How LTD benefits are figured
Most group long-term disability policies pay 50% to 70% of your pre-disability monthly earnings, up to a monthly maximum. The benefit is then reduced by “other income”, usually Social Security disability, workers’ comp and state disability benefits. A minimum benefit, often $100, applies even after offsets.
Taxes depend on who paid the premiums
If your employer paid the premiums, benefits are generally taxable. If you paid them with after-tax dollars, benefits are generally tax-free.
Own occupation and any occupation
Many policies pay for an initial period, often 24 months, if you cannot do your own job, then only if you cannot do any job suited to your training. Benefits often stop at that change.
Denials
Employer LTD plans are usually governed by ERISA, which requires an internal appeal before a lawsuit and limits what a court will consider. Build the record during the appeal.
Questions people ask
Does LTD reduce my benefit if I get SSDI?
Usually yes. Most policies subtract SSDI and many require you to apply for it.
How long do LTD benefits last?
Often until age 65 or Social Security retirement age, if you remain disabled under the policy’s definition.