Really sorry to hear this - try not to panic too much though (easier said than done I know), as with the right treatment she'll probably lead a very long, very happy and normal life. And they've caught it early, which is a good thing.
With our lab puppy (10 months - also black) it was elbow dysplasia rather than hips. She
started showing symptoms in October when she was about 4 months old. First of all it was just intermittant lameness, but it progressed until she could hardly put weight on her left leg and was in constant pain. The muscle in her left shoulder had also completely wasted away. She'd been back and forward to the vets several times for x-rays and examinations and medication, trying to manage the pain without putting her through surgery at such a young age, especially as it could reoccur. But it got to the stage where we had to take action, she couldn't even walk ten steps without limping badly, so in January our vet referred us to an orthopaedic surgeon who specialises in dysplasia conditions. We had an appointment with him on he 26th January and it was just supposed to be a quick consultation, but she was so bad he kept her in, and she was on the operating table by the time we got home. It was a real shock because it was so unexpected, but he said he didn't want to wait because she was one of the worst cases he'd ever seen at her for such a young dog. During the operation he found that the bone in her elbow had actually started to die away, so she had rotten dead bone that was progressing down her elbow and must have been absolute agony for her (thank God we caught it in time or it could have spread right down her leg). Thankfully he managed to remove all the decaying bone, along with a fragment of loose bone that he found, just leaving healthy stuff behind. And because he'd done it keyhole, he said she had very little in the way of incisions/wounds. So you can imagine our shock when we went to pick her up expecting a tiny bandage, and were greeted with this sight
A few days after the operation, we took her to our own vet to have the bandage off and we were amazed - not only had her incisions completely healed, but she was also walking nomally! She's been limping in her bandage because it was so restrictive, but we'd been so used to her limping before the operation that we thought nothing of it. You could have knocked me down with a feather when the vet walked her up and down the carpark and she was bending her elbow and putting weight on her leg, just three days after her operation!
Since her operation, she had to be confined to a crate all day and has only been allowed small walks on the lead. For the first two weeks she was only allowed to go outside for the toilet, and had to be helped down the back steps - I even had to sleep on the sofa with her because she couldn't get up the stairs! Gradually as she started to get a bit stronger we've built her up to longer walks, but she's been really frustrated because she feels better and wants to run and play. It's really difficult to keep her contained when she must feel like she's got a new leg! Especially considering the pain she's been in for the whole of her short life.
She had her follow up with the surgeon this afternoon, five weeks after the operation, and he was amazed at her recovery. He twisted her elbow every way he could and got no response - before when you lifted her leg, she'd cry out in pain and try to roll over and show you her tummy as if to say 'don't hurt me'. And he was really happy with the muscle tone she's built up too - so much so, he's given us permission to build her back up to her hour-long walks on the lead, and to have three off the lead walks every week I never thought I'd be so happy about three little walks, but it's such a massive step forward for us. To celebrate, we took her to the beach with our older dog after the vets, and she really did have the time of her life. She had 40 minutes off the lead, running about like a nutter wearing the biggest dopey grin you've ever seen (or was that me?!), and even had her first swim in the sea. There was no hint of a limp, and she just looked like any normal dog running around enjoying herself (albeit much more hyper!). It is literally the first time in her life she'll have been able to run around without pain - I could have cried for her, I'm just so pleased.
Oh dear, I've rambled on! I guess I just wanted to say don't lose hope - vets really can do amazing things, my black bombshell is proof of that. If all the other avenues fail, they can do great things nowadays with hip replacements, and they're making even the worst affected dogs jump around like puppies again! This site is full of stories about labs with HD and ED - I'll warn you, not all of them have a happy ending, but an awful lot of them do, and it really helped me reading through them.
How much does your insurance cover you for? Even if it doesn't cover the entire cost of her treatment, it should go a very large way towards it. Our bill (including the months of care before her op and all our dealings with the surgeon) has only come to around 2k, and it's all been covered by the insurance.
Sorry for rambling