When your employment is interrupted, it is important to act quickly to replace as much of your income as you can. Each day that passes without money earned puts you and those who rely on you for financial support in greater risk of running into money troubles. And applying for the wrong income replacement program can waste many more precious days, weeks, or even months.
Main Income Replacement Programs
The three major income replacement programs are:
- Unemployment insurance. This program provides some financial help if you lose your job, temporarily or permanently, through no fault of your own. (See Nolo's articles on Collecting Unemployment Benefits for more information.)
- Workers’ compensation. When you cannot work because of a work-related injury or illness, this is the program that is most likely to provide you with replacement income promptly. It may also pay the medical bills resulting from a workplace injury or illness; compensate workers for a permanent injury, such as the loss of a limb; and provide death benefits to the survivors of workers who die from a workplace injury or illness. (See Nolo's articles on Workers' Compensation Benefits for details.)
- Social Security disability insurance. This is intended to provide income to adults who, because of injury or illness, cannot work for at least 12 months. Unlike the workers’ compensation program, it does not require that your disability be caused by a workplace injury or illness. (Learn all about Social Security Disability.)
Dual Payments for Disabled Workers
Many disabled employees qualify for benefits under both workers’ compensation and Social Security disability insurance. There is nothing illegal about collecting from both at the same time if both claims are valid.
However, if you qualify for benefits from both programs, the total benefits you receive from both programs cannot equal more than 80% of your average earnings prior to becoming disabled.
Some states also allow disabled workers to collect both unemployment and workers’ compensation benefits at the same time. When in doubt, file truthful claims for any program for which you might logically qualify and let the system decide whether you are eligible for benefits under one or both.
Other Income Replacement Options
Although the government insurance programs covering unemployment, workplace injuries, and permanent disability are the most substantial sources of replacement income for people who are out of work, there are other options.
While you were working, you or your employer may have been paying into a private disability insurance program. If you were paying for it through payroll withholdings, or if your employer paid the full premium, you may have forgotten that you even have this coverage.
Coverage and eligibility for benefits differ among policies and companies. Review the employee policy manual or packet that your employer gave you when you took the job to see whether any private disability coverage is described there. If not, the people who handle benefits for your employer should be able to help you determine whether you have such coverage.
A few states—including California, Hawaii, New Jersey, New York, and Rhode Island—offer disability benefits as part of their unemployment insurance programs. Typical program requirements mandate that you submit your medical records and show that you requested a leave of absence from your employer. Some may also require proof that you intend to return to your job when you recover. Call the local unemployment insurance and workers’ compensation insurance offices (or visit their websites) to determine whether your state maintains this kind of coverage.
Some retirement plans allow withdrawals prior to retirement for emergency purposes. The administrator of your plan can advise you on whether you have this option.
Although many people incorrectly think that the federal food stamp program is a form of welfare, it is actually financed by the U.S. Department of Agriculture as a way of increasing the demand for food products. You do not have to be receiving welfare to qualify for food stamps. In fact, the eligibility formula for food stamps makes them available to many people who are not all that poor. If your income is eliminated or significantly reduced for several months because you are not working, check on whether you are eligible for food stamps.
To locate the agency in your area that issues food stamps, scan the county government offices listings in the telephone directory. Typically, you will find a listing for food stamp information under a category such as human services. If not, call your local office of the U.S. Department of Agriculture. Or get more information about the USDA’s Food and Nutrition Service online at www.fns.usda.gov.
There are programs that provide income to veterans of the U.S. military who become unable to work because of a disability, even if that disability is not a result of military service. Additional specialized laws also provide veterans returning from service with the right to return to their jobs without losing seniority or benefits.
However, laws protecting veterans’ rights, particularly their job rights, are passed and repealed with the changing of the political winds—making it tough to keep current. Your local Department of Veterans Affairs office, listed in the federal government agency section of the telephone directory, can give you details. Regional offices are also listed on the VA’s website at www.vba.va.gov.
Usually known as SSI, this program provides money to disabled people who have low incomes and very few assets. Unlike Social Security disability insurance, it does not require you to have worked under and paid into the Social Security program. If the circumstances surrounding your inability to earn income are so unusual that you have fallen between the cracks of the larger programs, SSI may be the one program that provides you with some income.
You can get details and file a claim at your local Social Security Administration office. (Find basic information on the program in What Is Supplemental Social Security Income?)
The U.S. Department of Labor also runs a federal program that provides money benefits to victims of anthracosilicosis—an occupational disease often suffered by miners. Typically known as black lung, the disease is caused by long exposure to coal particles in the air. It frequently leaves miners unable to work because they cannot breathe properly.
The benefits under this program are also payable to dependents of black lung victims, so the best way to research your eligibility for those benefits is to investigate details of the program at your labor department office. Or look for information and contact details at www.dol.gov.
Disaster Unemployment Assistance (DUA), also referred to as Disaster Relief and Emergency Assistance, is a federal program that provides temporary financial assistance to individuals unemployed as a result of a major disaster declared by the president.
Common casues of disasters are severe storms, flooding, wildfires, and earthquakes. For a current list of the declared disasters, see the Federal Emergency Management Agency’s website at www.fema.gov/news/disasters.fema.
To qualify for DUA, you must meet two major requirements. You must be out of work as a “direct result” of a major disaster. And you must not qualify for regular unemployment insurance (UI) from any state. Once found to be eligible for DUA, workers must actively look for work and accept suitable work offered them, not unlike UI recipients (unless the state opts to temporarily suspend its work search requirements for some workers).
Like Social Security, most people think that Medicare is reserved solely for elderly people. But, in fact, it also covers disabled people and can be a good way of coping with medical bills when an injury or illness prevents you from working.
However, you should be aware that the federal government has been tightening the restrictions for Medicare for those less than 65 years old, so this type of coverage may be difficult to secure.
For more details on this program, call the Medicare information line: 800-952-8627 or go to www.medicare.gov.