Federal Benefits Spotlight: Understanding Disability Insurance

10.3.25: Audio automatically transcribed by Sonix

10.3.25: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome back to the Federal retirement Show. I'm your host Val Majewski with American Benefits Exchange. As always, really appreciate you taking the time out of your busy schedule to view our content. And that's what it's here for. It's here for you, the federal employee that's looking for information regarding your benefits and retirement situation. So you can sort through all of this stuff. And why? Because this is not readily available to you. Actually it is. You just need to know where to find it, but it's not given to you in the way it should have been when you first got hired. So what we're here to do is to provide the information, make dollars and cents of everything so you can ensure that you are set up properly as you work through your career and into retirement. And now I highly encourage you at this point, if if you like our channel, if you like our show, if you like this podcast, subscribe to it. Get notified when we have a new episode, and do me a favor, share it with your colleagues. You're a federal employee. I know who you work with. You work with other federal employees that need this information. So do me a favor. If you like it, share it. Uh, if you like it, also go back and view our other content. We've got nearly 150 episodes now of information for you to sort through. And there's a variety of topics that we've covered, including the one we're going to cover today.

Speaker1:
And there's questions that we've answered from conversations that I've had with federal employees just like you. And that's what a lot of these episodes derive from, are conversations that I'm having with federal employees on a daily or weekly basis, and issues and questions that they're dealing with that I'm sure others are dealing with, because there's several million of you federal government employees out there. I'm sure there's a few more that will have similar questions and are looking for these types of answers. And that's where we're back to today. Today, we're revisiting a topic that we covered a long time ago, and this stems from conversations that I've been having recently with federal employees revolving around disability and disability insurance. And what type of disability insurance does the government offer? What type of disability plans are available? What? What my benefits do I have to choose from when it comes to disability? And we're going to dive into that a little bit today, and we're going to go over what it's like to have disability insurance as a federal government employee. So when it comes to disability insurance, true disability insurance, I want to let you know that you really don't have it. As a federal government employee, you have several things, but you really do not have true disability insurance. And I've gotten asked by several federal employees over the years, but one recently was saying, where are my benefits? Can I elect my disability insurance? And we talk about life insurance with your family, and you've got your health insurance with your fhlbb.

Speaker1:
And people are asking, hey, did I miss it? Where do I elect the disability insurance? Because I gotta tell you, as a as a private sector employee, I do have the option within our, our benefits suite that I have through our company to choose our group disability insurance along with, you know, our group life insurance and participate in 401 K and get health insurance and very similar things to what you have as a federal government employee. But what you do not have is the option to choose true disability insurance from the government. I'll tell you what they do give you here in just a second. But that's where this conversation comes from. A federal employee was had a misconception that, hey, I missed it. I didn't sign up for it. I didn't realize I didn't choose it. My group disability insurance. I want to elect it. Is it too late to elect it? And I had to tell this person, I'm sorry. It's not that it's too late. It's just. It's not an option. You didn't miss anything. It's just not something that the government gives you as a benefit. But what do they give you? As I just mentioned, you don't have true disability insurance as a government employee. But what do you have? You have sick and annual leave, so you have sick leave and you have annual leave.

Speaker1:
We're going to cover each of those here in a second. And the other thing that you have that might be misconstrued as disability insurance is you have disability retirement. And I'll go over what those things are here in just a second. But what is what is your plan. Right. You have to understand the the options available and then you have to develop a plan. And recently we had an episode where we talked about long term care scenarios. You know what? If you're in a long term care situation, you have to go into a facility or you need to have care at your home. What is your plan? Are you putting a plan in place? Because I believe you have to have some sort of plan, not just a I'll wing it when we get there, but with when it comes to disability insurance, you don't want to just wing it when you get there. Because what is this disability insurance or or needing some form of some form of plan for disability means if I'm hurt, uh, if I have, or if I become disabled, or if something happens where I can't work, what is my job going to do for me? Or what is a plan that I can put in place in order to help recover or make up for the loss of income if I'm unable to work. So let's dive into it.

Speaker1:
These two things first, what the government gives you. I said you don't have true disability insurance, but you do have two things the government gives you while you're working. And that's sick leave and annual leave. So sick leave. What is it? Uh, this is something that you accrue every pay period. You accumulate four hours, uh, every pay period of additional sick leave. So for if you had accumulated it over a ten year period, that would be approximately six months of sick leave that you would build up. And this is not use or lose, right? It's something you can accumulate over time. There's no expiration date on your sick leave hours. But this is something that you use for sick leave purposes. And if people get disabled or become disabled while they're working, and this is generally an accident or an injury or something that happens outside of work, because if it happened inside of work or while you're working, that's where generally worker's comp will come and pick up, um, the need right there instead of needing disability insurance. But if you use your sick leave, uh, there's only so much that you can utilize before it runs out. And if you're unable to work after it runs out, well, then you can go on leave without pay. And that's not something that you want to do, because now you're not getting paid for the time while you recover. So sick leave. Um, it's good to accumulate that.

Speaker1:
But you also want to be a little frugal with your sick leave as well, right? Ensure that you're building this up for a reason so you can utilize it. I've, I've talked to federal employees that have never used an hour of sick leave their entire time working for the government. That's pretty impressive to not ever need to not go in for whatever reason, right? They may have used their vacation time, but they've not used their sick leave time, and that's impressive. But for people that you know, and I'm not saying use it, um, just, you know, little liberally. Right. But just they're not, uh, as frugal with it. They're not accumulating it for in case of emergencies or in situations where you're really going to need it, uh, it can come in handy if you save it up. And if you use it wisely. Okay. But it's there for you to utilize. Um, you know, if you're sick or injured. This is kind of like what the government gives you for short term disability. If you're out for a little bit of time, you can't go to work. You're using your sick leave hours. Now, you do get additional leave with your sick leave. You get a 12 weeks per year that you can use to care for a family member that is seriously ill or hurt, or whatever the case might be. You do have that option that is in there.

Speaker1:
I don't see federal employees, you know, taking advantage of that all the time of realizing that it's there. But that is something that you can utilize. Next up is annual leave, and you accumulate eight hours of annual leave biweekly. This is used for vacations, rest, uh, personal business or emergencies as well. And this is a use or lose type of benefit right. So it's use or lose which means at the end of the year, there's a maximum amount of benefits that you can carry over. Generally that's 240 hours of annual leave time that you can carry over. So you're accumulating this. And if you don't use it, you can lose it. So that's where people will generally use their vacation time because it is a true use or lose unlike the sick leave. But it can be for a variety of reasons, and it is subject to approval. Now, generally, you've got to submit for your annual leave and it has to get approved by a supervisor, manager, etc. um, but if you're using it in the right way, it should be approved, not an issue. But there are times again where you just you want to make sure you go through the proper channels, talk to your your superior to get that properly approved. But this can be used in conjunction with your sick leave if there were a disability. Now why am I talking about these things during the disability insurance episode of the Federal Retirement show? Because this is what is generally used by federal employees as short term disability, annual leave and sick leave time.

Speaker1:
If you're in a position where you would normally have disability insurance, that would take over well, as a federal government employee, if you don't have that in place, you have to utilize your sick leave and your annual leave to cover that time while you're disabled. And once that runs out, it runs out. Right now you're going again on leave without pay. So you want to make sure that, number one, you're accumulating some time and using it wisely. But two, what I'm going to talk about here in a little bit might be beneficial for you just for that. What if and to make sure you're hedging your bet and protecting against things happening now. The other piece of the puzzle is disability retirement. This is another option that you have as a federal government employee. But this is not your your short term disability need. This is probably more of your long term disability need, because this is where the disability is expected to last more than 12 months. You have to have at least 18 months of creditable service in order to even think about utilizing disability retirement. And this is subject to approval. Right. Um, the the agency that you work for has to exhaust all attempts to retain you, meaning putting you in a position that you can do some sort of work.

Speaker1:
Right. If it's not in your current position, because the disability has to be expected to last 12 or more months, it has to keep you from from being able to come back to work, and they have to exhaust every attempt to try to reposition you or put you in a position where you can can work. Now disability retirement, uh, if you apply for it and get approved for it, you're going to have to continue to show that you are still disabled in order to continue to get that disability retirement check. And when you do apply for disability retirement, you're going to be applying also for Social Security disability at the same time. So it's it's disability retirement. Right. This is not your disability insurance. This is disability retirement. And this has to be a pretty serious situation in order for you not to be able to work. Now, there are other parts of disability or other forms of disability benefits. For those that are ex-military, you might be getting a VA disability benefit. And that is not this. That is not what I'm talking about here. This is disability retirement as a civilian, let's say Fers employee, because most of you listening are going to be Fers employees. This is a benefit that you're going to apply for, and that you have to continue to show that you are still in that position where you are disabled, in order to continue to get the disability payment.

Speaker1:
Now, the disability payment will continue until age 62, where you should be eligible now for a regular retirement pension. Okay. So you will that will transition as we go. If you have questions about disability retirement please reach out to us. I didn't mention this earlier, but you can go to our website, Federal Retirement Show.com. You can fill out the form, request some information, request a full benefits and retirement review, get your questions answered. And one of our experts, if it's not me personally, will be reaching out in order to review all of that with you and answer your questions. So if you do have more questions on disability retirement, fill out that form on our website and we'll be happy to work on that with a on a one on one basis answering those questions. But I want to get to the end of the show. Right. Or the the the star of the show. Sorry. Uh, is disability insurance true disability insurance. Now we talked about again other benefits that you might have you might have uh, the from the government, you're most likely have the group health benefits from the government. But disability insurance is a lot of times things that private sector companies are offering that the government for some reason, just doesn't offer as a group benefit. So what if you want to cover this now, what is disability insurance going to cover? Unlike using your sick leave or annual leave, yes, your sick leave or annual leave will have you pay the same amount.

Speaker1:
Or have you earned the same amount you normally would. Um, while you're, you know, working disability insurance will supplement a part of that income, but it can last a lot longer. And you don't have to drain your sick leave or annual leave in order to do it. You don't have to exhaust all of it. So true disability insurance, you can get it for short term or long term. Generally, short term means anything up to one year, and long term means anything beyond one year, and that can be up to two years, five years until age 67. There's a number of ways that you can design these plans and customize them so that if you happen to be in a disability situation or disabled where you can't work and it activates this policy. Now, this plan will pay you a percentage of your income for the duration of of the term of the plan. So just understand what what that means is you can not only save up the the sick leave or the annual leave. You can now have the policy pay your income. That's what it's there for. So a lot of times disability insurance is also known as disability income insurance. Because if you become disabled and it triggers the policy and you satisfy the waiting period, which could be anywhere from, um, you know, seven days to 14 days, 30 days, 60, 91, 80, it could be a full year.

Speaker1:
If you just have a long term disability plan, you could customize this and design it. But once you're in that position, you're you're disabled, unable to work. You satisfy the requirements and you satisfy the waiting period. Now the policy kicks in up to generally 60% of your pre disability income for the duration of the policy. Now that could again be uh, for one year, two years, five years, sometimes until age 67 is when people would want to get it. It's pretty pretty long and comprehensive. But as long as you continue to be disabled and just like disability retirement from the government, you'd have to continue to prove that you are still in a disability situation. Um, the policy will continue to pay you, pay you that income on a tax free basis. So this is a true insurance policy. This is a true insurance plan. Now why am I talking about this? And, you know, it sounds like I'm trying to sell you disability insurance. I'm not. But I just want to let you know that you don't have true disability. You don't have the option of getting it. So if you do want it, if you want to ensure that your family's covered and you're going to collect an income instead of having to drain your leave, whether it's annual or sick leave, you can get a true insurance policy to cover that.

Speaker1:
To hedge to be a what if. And the cost may not be as expensive as you think, depending on the type of plan you design. I mean, it can be as expensive as you want it to be, but we can work within a budget and you can say, okay, what kind of plan can I put in place for 50 bucks a month, 100 bucks a month, whatever it might be, so that if I become disabled, my family and will not suffer because we'll now be able to get an income, we'll be able to hedge some of that, make back some of that money through the policy, through the true plan. And I know how long it would last for in the event that I'm in that kind of situation. So it is a true insurance plan. Now here's the other thing. Since it's not group insurance, like when you signed up for Begley initially or your health insurance initially, you didn't have to answer health questions because you're in a true group policy here. There are ways that you can get it on a guaranteed issue basis, meaning you don't have to answer health questions. But if you want the best bang for your dollar, you want the biggest plan that you can possibly design. You may have to answer a few health questions in order to get it. So you've got to be healthy generally to get one of these things. If you want to build a nice, big, comprehensive plan.

Speaker1:
Now, if you're not healthy, you can still get coverage, but you would just have to satisfy the waiting period before you turn the the plan on. They might talk about preexisting conditions and things like that. But if this is something of interest to you. Yeah, fill out that form on our website again, federal retirement Show.com. That way somebody can be in touch again, if it's not me personally, one of our experts across the country will reach out, perform a full benefits review, but make sure you specifically ask about the different disability insurance options if this is a concern of yours. If going on disability or being in a disabled situation, instead of draining your sick leave and going without pay, the plan will provide you some sort of income up to generally 60% of your pre disability salary, and that will come to an a tax free basis for as long as the plan says, as long as you are still in a disabled situation. So, um, I hope you found this valuable. I hope you found our information today on disability insurance. Um, you know, educational and a value to you because that's, again what we're here for, right? We want to provide, uh, information that I think is going to help. And through the conversations I'm having and the conversation I recently had with that misconception of somebody thinking they had an option to choose true disability insurance from the government, and it turns out they did not.

Speaker1:
You need to know what's available outside, because maybe you were thinking the same thing. Oh, I'll sign up for disability insurance at the next open enrollment, or I'll do this, this and I'll do this. That's not going to happen because this doesn't exist within the government plan. It's not within your suite of benefits. So if you do want something like this, you have to look outside and you have to know what your options are. And we can run those scenarios for you so you can see what's best for you and your family. But as I said earlier, if you like our content, go back and view the other episodes that we have also subscribe. Get notified when we have new episodes or new content come out. Share this with a colleague or multiple colleagues. We want to get as many federal employees listening to the federal retirement show as possible. And do me a favor. Make sure make sure that you fill out that form on our website so that you can go through a personal benefits and retirement review. Get all of your questions answered, see exactly where you stand, and ensure that you are set up properly as you go through your working career and into retirement. Again, my name is Val Majewski with American Benefits Exchange. You've been watching the federal retirement show and I look forward to seeing you on a future episode.

Speaker2:
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Speaker3:
We have more options for extended work lives today than we've ever had before, and Americans are taking advantage of them.

Speaker2:
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Speaker4:
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Speaker2:
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