Dealing with a disability is stressful enough. Between managing pain, medical appointments, and the emotional toll, the last thing you need is the added burden of figuring out how to get the financial support you need. It’s easy to get overwhelmed with the paperwork and conflicting information, leaving you feeling unsure of your rights.
If you’re not careful, you could end up missing out on benefits you’re entitled to or even face unexpected financial setbacks down the road. Don’t let this happen to you. Let our knowledgeable Muskegon injury lawyer discuss the different types of disability benefits, how each works, and the potential pitfalls you need to avoid, helping you get the compensation you deserve after an automobile or general negligence incident.
Types of Disability Benefits
If you’re unable to work due to an injury from an automobile accident or general negligence, several disability benefits might be available to help you financially. These include:
First-Party No-Fault Benefits
In cases of automobile negligence, first-party no-fault benefits come into play. These benefits are provided by your own insurance company and include coverage for wage loss. If you’re injured in a Michigan auto accident, your insurance covers up to 85% of your gross wage loss, helping you maintain financial stability during your recovery.
Short-Term and Long-Term Disability
Short-term and long-term disability benefits can be either employer-provided or privately purchased. STD covers a portion of your lost wages for a few months following an injury or illness that prevents you from working. LTD typically kicks in after STD benefits have been exhausted, providing coverage for several years or even until retirement, depending on the policy.
Social Security Disability
Social Security Disability is a federal program that provides benefits to individuals who are unable to work due to a severe, long-lasting disability. To qualify, you must meet specific Social Security Administration (SSA) criteria, including the inability to perform any substantial gainful activity. The application process can be complex, so having detailed medical records and seeking legal assistance from a qualified personal injury attorney can help streamline the process.
Workers’ Compensation
If your disability is the result of a job-related injury, you might be eligible for workers’ compensation benefits. These benefits are designed to cover medical expenses, rehabilitation costs, and a portion of lost wages, typically 80% of your after-tax average weekly wage, subject to maximum and minimum limits set by the state.
Why No-Fault Wage Loss Benefits Are Often Better
No-fault wage loss benefits are often more advantageous than other disability benefits due to their tax-free nature. Normally, a portion of your salary is deducted for various taxes, including Medicare, Social Security, and state and federal taxes. However, no-fault wage loss benefits are not subject to these deductions, meaning you can receive a payout larger than STD, LTD, and other taxable benefits.
For instance, if you earned $60,000 annually before an accident and received 85% of your gross wage loss through no-fault benefits, you’d get $51,000 per year or $4,250 per month. Since these benefits are tax-free, your compensation might even exceed your previous after-tax income. If your tax rate is 30%, your monthly after-tax income would be $3,500, which is less than the $4,250 you’d receive in no-fault wage loss benefits.
The Catch: Disability Plans Often Have “Offset” Clauses
Most STD and LTD plans, especially those provided by your employer, include “offset” clauses. These clauses basically give the insurance company the right to reduce your disability benefits if you’re receiving income from other sources. It’s their way of ensuring you’re not receiving more money than your actual income loss.
These offset clauses are often triggered if:
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- you receive no-fault benefits due to automobile negligence
- you qualify for Social Security Disability benefits
- your disability is work-related, and you receive workers’ compensation
- you win a lawsuit or receive a settlement related to your injuries
In some cases, insurance companies might even place a lien on your future settlements in a personal injury lawsuit, meaning they have the legal claim to a portion of the money you receive to reimburse themselves for the disability benefits they paid you.
That’s why it’s essential to understand the specific terms of your disability policy. A local Muskegon injury lawyer who is well-versed in automobile negligence and general negligence cases can help you review your policy and advise you on how to proceed to protect your interests.
What Should You Do?
If you’re considering or already receiving disability benefits, here’s what you should do to protect your financial interests:
Read the Fine Print
Carefully review your STD and LTD plan documents, including the Summary Plan Description (SPD). Pay close attention to any language related to coordination of benefits, offsets, or liens. Don’t hesitate to ask your HR representative or insurer for clarification if anything is unclear.
Be Aware of Potential Payback
If you’re receiving other benefits, such as no-fault wage loss, workers’ compensation, Social Security disability, or other forms of income replacement, understand that you might have to repay some or all of your STD or LTD benefits later.
Know Your Minimum Payments
Some disability plans guarantee a minimum payment, even if offsets reduce the amount you’d typically receive. Find out if your plan has such a provision and what the minimum amount is, as it could provide a financial safety net.
Consider a Separate Savings Account
If you’re uncertain about potential payback obligations, consider depositing your STD or LTD benefits into a separate savings account. That way, you won’t accidentally spend money that you might have to reimburse later, avoiding financial hardship.
Keep Life Simple With Expert Muskegon Injury Lawyers to Guide You
Understanding the ins and outs of disability benefits, especially after experiencing an injury from an automobile accident or general negligence, can be a lot to handle. But remember, the more you know, the better equipped you are to make the right decisions for your financial well-being.
If you’re unsure about how disability benefits work or worried about potential pitfalls, don’t worry – Shafer Swartz PLC is here to guide you. Our seasoned Muskegon injury lawyers can help review your insurance policies, explain your options, and advocate for your rights to ensure you receive the maximum benefits available.
Don’t let the stress of dealing with disability benefits overwhelm you. Contact us today at (231) 722-2444 or here to schedule a consultation. We’re ready to provide you with expert guidance and support so you can focus on your recovery and move forward with confidence.