Could Private Disability Insurance Replace SSDI? Let’s Compare

The Disability Insurance Trust Fund is running out of money. That means the SSA will be unable to pay full Social Security Disability Insurance (SSDI) benefits starting in 2028. One idea Congress suggested to fix this problem is expanding Private Disability Insurance (PDI) plans that employers offer workers. Why?

Well, expanding PDI could give disabled workers access to cash benefits and employment support systems faster. In other words, PDI would function much like workers’ comp benefits do — but for impairments and injuries that aren’t work-related. Congress thinks this would result in fewer people filing SSDI claims and limit how long they can receive payments.

To prepare for the possibility that PDI may eventually replace Social Security disability, let’s look at how these programs differ. We’ll also review some key findings in the Government Accountability Office report on the SSDI program’s financial challenges.

Comparing Both Benefit Programs

Key differences between these disability insurance programs include:

  • How many workers are covered
  • What those covered workers might look like
  • Eligibility requirements for screening applicants
  • Benefits paid to those who qualify
  • Back-to-work programs for beneficiaries whose conditions improve

Private Disability Insurance vs. Social Security Disability: Who’s Covered?

The first difference between SSDI and PDI is how many people in the current U.S. population have coverage. Nearly all U.S. employees have SSDI coverage right now (96%), but only 33% have jobs with Private Disability Insurance plans. Self-employed workers or those with lower-wage jobs usually don’t have access to Private Disability Insurance, for example. PDI coverage is more common among higher-wage industries — like managers, executives and finance sector workers.

And while SSDI coverage also pays benefits to your dependent family members who qualify (spouses, children, widows/widowers), PDI does not. After two years, people getting SSDI payments automatically qualify for Medicare. Typical PDI plans don’t include medical benefits.

Private Disability Insurance vs. Social Security Disability: How Long Can You Get Paid?

There’s a major difference in how long you can receive SSDI benefits compared to PDI payments. Once your claim’s approved, you can get monthly SSDI checks indefinitely until you reach full retirement age. But for certain conditions (like back injuries, depression or chronic fatigue), PDI plans limit payments to two years or less.

Eligibility requirements for these two disability insurance plans are also very different. SSDI looks at your age, education, expected recovery time and job skills when deciding whether you’re too disabled to work. While PDI doesn’t look at your work history, it does exclude pre-existing conditions. That means chronic illnesses and old injuries that flare up again won’t qualify for PDI. (“Pre-existing” means any condition your doctor diagnosed, treated or medicated during the three months before your insurance coverage began.)

Private Disability Insurance vs. Social Security Disability: Do They Cover the Same Medical Conditions?

Some PDI policies may cover medical conditions that SSDI doesn’t and vice versa. However, these PDI plans get a lot more strict once you reach the two-year mark. For 24 months, PDI makes payments to disabled workers who cannot perform their current full-time job duties. After two years, PDI recipients must prove they cannot work any full-time job that pays a “reasonable income.” Most PDI plans define “reasonable income” as 60% of your average earnings before your condition forced you to stop working.

Both SSDI and PDI have programs that help beneficiaries return to work. However, PDI policies may provide that help much faster than SSDI does today.

If you’re confused about filing a disability claim and whether you have insurance coverage, a lawyer can answer your questions. All Social Security disability lawyers work on contingency, so you’ll never pay anything unless they help you win benefits. And if one does help you win benefits, you’ll only pay a small, one-time fee.

Ready to see if you may qualify? Click the button below to start your free disability benefits evaluation now:

Get Your Free Benefits Evaluation

Laura Schaefer is the author of The Teashop Girls, The Secret Ingredient, and Littler Women: A Modern Retelling. She is also an active co-author or ghostwriter of several nonfiction books on personal and business development. Laura currently lives in Windermere, Florida with her husband and daughter and works with clients all over the world. Visit her online at and