Private and Group Disability Insurance

• Insurance companies sell different types of disability insurance plans that cover workers for different lengths of time. The two main disability insurance plans available are short-term disability (STD) and long-term disability (LTD). STD plans cover individuals for periods ranging from 13 to 104 weeks while the coverage for LTD plans lasts for several years or permanently. The same coverages are also available in group plans sponsored by professional associations and employers. Benefit amounts vary by insurers. Most plans replace between 50 to 66 percent of the insureds' salaries, according to McClaren & Associates.
  
  

State Disability Insurance

• State disability insurance plans pay benefits to eligible workers for temporary periods of time. Only five states sponsor this type of coverage: Rhode Island, New Jersey, California, Hawaii and New York. Workers fund these disability plans through payroll taxes taken out of their checks. Each of these states pays its workers differently. For example, New Jersey only covers two-thirds of its workers' pre-disability wages while Hawaii and California replace 58 and 55 percent, respectively.
  
  

Social Security Disability

• The Social Security Administration (SSA) runs an entitlement disability program that pays workers if they cannot work for at least one year or longer. Applicants must meet the requirements of having qualifying disabilities as well as worked and made enough over their lifetimes to pay into Social Security. Unlike state disability insurance coverage and private and group disability plans, applicants do not have to pay premiums in exchange for coverage. Workers receive benefits based on their work histories which include their lifetime earnings. Each year, eligible workers receive statements detailing their payment amounts if they were to become disabled. The average Social Security disability check is $1,063 per month as of 2011.
  
  

Working and Receiving Benefits

• Disability insurance allows individuals to work while receiving benefits as well. Group and individual disability plans pay residual benefits which are payments that cover the drop in insureds' incomes due to their medical conditions. Some residual benefits pay insureds 50 percent of their full disability payments if they suffer 20 percent or more in wage losses. State disability plans decrease their benefits based on how much insureds earn while working. California reduces benefits dollar for dollar after the insureds' current earnings, combined with their benefit amounts, top their pre-disability salaries. Social Security eases individuals back into the workforce by providing trial periods (60 months) and extended periods of eligibility (36 months) where they can test their abilities to work while receiving full benefits.