Federal Disability Coverage

[Anonymous]

I am a fed and I just got an e-mail that disability coverage is having an open season. The prices seem a bit high.

We save 15% of our income for retirement so my thinking is that we could always use those funds if one of us became disabled (there are websites that discuss taking money out of a 401(k) if you retire early, which is effectively what this is). We both have about $300K - $400K saved in our respective retirement accounts, so I'm not sure that it's worth paying $13 a pay period to get $1,000 in disability, when we could just take $1,000 a month out of our retirement accounts (at 4% of $300K).

Thoughts? Recommendations? TIA!

[Anonymous]

I'm confused by this. I thought all feds were covered by FERS Disability Retirement... it wasn't something you needed to sign up for during open season.

[Anonymous]

OP is probably talking about long term care insurance.

[Anonymous]

OP, can you confirm what you are asking about?

Is it some kind of supplemental disability insurance? Or long term care insurance? ($1000 a month won't buy you a lot of long term care...)

My husband is a fed who is retired on disability. It is a good program but not as good probably as private disability insurance would have been. It pays 60% of your salary for the first year you are disabled and then 40% of your salary thereafter, until you hit regular retirement age. The jump down from 60% to 40% was really hard to deal with though, because we aren't retirement age yet -- still have kids at home, still saving for college, haven't paid off the house so we still have a mortgage. And now we have a lot of extra costs because he is disabled! So it's a real hardship. A plan that paid 60% of his salary would of course have been better -- but surely more expensive. Most people aren't permanently disabled though and are able to go back to some other kind of work after a while. So you have to decide what you think is likely for you.

[Anonymous]

I think OP is talking about supplemental disability insurance. It is sold by a private company
https://www.fedadvantage.com/disability-insurance

They guarantee that you will get 60% of your salary and a little help with medical expenses. They supplement federal disability retirement and social security benefits upto 60%. It is probably a good idea if you are in the PP’s unfortunate situation where you can’t work but still have significant family responsibilities

[Anonymous]

OP here. It's not the company PP mentions; it's this one: https://securechoicellc.com/.

They have various rates for paying you a specific dollar amount, not a percentage of your salary.

I'm not sure if it's legit, and I figured DCUM was the perfect place to ask.

PP 8:02, what you wrote is very helpful, and I'm sorry you're in that situation.

[Anonymous]

FERS disability retirement is not great but better than nothing.

It is not portable. The plan you linked to also is not portable. If I were looking for private disability insurance I'd look for something I could take with me if I left my job.