If you become disabled during the time you are employed full-time, you may be eligible for disability benefits. How much you will earn will be dependent on your policy. Sometimes the wording in long term disability policies can be lengthy and confusing. Here are some answers to frequently asked questions about long-term disability pay:
How Much Will My Monthly Payment Be?
The amount you receive in long-term disability benefits under your policy will depend on several factors, including the terms of your policy and your individual circumstances. Consult your policy for the exact percentage of your salary that you will receive. Usually, the number is between 50% and 80% of your gross salary. Some policies will only pay you a set amount per month regardless of your salary, so it’s always best to review your policy.
Here are some factors that can affect your benefit amount:
- Benefit percentage: Most long-term disability policies will pay a percentage of your pre-disability income as benefits, typically ranging from 50% to 80%. Most policies we see pay 60%. The exact percentage will depend on the terms of your policy.
- Maximum benefit amount: Your policy may have a maximum benefit amount, which is the most you can receive in benefits each month. This amount can vary depending on the policy.
- Elimination period: Your policy may have an elimination period, which is the period of time you must wait before benefits begin. During this period, you will not receive any benefits. The length of the elimination period can vary from a few weeks to several months, depending on the policy.
- Other sources of income: Your policy may include provisions for deducting other sources of income, such as Social Security disability benefits or workers’ compensation benefits, from your long-term disability benefits.
It is important to calculate your monthly benefit to determine whether it is a viable claim or not. We’ve seen LTD benefits get reduced to zero once offsets like Social Security disability and Worker’s Compensation benefits are applied. Most, but not all, policies provide for a “minimum benefit”.
A minimum benefit is the lowest amount of benefit that an individual can receive from a disability insurance claim. This minimum benefit amount can typically be found in the Schedule of Benefits. For example, a policy may guarantee a minimum benefit of $100.00 per month, or 10% of the gross LTD insurance benefit amount.
Will I Have to Pay Taxes?
When you receive your first payment, you may be shocked to see that it is minus state, local and social security taxes. This is because most policies that are paid for with pre-tax dollars; passing the tax bill onto the insured. Plan your budget based on the taxed amount, not the gross amount. In contrast, premiums that are purchased by an individual are pre-taxed, so they will not see taxes taken from their monthly payment.
Will I Have to Apply for Social Security Disability Benefits?
It’s not uncommon for long-term disability insurers to require that you apply for social security disability benefits. If you begin receiving social security disability benefits, your payment from LTD will most likely decrease. The reason for this is your LTD payment is meant to be supplemental to your social security disability benefits.
What If I Get a Part-time Job?
If you are able to work on a part-time basis, but you are still earning less than your previous salary, you may still receive benefits but at a reduced rate. The difference is more clearly defined in your policy under “own occupation” and “any occupation.” Under “own occupation” if you are not able to return to your original occupation and decide to get a part-time job making only a small portion of your previous salary, then you can expect to continue to receive benefits. Under “any occupation,” you are saying that you cannot work in any occupation thus returning to work, even part-time, would likely stop your LTD benefits. It’s a good idea to consult an attorney before you decide to start working again.
When Will I Receive My First Payment?
Payments for long-term disability will not start immediately. Many policies require that you exhaust your sick leave and your short-term disability benefits before you can start receiving long-term disability benefits. There is also a waiting period of between 90-180 days before you can be issued benefits. This means that even if you are found to be disabled, you still have to wait for the 90-180 period before receiving payment.
Will I Be Compensated For Inflation?
The cost of living adjustments, known as COLA, is sometimes a part of a basic package. However, most policies today only offer them as a rider that you can purchase to supplement your policy. If you are entitled to COLA benefits, then you can receive an additional 1-3% per year based on the inflation rate determined by The Fed.
Do I Still Pay My Premium?
A common question is do you still pay a premium for your disability policy if you are receiving benefits. In most cases, no. The majority of policies do not make you continue to pay premiums but check your policy just to be sure, so you don’t get surprised with a bill.
How Long Will I Receive Benefits?
The amount of time you can expect to receive benefits in a long-term disability (LTD) claim typically depends on the terms of the policy itself.
Some policies may provide benefits for a specific period of time, such as two, three, or five years, while others may provide benefits until the policyholder reaches a certain age, such as the claimants Social Security Normal Retirement Age (between ages 65 and 67).
In general, most LTD policies provide benefits until the policyholder is able to return to work or until the maximum benefit period is reached, whichever comes first. The maximum benefit period may vary from policy to policy, but it is typically between two and five years, although some policies may offer longer benefit periods.
If you are receiving long-term disability benefits for a mental health condition, the payout range is usually capped at 24 months, or 2 years.
Many questions need answers when you are dealing with disability benefits and insurance companies. If you are not getting the answers you need, or if you’d like to speak to an experienced Pensacola Long-Term Disability Insurance Attorney, contact us at (888) 321-8131 to schedule a consultation. Although based in Florida, the Ortiz Law Firm represents claimants across the United States. We can help you evaluate your claim to determine if you will be able to access Long-Term Disability Benefits and how to move forward with the process.