Health Benefits

Disability Insurance vs. Long-Term Care Insurance: What’s the Difference?

Man smiling at a doctor's office

Many people confuse disability insurance with long-term care insurance, but they are two very different types of coverage.

Disability insurance replaces up to 60 percent of your income during your working years, expiring at age 65. Benefit eligibility is triggered by sickness or accident that prevents you from working. Think of disability insurance as “wage replacement insurance”; it covers existing expenses before you became disabled and lost your wage income.

Long-term care insurance covers when you are unable to perform basic activities of daily living (ADLs) or require substantial supervision because of a cognitive impairment. With long-term care insurance, you are covered regardless of your work status. The insurance provides benefits for personal care services, typically in your senior years as you become dependent on others for care. Younger people can also suffer accidents or illnesses, or develop conditions that require long-term care, even if only for a limited time.

Long-term care benefits cover assistance for at least two of six ADLs, or continual supervision in a memory care facility because of a cognitive impairment, such as Alzheimer’s disease. The six ADLs include bathing, dressing, eating, toileting, transferring (from bed to chair, for example), and managing incontinence. Beneficiaries may choose to receive their care at home, an assisted living facility, a memory care facility, or a nursing home.

The CalPERS Long-Term Care Program has paid over $2.4 billion for such care to over 29,000 individuals. Without long-term care insurance, just six months of care can cost many thousands of dollars beyond disability payments, which are generally consumed by normal living expenses.

Remember: Disability insurance covers lost wages due to an illness or accident during your working years. Long-term care insurance covers the possibility that you may no longer independently care for yourself, at virtually any point in your adult life.

For more information about the CalPERS Long-Term Care Program, visit the program website or call (800) 908-9119.