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How do you survive while waiting for a disability approval letter from Social Security? The application and review process can drag on for months or years. Meanwhile, the regular bills keep piling up.
No news is good news while looking forward to the administrative law judge (ALJ) to make a decision – because denials often come faster than approvals.
However, what do you do about income, and how do you pay your bills in the meantime? Emergency funding in the form of loans could help while you cannot work. Also, government welfare and entitlement programs could provide some financial help in the short-term.
Emergency Disability Funding
People may be able to tap into emergency funding sources while waiting for a disability approval letter. However, to borrow money, you must show that you have a source of future income. Otherwise, the lender will deny your loan request based on your inability to repay the obligation.
Request an emergency loan from a private lender. You must have a future income stream aside from pending SSDI benefits. The earnings sources supporting the crisis funding could come from short-term disability or Worker’s Compensation insurance. However, pre-settlement is rarely a sound eligibility criterion. Interim assistance and expedited payments are a better alternative for SSI applicants.
Short-term disability loans rely on the claim checks from private insurers and state government agencies to support repayment. Short-term disability insurance replaces a portion of income for off-the-job (non-occupational) accidents and illnesses.
However, very few people will qualify for short-term disability loans while waiting for Social Security approval. Most people do not have the coverage needed to support repayment.
- Only six states require temporary disability insurance
- You must purchase private short-term disability insurance before the need arises
Settlement loans for Worker’s Compensation claims rely on future claims checks from the private insurance company contracted by your former employer. Worker’s Compensation pays temporary and permanent wage replacement benefits for on-the-job (occupational) accidents and illnesses.
More people qualify for settlement loans for Worker’s Compensation while waiting for Social Security approval. All 50 states make it mandatory. However, occupational incidents are far less common than off-the-job accidents or sicknesses.
Social Security disability pre-settlement loans may be challenging to find through private lenders. Private pre-settlement finance companies offer non-recourse loans when they can review case details from an attorney, determine that the plaintiff has a strong case, and assign benefits payments to them. However, technical and legal issues make it very unattractive for private companies to support this type of transaction.
- Social Security denies 70% of initial SSDI applications for a variety of reasons. Also, the appeals process can be lengthy, making it challenging to project repayment schedules for any pre-settlement advances.
- Social Security lump sum back payments go to the claimant rather than the attorney. Pre-settlement companies trust that lawyers will disperse the funds in line with the contract – but not the claimant who probably is experiencing financial hardship.
Interim Public Assistance
Interim Public Assistance provides temporary loans to people who are unable to work due to a disability and have a high probability of receiving federal Supplemental Security Income (SSI). You apply to borrow money at your state Department of Health and Human Services or Department of Social Services.
You reimburse any interim public assistance from your SSI back pay benefits check. Expect the responsible agency to deduct the reimbursement amount automatically.
However, this emergency cash assistance is only available to pending SSI recipients. People applying for SSDI do not qualify for an interim public program.
The federal government supports four different types of accelerated payments for Supplemental Security Income (SSI) applicants. Note: these faster benefit options do not apply to SSDI.
- Presumptive payments could advance up to 6 months of possible SSI benefits. You do not have to repay presumptive payments if later denied. Apply through your local disability determination agency.
- Emergency advance payments help new applicants facing financial hardship whose SSI benefits are delayed or not received. You repay emergency advance payments from up to 6 future benefit installments.
- Immediate payments help new applicants and existing recipients facing delays in SSI benefits. You repay immediate payments from your next installment.
- Expedited reinstatement pertains to people whose SSI benefits stopped because you worked and had earnings in the past. You may get six months of provisional benefits during the redetermination process. You do not have to repay expedited benefits if Social Security later denies your claim for reinstatement.
What to Do About Income
What can you do about replacing income while waiting for a disability decision? We all need money coming in to cover our daily living expenses. Savings, if any, deplete rapidly when it is your sole source of support.
Fortunately, some options do exist to help during your financial hardship.
Temporary Disability Benefits
Temporary disability insurance is a “hit or miss” form of income benefits. State-based temporary disability programs replace a portion of earnings (with a hard dollar cap) for six or twelve months. However, this entitlement exists in only six states as of 2019.
Collecting unemployment compensation is not the ideal way to replace your income when applying for disability. The first rules for unemployment benefits in all fifty states conflict directly with Social Security eligibility requirements.
- Physically able to work
- Available for employment
- Actively seeking a new job
Once again, speak with your lawyer before filing for unemployment benefits. You may not want to send conflicting signals to the administrative law judge deciding your case.
Working a Job
Ask your attorney whether you can work to earn income while the administrative law judge reviews your case. The Social Security eligibility rules are complex, and you do not want to put your benefits at risk or push out the onset date of your claim.
Speak with your lawyer about these two work-related tests before taking a job for pay.
- Substantial Gainful Activity is work that brings in over a certain dollar amount per month
- 12-Month Duration Requirement links eligibility to the expected duration of your condition
The earnings limit for SSDI applicants is $1,220 monthly in 2019 ($2,040 for blind applicants). Plus, there are different rules for business owners whose earning may fluctuate month-to-month.
Supplemental Security Income
Applying for Supplemental Security Income (SSI) is a possible funding source while your SSDI decision drags on. However, the restrictive SSI eligibility requirements may eliminate many applicants from tapping into this resource.
- Resource limits are $2,000 for an individual and $3,000 for a couple
- Income limits count earned, unearned, in-kind, and deemed sources
On the other hand, applying for SSI has advantages. First, there is no five-month waiting period before benefits begin as with SSDI. Also, you can take advantage of the interim public assistance loans noted above.
Expedited disability determination is perhaps the best approach to emergency income because you do not have to reimburse an agency or private company. Expedited resolution means that Social Security makes an approval decision in less time than usual.
- The Quick Disability Determination (QDD) process uses a computer-based predictive model to screen initial applications. The model identifies cases where a favorable determination is likely, and complete medical evidence is available.
- Compassionate Allowances (CAL) are a way to identify diseases and other medical conditions that meet Social Security’s standards for disability benefits by definition. These conditions primarily include certain cancers, adult brain disorders, and several rare disorders that affect children.
How to Pay Bills
How do you pay your bills while waiting for a disability approval letter? You still need a home to live in, food to eat, and clothing to wear. Now add doctor and hospital costs, because you have a medical condition that prevents you from performing your full-time occupation.
A combination of reduced income and extra medical expenses is a recipe for financial hardship. Cut costs to the bone, and look into welfare, health insurance subsidies, and utility assistance for help.
Welfare is a sometimes a viable source of government help paying your bills while waiting for disability benefits to start. Welfare programs base eligibility on household income. Therefore, people unable to work due to disability often meet the earnings criteria.
The United States government provides six different programs that fall under the “welfare” umbrella.
- Temporary Assistance for Needy Families
- Medicaid (see below under health insurance)
- Supplemental Nutrition Assistance Program
- Supplemental Security Income (see above)
- Rental Housing Assistance
- Earned Income Tax Credit
Temporary Assistance for Needy Families (TANF) is a welfare program that helps needy families with children to achieve self-sufficiency. However, one of the program objectives is to “promote job preparation, work, and marriage.”
You need to have a job to qualify for TANF. Fortunately, there are exemptions from the work requirements rule in many states. For example, people in Pennsylvania with physical or mental health problems that prevent them from working do not have to get a job or do the work activities.
Food stamps are welfare government program that could help pay some of your bills. The Supplement Nutrition Assistance Program (SNAP) provides financial help for low-income families to buy meals. You must meet two sets of qualifying criteria.
- Household income tests – if you are the only provider in the household, you will probably meet the criteria. You may not qualify for food stamps if another household member continues working and pushes earnings above the limits.
- Household resource limits – If your household has more than $3,250 in countable resources, you do not qualify for food stamps, even if you have no salary. You could be eligible after spending down assets.
People on short-term disability may find it more challenging to qualify for food stamps. First, the short-term disability benefits may count towards income. Second, your state agency may use look back periods that include recent times when you were still working.
Rental Assistance is another welfare program that can help with housing expenses. Having a roof over your head is a vital element when dealing with a severe medical condition that prevents you from working.
The U.S. Department of Housing and Urban Development (HUD) administers this program in cooperation with each of the states. HUD offers three forms of rental assistance for people with low incomes and few resources.
- Privately owned subsidized housing
- Public housing
- Section 8 housing choice vouchers
Although technically not part of Welfare, several federal government agencies do provide homeowners help with mortgage payments via several programs.
- The Home Affordable Modification Program (HAMP)
- Principal Reduction Alternative (PRA)
- Second Lien Modification Program (2MP)
- Home Affordable Refinance Program (HARP)
Having proper health insurance is crucial to pay your medical bills while your disability decision is pending. Also, the judge deciding your case will want to see that you are under the care of a doctor and taking prescribed medications.
However, the premiums can be costly and difficult to afford with little money coming in. These resources could help pay your health insurance premiums.
- FMLA rules require employers to continue funding group health benefits for twelve weeks after an employee’s disability begins.
- Medicaid is a joint federal and state funded health insurance program for low-income and needy people. Apply for this public benefit if you meet the income and resource criteria. Every state has different rules on who qualifies.
- Private health insurance purchased on a state exchange comes with a possible income-based premium and or cost-sharing subsidy Take this step if your household earns too much to qualify for Medicaid.
- Medicare is not a good health insurance option unless you are over the age of 65. Medicare has a two-year waiting period for people after SSDI approves their case.
Utility assistance programs are yet another resource to help pay bills while waiting for disability to kick in. The federal Department of Health and Human Services (HHS) offers the Low Income Home Energy Assistance Program (LIHEAP) through its Administration of Children and Families agency.
ILEAP provides federally funded assistance through the states to help low-income families manage the costs of staying warm in the winter and cool in the summer.
- Help to pay your heating or cooling bills
- Emergency services in cases of an energy crisis, such as utility shutoffs
- Low-cost home improvements that make your home more energy efficient
Contact your local LIHEAP office to see if you qualify.
Deferment & Forbearance
Deferment or forbearance of existing loans is a possible answer to bill paying while waiting for a disability decision. Both alternatives allow you to suspend making payments temporarily or reduce the size of each installment if you are experiencing economic hardship. The process works slightly differently for student loans versus mortgages.
- Student loan deferment is the best option, as the federal government will pay the interest on your subsidized loans.
- Student loan forbearance is available if you do not qualify for deferment. Interest will continue to accumulate.
- Mortgage deferment and forbearance is the same thing. The mortgage company may agree to lower your monthly mortgage payments for a set period.