Disability and Income Loss: What to Do Next

By Tom Burchnell
disability income loss

If you find yourself in an unfortunate situation where you are on disability and dealing with income loss, it’s important to know what steps to take for yourself and your family.

Did you know that a 35-year-old has a 50 percent chance of becoming disabled for a 90-day period or longer before they even turn 65? About one in seven people between those ages can expect to become disabled for five years or longer. While everything in life can be going smoothly one minute, it can take a turn quickly, leaving you in need of a new source of income and added medical expenses that you did not expect. 

We’ve outlined the top methods you can use to stay on top of your finances while you deal with disability and a loss of income.

Financial Assistance

When you find yourself dealing with disability and an income loss, there are insurance programs in place that can act as income replacements to help you offset your financial loss.

Government Disability Programs for Income Loss

More than 375,000 Americans become totally disabled every year. A disability is defined as any condition of the body or mind that makes it more difficult for the person with the condition to do certain activities and interact with the world around them. 

There are two different programs for disability benefits:

  • Social Security Disability Insurance pays benefits to you and certain family members if you have worked long enough and paid Social Security taxes.
  • Supplemental Security Income pays benefits based on your financial need.

 Both are administered by the Social Security Administration and you can only qualify for either program if you have a disability and meet medical criteria. Social Security considers you to have a qualifying disability if all the following apply to you:

  • You cannot do work and engage in substantial gainful activity (SGA) because of your medical condition.
  • You cannot do work you did previously or adjust to other work because of your medical condition.
  • Your condition has lasted or is expected to last for at least one year or to result in death.

How do you qualify for disability insurance after income loss you may be asking? Here are the typical qualifications you must meet to receive disability insurance:

  • Work in long enough and recently enough in jobs covered by Social Security.
  • Have a medical condition that meets Social Security’s standard for disability.

You may find your disability within the list of medical conditions that social security considers severe enough to prevent someone from performing a job.

To find out if you qualify for disability insurance, visit the social security website.

Disability and Income Loss:Workers’ Compensation

Another option that may be available to you is worker’s compensation. Workers’ compensation is insurance that provides cash benefits and/or medical care for workers who become injured or ill as a direct result of their job.

Your employers pay for this insurance. You, the employee, are not required to contribute to the cost of compensation. With Workers’ Compensation, you would receive weekly cash benefits and medical care, paid for by the employer’s insurance carrier, as directed by the Workers’ Compensation Board. You can be disqualified for Workers’ Compensation benefits if it is deemed that your injuries were intentional or the result of intoxication. 

The most common causes of work-related injuries include:

  • Exposure to harmful substances or environments (includes Covid-19): 36.1%
  • Overexertion and bodily reaction: 21.7%
  • Falls, slips, and trips: 18%
  • Contact with objects and equipment: 16.7%
  • Transportation incidents: 3.5%
  • Violence (by persons or animals): 3.3%

While some injuries are clearly caused by working conditions, an employer can decide to dispute the claim that the injury is work-related, which means you won’t receive any cash benefits until the workers’ compensation law judge decides which side is right.

Think Ahead 

Accidents and emergencies can come up at any time leaving you with a disability. Sometimes a disability can impact our working abilities or cause income loss. It’s best to be proactive and prepare yourself for anything before it has a chance to happen. 

Create An Emergency Fund

If you haven’t yet, it’s never too late to start an emergency savings fund. An emergency fund is a separate savings account used as a safety net for covering expenses only during an unforeseen situation like a disability and income loss. It should be separate from your nest egg or long-term savings plan. Most financial experts would recommend having somewhere between three to six months of funds available to cover your living expenses.

If you find yourself injured, ill, or disabled and unable to work for an amount of time, an emergency fund is highly recommended to have in your back pocket while you figure out how to get back on your feet 

Cut Back Your Spending

When you find yourself in a less than ideal situation like a disability where you cannot work and you have an income loss, it’s time to start rethinking your budget. Put off resorting to your emergency fund for as long as possible by cutting out all unnecessary spending. Make sure that you are covering all the living expenses such as rent, groceries, insurance, utilities, and insurance. It may even be helpful to resort to selling possessions like clothing, jewelry, or electronics that are in good condition and can bring in a bit of cash to help you get by.

If utilities and other living expenses are becoming too much, you can contact your service provider and give them a heads up about your financial situation. Oftentimes they are willing to work something out with you to cut you a break when you need it.

Consider Alternatives

There are several options available when you are on disability for an amount of time and have income loss. However, they all require strict qualifying criteria and can have a drastic impact on your already dire circumstances, 

Home Equity Loan

Through the Fair Housing Act, a person cannot be denied a loan just because of a disability. A lender also can’t require someone to pay higher fees or meet more stringent criteria because of their disability. Many disabled people own their own homes and can qualify for a home equity loan. If you are facing a loss of income due to a disability, injury, or illness, a home equity loan may be the solution to help you get back on your feet. However, be prepared to repay the loan over a set period of time to avoid foreclosure.


In order to continue making ends meet and afford unexpected medical bills after a disability and income loss, another solution is a sale-leaseback. A homeowner can sell their home, converting their equity to cash, while staying in their home as a renter. When they have worked through their situation and gotten back to a steady financial situation, some programs will let them repurchase the home or sell it on the open market. 

Key Takeaways

Instead of feeling stuck waiting on government aid or workers’ compensation, take back control of your finances by harnessing the value of your home with these financial assistance strategies.

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Medical Bills
Medical Expenses
Tom Burchnell
Written by Tom Burchnell
Director of Product Marketing

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.