If you live and or work in New Jersey, it is far better to discover the importance of long-term disability insurance before the need arises.

Buying a policy from a private insurance company can help you avoid four gaping holes – if you act in time.

The NJ state plan does not cover every resident, plus it stops making claim payments after only 26 weeks – leaving many people without any income support.

Social Security provides for subsistence living at best – plus, you do not qualify if you can perform any work.

Workers Compensation pays more generous benefits, but it could be hard to prove that your chronic medical condition happened while on-the-job.

Long-Term Disability in NJ

Most New Jersey residents first learn about how critical purchasing long-term disability insurance from a private company is after they trip over two big holes in the state-run program.

  1. They do have coverage under the state plan
    1. Self-employed and 1099 contractors
    2. Federal government employees
    3. Commuters to work in New York, Pennsylvania, or Delaware
  2. Their medical condition keeps them out of work beyond 26 weeks

Of course, you have to start coverage before becoming sick, hurt, or pregnant to make a difference. Otherwise, all you can do is warn a friend.

Not Covered

Many residents do not pay into the New Jersey state disability plan and, therefore, cannot collect from the program after they suffer a non-occupational accident or illness. They must buy a policy through a private company to enjoy similar wage protections as their neighbors.

Request a short-term disability quote for individuals if you are exempt from the state plan and are seeking benefits for future incidents. A new policy will exclude pre-existing conditions for one year. Plus, you must show evidence of good health to qualify.

Three features play a role in your premium costs.

  1. The monthly benefit is the amount the policy will pay
  2. The elimination period is the time before claim payments begin
  3. The benefit period is the maximum time the policy will pay claims

Please note, you can select a 7-day elimination period to mimic the state program, but choose to extend the benefit period by an additional year and a half – up to two years in total for this policy variation.

Extended Conditions

The NJ state disability plan stops making claim payments after twenty-six weeks for off-the-job accidents and illnesses. The six-month maximum duration creates a dilemma for people who remain unable to work past this point.

  • Unemployment compensation is not an option because you must be physically able to work to qualify
  • Social Security requires that you condition last at least one year

Therefore, buying long-term disability from a private company is an excellent way to fill this hole. A policy with a 6-month waiting period makes sense for people covered under the state plan.

The benefits would kick in a just the right time and could continue paying claims for one, two, five years, or up to age 65 – depending on what options you select when signing up.  Plus, the lengthier elimination period results in more affordable monthly premiums.

Permanent Disability in NJ

Many New Jersey residents learn a second painful lesson about the significance of purchasing long-term disability insurance privately after they suffer a permanent impairment. The second set of giant holes makes many wish they had taken care of the problem in advance. Of course, by now, it is too late.

  1. Social Security benefits are minimal and hard to get
  2. Workers Compensation offers no help with non-occupation losses

Social Security

Social Security Disability Insurance (SSDI) covers permanent non-occupational (off-the-job) medical conditions. However, the level of wage replacement benefits are usually insufficient to maintain your previous lifestyle in NJ, and qualifications are strict.

  • The average SSDI check of $1,250 per month barely covers the rent for a low-end apartment in a sketchy neighborhood
  • The SSDI qualification rules require that the person be incapable of any job that exists in the US economy[1]
  • Approval waiting times can take many months causing grave financial distress in the interim

Having a private long-term disability policy in force addresses these issues.

  • Monthly benefits replace up to 66% of previous income with amounts as high as $10,000 or more
  • The “own occupation” definition means you qualify even if you can adjust to a new lower-paying job available elsewhere

Worker’s Compensation

Worker’s Compensation (WC) also covers permanent disabilities but limits the claims to those suffering occupational (on-the-job) losses. Since WC pays out far richer benefits than Social Security, many people with chronic medical conditions hire attorneys to plead their borderline cases.

It is tough to prove the original cause of many permanent impairments. Therefore, many law firms advertise their expertise in fighting WC cases. The more generous benefits can continue for decades.

  • Cancer patients who had previous asbestos or toxic fume exposure
  • Back injuries caused by repetitive stress (Cervical Radiculopathy)
  • Hearing loss from loud machinery
  • Knee injuries caused by lifting and climbing

Buying a private long-term disability policy could mean not having to hire attorneys to prove that your job caused your impairment. Our bodies naturally break down as we age, so having this coverage in force makes sense.

Footnoted Sources:

[1] Social Security Office of Disability & Retirement Policy