|
Not Filing a Disability Claim is a
Financial
Disaster Waiting to Happen
by Scott E.
Davis, Esq.
Without debate, we can agree
the past two years in the stock market have been financially unbearable.
But if you think the stock market has been bad, let’s discuss
another scenario that may be the “mother of all bear markets.”
Unfortunately, this financial fiasco commonly occurs to
people just like you.
How do I know it occurs?
Because I listen to the stories literally daily. Indeed, the
severity of this financial decision makes the stock market meltdown
of 2000 to 2002 look like a walk in the park.
Whether intentional or
unintentional, falling into this trap will cost you disability
income, retirement income and pre-retirement Medicare health
insurance. The total financial loss varies, but I have seen
this scenario cost people as much as $90,000 in past-due benefits
alone! To be sure, that amount does not count the lost
future benefits which easily dwarfs the past due benefits.
I have commonly seen
the amount of lost past-due benefits exceed $40,000. Query…how many
financial decisions do you make in your life carry that carry an
opening price tag of $40,000 with the amount escalating as
you age? My guess is not very many.
Perhaps most heartbreaking is
that a small amount of education makes this problem entirely
avoidable!
What in the world am I
referring to? Answer: Not filing a social security disability claim
with the Social Security Administration (SSA).
Without exaggeration, the
decision to file a social security disability claim could be the
most important financial decision of your life.
I am not trying to
melodramatic, rather, I would like to have your undivided attention
for a few minutes. Reading this article and sharing it with family
members and friends should insure that no one you know will make
this mistake. Indeed, this article is also relevant to those who are
still working because one never knows what the future may bring;
nobody ever plans on becoming unable to work.
Mistake #1: Not filing a
claim because of your own denial
Many people do not file a
disability claim because often they are in denial about their
inability to work. I am not suggesting you should file a disability
claim the day after stopping work, in fact you shouldn’t. However,
after being off work for 6-12 months you should be in a position to
know whether you can return to and sustain full time work. Many
people wait to file a claim hoping they will recover and return to
work. Fortunately, people often need a few weeks or months to
recover fully.
However, the “wait and see”
strategy often lacks direction and becomes clouded due to our denial
mechanism. America was built on perhaps the strongest work ethic in
the world. Americans often take pride in driving themselves into the
ground despite what their body or mind tells them.
We don’t want to believe we
can’t work; it’s not fashionable in this country. Thus, most people
hope for years they will get better and delay or forget to
file a disability claim. All the while, they struggle financially
when they could be receiving disability benefits which would
significantly ease their stress making it easier to recover.
Instead, try this strategy …
Make a decision to file a disability claim the moment you or
your doctors believe you will be unable to work a minimum of 12
consecutive months. This could occur the day after you stop working,
or within 6 or 12 months of your last day at work. However, I
generally recommend waiting a minimum of 5 months to file a claim to
allow sufficient time for you and the doctors to see how your
condition progresses while not working.
This strategy also parallels
the eligibility requirement for SSA disability benefits. In order
to be eligible, you must be unable to work for a minimum of 12
consecutive months – you do not have to be permanently disabled.
Thus, when you expect to be off work for 12 consecutive months, file
your claim with SSA by calling (800) 772-1213 or by visiting a local
SSA office. There is no charge to file the claim and it takes only
minutes to do.
Mistake #2: Not filing a claim
because “I don’t want to live off the system”
Another common reason people
do not file a disability claim (when they should) is they “do not
want a government handout or to live off the system.” For those who
have worked at least 5 of the 10 years (the years do not need to be
consecutive) before they became disabled, this notion is pure
nonsense.
It is critical to understand
that you have a disability insurance policy with SSA and the federal
government. How did you obtain it? Remember all the money you paid
in for W-2 withholding or self-employment taxes to Uncle Sam? Some
of the taxes went to pay for SSA retirement and disability
insurance. Thus, you have already paid Uncle Sam the premiums
for a disability insurance policy. This insurance policy is no
different than your health, life, auto or home insurance … the
disability policy just happens to be with SSA.
Indeed, filing a disability
claim is not living off the system – it is collecting benefits from
an entity that forced you through mandatory withholding to pay for
the insurance in the first place! You wouldn’t dream of losing your
home to a fire and then not filing a claim with your insurance
company. Similarly, with regard to disability insurance, SSA is just
another insurance company.
The sooner you get over the
“living off the system” frame of mind, the sooner you will be in a
position to file your disability claim and make a smart financial
decision that is in you and your family’s best interest.
Tip: At the very
latest, file your SSA disability claim
within 18 months of becoming
disabled
The financial meltdown I
referenced earlier invariably occurs because people wait too long to
file a disability claim with SSA. Why does it matter when you file?
SSA will only pay monetary benefits for a maximum of 12 months prior
to the date of your application. This is true regardless of what
date you became disabled.
Because there is a six
calendar month waiting period before you are eligible for SSA
monetary benefits, you can wait a maximum of 18 months to file a
claim before it starts to cost you money each month.
By way of example, let’s
assume you became disabled on February 1, 2001, but did not file a
disability claim in 2001 because you thought you would get better
and return to work. You finally decide to file your claim in August
2002. However,
the most SSA will pay in retroactive benefits is 12 months prior to
your application date, or back to August 2001.
Assume SSA agrees with you and
finds you became disabled on February 1, 2001. The 6 month waiting
period means you are first eligible for benefits beginning August
2001. Since August 2002 is 18 months after February 2001, August
2002 is the absolute latest month you could wait and still obtain
all the monetary benefits you are entitled to.
The financial fiasco begins
when you wait more than 18 months after becoming disabled to file a
claim. Why? Again, because SSA only pays retroactive benefits for 12
months prior to your application date, regardless of the date you
became disabled.
To see how quickly you can
lose benefits, assume this time you decide to wait until August 2004
to file your claim. Let’s again assume SSA finds you became disabled
on February 1, 2001. Like the prior example, after the 6 month
waiting period, you remain eligible for monetary benefits
beginning August 2001.
But since SSA only pays
benefits 12 months prior to your application date, the first month
you are entitled to receive monetary benefits is August 2003.
The difference between when you were first eligible to receive
benefits (August 2001) and when you actually are (August 2003) is 26
months. If we assume your monthly benefit amount is $1,000, your
decision to wait two years to file your claim cost you $26,000 in
retroactive monetary benefits. Of course, you would continue to
receive the $1,000 per month into the future as long as you remain
disabled, but the $26,000 is forever lost.
The prior example illustrates
how expensive it is to wait beyond 18 months to file a disability
claim. Imagine how staggering the loss can be if your family’s
monthly benefit is $2,000, or if you never filed a disability
claim with SSA.
Conclusion
In summary, hopefully you
understand that you do have disability insurance with SSA and how
critical it is to file a claim in a timely manner. By waiting 5
months to file your disability claim with SSA, you will give
yourself and your doctors adequate time to determine if you will
likely be unable to work for a minimum of 12 consecutive months. You
will also protect all the monetary benefits you are entitled to when
or if your claim is approved by SSA. Finally, you will avoid a
financial trap that unnecessarily claims too many victims.
Remember to never quit and
keep fighting
for the benefits you deserve!
Scott E. Davis is a social security and long-term disability insurance attorney in Phoenix, Arizona. Mr. Davis represents clients throughout the United States. Although Mr. Davis has experience representing clients with a broad spectrum of physical and/or psychological disorders, the majority of his disability practice is devoted to representing individuals with chronic pain and chronic fatigue disorders. In almost every case, a fee is charged only if his client obtains benefits. Mr. Davis invites your questions and inquiries regarding representation.
Call (602) 482-4300, 8:30 am to 5:30 pm, Mon. to Thu., or email: info@scottdavispc.com.
Visit his website at
www.ScottDavisPC.com.
Back to List of Articles
| 
