Disability insurance replaces at least a portion of your income if you are unable to work due to an illness, like severe asthma or diabetes, or an injury, like nerve damage or loss of a limb. You can use your disability income to pay for a number of things, including recurring bills like your mortgage, electricity, and even your health insurance premiums.
But your disability insurance benefits don’t cover your medical expenses directly. For example, you couldn’t have your doctor bill your disability insurance directly after a visit the same way they bill your health insurance coverage.
How are health insurance and disability insurance different?
Health insurance and disability insurance are both important types of insurance, especially in case of an emergency, but they are very different types of insurance coverage.
Health insurance
Health insurance pays for your medical expenses. Depending on your coverage, your health insurance policy will likely pay for some combination of annual check-ups with your PCP, sick visits, urgent care and emergency room visits, lab work, X-rays, prescription medications, and surgical procedures.
Health insurance coverage varies based on a number of factors, so the only way to know what is and is not covered by your health insurance is to read your policy carefully. You can always call your health insurance company for assistance if you have questions about your coverage.
Health insurance does not cover lost income due to injury or illness, so if you’re out of work after a car accident, health insurance can cover emergency room bills or physical therapy, but it won’t pay you for the time you’re not working.
Disability insurance
Disability insurance helps replace your income if you are unable to work after an illness or an injury. You may need short-term disability insurance if you have a broken leg or a pregnancy-related health concern that prevents you from working, while long-term disability insurance can pay out for years if you have an illness like chronic fatigue or arthritis or if a disabling injury, such as permanent blindness or paralysis.
Disability insurance does not cover medical expenses. Think of it more like a financial safety net. You may not ever need to use it, but just in case you’re injured and can’t work, you’ve got a plan in place to make sure you keep earning an income.
Do I need health insurance while on disability?
Yes, you still need health insurance while on disability. For people who are receiving payments from a group disability policy or an individual policy, you’ll likely need to talk to your employer about how long you’ll have access to your health insurance coverage while you are not able to work.
You may need to sign up for COBRA or purchase a private health insurance policy through the marketplace. If your disability insurance coverage is provided by the state or your benefits are paid by Social Security, you may be approved for Medicare or Medicaid.
What does disability insurance NOT cover?
Disability insurance does not cover things intended to be covered by other types of insurance, like medical expenses or property damage. It also does not cover anything excluded by your policy. Common disability policy exclusions include:
Purposeful injuries
Criminal activities
DUI/DWI-related injuries
Frequently asked questions
What is covered with disability insurance?
Disability insurance replaces a percentage of your income if you are unable to work due to an illness, like arthritis or chronic fatigue, or an injury, like a broken bone or a severe burn.
Why would someone choose to get long term disability insurance even if they already have health insurance?
Health insurance and disability insurance cover different things. Disability insurance replaces a portion of your salary if you’re sick or injured and unable to work because of it. Health insurance doesn’t replace your salary, it pays for medical expenses like doctor visits and lab tests.
What type of health insurance plan covers medical expenses and disability income for the insured?
While there are some rare instances where health insurance might pay for some living expenses (for example, Medicaid provides some coverage for long-term care in a nursing home) health insurance plans only pay for medical services. A separate disability policy is required to have money to pay the bills if you are disabled by injury or illness.
