Disability insurance for teachers

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PostPosted: Tue Jul 06, 2010 10:40 am   Post subject: Disability insurance for teachers  

I'm a teacher in MD, do I need disability insurance too?


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PostPosted: Tue Jul 06, 2010 4:57 pm   Post subject:   

Need a lot more information than this. A quick answer is it's highly likely.



Are you public or private school? This makes a huge difference lots of times. Depending on the retirement and pension benefits offered by the state of Maryland, there may be disability benefits built into the retirement plan that covers public school teachers. Still, depending on how long you've been a teacher, you may or may not be eligible.



You may have a group plan through your employer, but it's may lack certain coverage you'd want.



A generally good question to ask yourself is if you have the resouces to be able to retire tomorrow. If the answer is no, you should take a serious look at disability insurance.

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PostPosted: Tue Jul 06, 2010 11:56 pm   Post subject:   

Do you work because you need the income? If the answer is "yes", you need coverage.


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PostPosted: Wed Jul 07, 2010 5:44 am   Post subject:   

I'm sure there are some districts that mandate supplemental policies (including disability coverage) to be offered to teachers. Why don't you check up with your state requirements!



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PostPosted: Fri Jul 09, 2010 9:16 am   Post subject:   

I thought, a teacher becomes eligible for disability coverage by paying SS taxes. Yes, that means your condition has to be one mentioned in their list.

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PostPosted: Sat Jul 10, 2010 4:33 am   Post subject:   

Quote:
I thought, a teacher becomes eligible for disability coverage by paying SS taxes. Yes, that means your condition has to be one mentioned in their list.




Everyone who pays FICA taxes becomes eligible for SSDI. SSDI though, is very limited in benefit and is quite difficult to get an approved claim for, though if you fight long and hard enough will eventually most likely pay something.



The original post was speaking to the idea of individual DI coverage, which can be tricky with teachers based on their benefits under their pension plans, which often include a form of disability insurance. Getting individual coverage then creates a potentially overinsured individual.
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PostPosted: Sat Jul 10, 2010 5:56 am   Post subject:   

Is it true that there are certain districts that don't need teachers to pay Social security taxes? I've heard that these teachers may opt for a Teacher retirement system (TRS) that mandates a form of disability insurance coverage for them.

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PostPosted: Sat Jul 10, 2010 7:31 am   Post subject:   

I think the disability insurance offer under such Teacher retirement system may vary depending upon the state norms. The coverage may also have small differences in each state.

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PostPosted: Sat Jul 10, 2010 4:50 pm   Post subject:   

Quote:
Is it true that there are certain districts that don't need teachers to pay Social security taxes? I've heard that these teachers may opt for a Teacher retirement system (TRS) that mandates a form of disability insurance coverage for them.




No, earned income does not get to avoid FICA taxes, with two exceptions. Students who are at least enrolled on a part time basis are usually exempt from owing the social security part of FICA. Additionally the social security part of FICA is only applied to earned income up to $106,800 per income earner (this number usually changes each year as it's tied to CPI-U). The medicare portion has not limit and is always paid.
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PostPosted: Sat Jul 10, 2010 4:52 pm   Post subject:   

Quote:
I think the disability insurance offer under such Teacher retirement system may vary depending upon the state norms. The coverage may also have small differences in each state.




Key word from before is usually, as in usually this benefit is offered under retirement plans. There are some that don't. We would need to look into Maryland's specifics. If the OP is interested, I know a large operation of Disability/Financial Planning experts in the Maryland, who would likely know the rules rather well.
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PostPosted: Mon Jul 12, 2010 5:42 am   Post subject:   

Quote:
No, earned income does not get to avoid FICA taxes




If a public employee is covered by a defined benefit plan that requires contributions by both the employee and the employer in equal amounts totaling at least 15.3% of pay, such as California's PERS and STRS programs, the pension plan may have filed for an exemption from Social Security, and employees then do not make the 6.2% FICA contribution, unless they voluntarily agree to "opt in". All employees pay the 1.45% Medicare contribution.



In such pension plans, there is an integration of benefits provision that reduces the pension plan's obligation to the retiree $ for $ for every dollar of benefit received in Social Security retirement income. Retirees either get the pension benefit, the Social Security benefit, or a combination, as stated in the pension plan documents.



The original question, however, concerned the need for disability income insurance. This is often described as "the forgotten need," meaning we think about and cover all of our various insurance needs, except our paychecks, believing that Workers' Comp will cover it, failing to recognize that we may have an even greater likelihood of being injured or becoming ill OFF THE JOB, and would have little or no income as a result.



Those who believe Social Security's version of Disability Income Insurance will cover them need to get a grip on reality. The SS definition of disability includes three key words that disqualify almost 80% of first time applications for benefits: "Substantial Gainful Activity". If there is ANYTHING a person can do in the American economy in 2010 that could pay them at least $1080 per month (less than the federal poverty wage), that person is disqualified from receiving SSDI.



A closer reading of the rules states that the fact that the "activity" SS believes they can perform does not exist in the general vicinity of the person's residence is not a reason to qualify them for a benefit -- read: you'll have to move to the area where the activity is available, then demonstrate that you cannot do it, or that it does not provide the $1080 per month in order to qualify. Utterly ridiculous!



Having an individual own occupation disability income policy will provide a short or long term income benefit if the insured becomes disabled and cannot perform the substantial duties of their occupation with their disability. Far easier to qualify for than SSDI. And probably pays more money, too, at 60% of pretax wages. It should be an "occupational" policy, meaning coverage on or off the job, compared to a "nonoccupational" policy that only provides a benefit if the insured is not entitled to workers' compensation.


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PostPosted: Tue Jul 13, 2010 2:42 am   Post subject:   

Quote:
a public employee is covered by a defined benefit plan that requires contributions by both the employee and the employer in equal amounts totaling at least 15.3% of pay, such as California's PERS and STRS programs, the pension plan may have filed for an exemption from Social Security, and employees then do not make the 6.2% FICA contribution, unless they voluntarily agree to "opt in". All employees pay the 1.45% Medicare contribution.



In such pension plans, there is an integration of benefits provision that reduces the pension plan's obligation to the retiree $ for $ for every dollar of benefit received in Social Security retirement income. Retirees either get the pension benefit, the Social Security benefit, or a combination, as stated in the pension plan documents.




This doesn't make sense to me. The only two ways to receive a social security benefit is to either pay FICA tax or be entitled to a benefit by being a widow/widower (we'll ignore children for a minute since they are not likely to receive pension benefits). Why would anyone voluntarily pay a tax that will reduce their pension benefit?
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PostPosted: Tue Jul 13, 2010 3:00 pm   Post subject:   

Quote:
Why would anyone voluntarily pay a tax that will reduce their pension benefit?




Because there have been persistent rumors circulated to members of the CAL PERS and STRS retirement plans over the past 10 years that the Legislature will eventually permit them to collect both their state pension AND Social Security Retirement, if qualified. Currently, most PERS and STRS participants do not pay FICA.



The "possibility" has been used as an attractant to persons who are fully insured for Social Security to switch careers to teaching. Earn money, get a pension (only need to teach for 5 years to qualify for a lifetime benefit), and keep your Social Security, too, is pretty powerful. Just hasn't happened in California yet.



Those who do receive a reduction in their PERS benefit when they start collecting Social Security Retirement benefits. But both programs allow a participant to retire at age 55 with a lifetime benefit. Assuming delaying the start of SSR to age 70, this means 15 years of collecting the maximum pension entitlement (based on age, years of service, and salary), followed by collecting the maximum SSR benefit.



Only the current financial "crisis" in California prevents the full double-dip from happening. But it's come very close to passage several times.


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PostPosted: Sat Apr 09, 2011 1:42 am   Post subject: ymkJBdqTMzRp  

Insurance teachers.. Retweeted it Smile


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PostPosted: Sat Apr 09, 2011 6:31 am   Post subject:   

I do agree on one point - the chances are more that we may get injured off the job than our chances of getting injured at work. Only those of us who're in a risky profession may have more risk of getting injured at work.

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