on one income. It’s not easy, but it could make things much better in the long run. No matter what, though, it’s a lousy situation. I’m waiting for my hearing now.

    Cordelia says August 22, 2013

    You’re correct about the waiting period; you’re automatically enrolled in Medicare after 2 years of receiving SSDI. However, there are ways to qualify for Medicaid in the interim (see:

    I wish we’d thought of the “living on one income” BEFORE disability plan. Not only would it have allowed us to save up for the future; it would have gotten us used to things being “tight” before they actually were.

    Wishing you all the best with your hearing.

Bryce @ Save and Conquer says August 21, 2013

I’m so sorry for what you are going through. I expect I will need SSDI sometime soon as my medical condition worsens. We have a year’s worth of expenses saved in a CD ladder and another year’s worth in i-bonds. I am hoping I will not need a lawyer as my medical condition is listed on their web page as one with almost always approved. And since I am looking at their web page, I checked on Medicare. Their FAQ says, “You will receive Medicare after you receive disability benefits for 24 months. When you become eligible for disability benefits, we will automatically enroll you in Medicare. We start counting the 24 months from the month you were entitled to receive disability, not the month when you received your first check.” Since Cobra only lasts for 18 months, you will need something to fill the 6-month gap. Sorry.

    Cordelia says August 22, 2013

    Thank you for the clarification; you’re right, my understanding was off on that point. That’s something we’re going to have to start planning for now so we’re ready when it hits. Knowing it’s at least retroactive to when you were eligible, not when you get your first check, helps.

    I’m glad to hear you’ve saved up something to help you through the application process if and when you get there. Best wishes to you on your own journey!

Michael | The Student Loan Sherpa says August 22, 2013

I’ve never had to deal with these issues, but I am curious. How much do you suggest setting aside for an emergency fund?

    Cordelia says August 27, 2013

    I would say six months to a year, at the very least. Again, the process of applying for disability could take anywhere from 2-3 years, so really, the more you can save, the better.

Debbie M says August 25, 2013

Too late for you, but there’s also such a thing as long-term disability insurance. It won’t go into effect for several months, but then it lasts for a longer time. That’s what I used to get when I was working because my sick leave and vacation leave could cover several months.

Very interesting. I agree, it sounds like you got a good lawyer!

    Cordelia says August 27, 2013

    I wish we had thought of long-term disability coverage. I almost wonder now if it wasn’t an option through my husband’s employer (if it was, I like to think we would have gone for it). Still, you can always get disability insurance privately, and I wish now that we would have been more proactive in that regard.

    But, you live and you learn. I’m glad we’re at least making it through as well as we are.

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