Disability Insurance for Government & Public Employees
Government and public-sector employees can have unique disability insurance considerations because existing employer or retirement-system benefits may affect the amount of Individual Disability Insurance available.
State and federal employees, police officers, firefighters, teachers, first responders, and other public employees may benefit from reviewing how their existing disability benefits work and whether individually owned coverage can help provide additional income protection.
Why Is Disability Insurance Different for Government Employees?
Government and public employees may already have access to disability, retirement, workers' compensation, or other benefits through their employer or public retirement system.
These benefits can provide valuable protection, but they may also differ significantly from traditional Group Long-Term Disability Insurance.
When evaluating Individual Disability Insurance, it is important to understand both what benefits the employee actually has and what existing coverage an Individual DI carrier will assume for financial underwriting purposes.
How Does Existing Coverage Affect Individual Disability Insurance?
Existing disability benefits are generally considered when determining how much additional Individual Disability Insurance an individual may qualify for.
For financial underwriting purposes, disability insurance carriers may apply an assumed existing benefit to certain government employees even when the employee does not have a traditional Group LTD policy.
For example, carriers may commonly assume approximately:
-
60% of income for certain state employees
-
40% of income for certain federal employees
The exact treatment varies by carrier, state, retirement system, occupation, and the employee's actual benefits.
These assumptions can affect the amount of supplemental Individual Disability Insurance available.
What Should Federal Employees Know About Disability Benefits?
Federal employees covered by the Federal Employees Retirement System (FERS) may have access to disability retirement benefits rather than a traditional employer-sponsored Group LTD policy.
For many eligible FERS employees under age 62, disability retirement is initially calculated at 60% of high-3 average salary, subject to applicable Social Security disability offsets. After the first 12 months, the formula generally changes to 40% of high-3 average salary, again subject to applicable Social Security offsets.
Because eligibility requirements, offsets, and benefit calculations differ from a traditional Individual DI policy, federal employees may still have a need for individually owned income protection.
The 40% assumption used by an Individual DI carrier for financial underwriting should not be confused with a guarantee that every federal employee will receive 40% of their income during every disability.
What About Police Officers, Firefighters & First Responders?
Police officers, firefighters, and other first responders can have particularly important disability insurance needs because their occupations often involve significant physical requirements and occupational hazards.
An illness or injury that prevents an individual from performing duties such as emergency response, firefighting, law enforcement, lifting, climbing, or other physical responsibilities could have a substantial impact on their ability to continue in their occupation.
These employees may also participate in specialized public retirement or disability systems. Federal law enforcement officers and firefighters, for example, have special retirement provisions under FERS.
Who May Consider Supplemental Individual DI?
Supplemental Individual Disability Insurance may be worth evaluating for:
-
Federal employees
-
State employees
-
County and municipal employees
-
Police officers and law enforcement
-
Firefighters
-
First responders
-
Teachers and education professionals
-
Government administrators
-
Public-sector professionals
-
Other employees participating in government retirement or disability programs
The need for additional coverage depends on the individual's existing benefits and the amount of income that would actually be protected during a qualifying disability.
Frequently Asked Questions
Can state employees purchase Individual Disability Insurance?
Potentially, yes. However, carriers may consider existing or assumed state disability benefits when determining the amount of additional Individual DI available.
Why do Disability Insurance carriers assume coverage for government employees?
Government employees may have disability or retirement-system benefits even when they do not have a traditional Group LTD policy. Individual DI carriers may account for these benefits when determining the amount of additional coverage they are willing to issue.
Can police officers and firefighters obtain Individual Disability Insurance?
Yes, available coverage depends on the individual's specific duties, income, existing benefits, medical history, and carrier occupational guidelines.
Does every state employee have 60% disability coverage?
No. The 60% figure may be used by certain Individual DI carriers as an assumed existing benefit for financial underwriting purposes. Actual state employee disability benefits vary by state, employer, retirement system, and employee.