Everything You Need to Know About Waiting for Long Term Disability Benefits
Becoming disabled before retirement can be a scary thing. Most of us plan to work until at least retirement age. We expect to have our homes paid for, and children moved out by that time. But life is unpredictable, and sometimes people become disabled before retirement. It helps to understand how long it will take to start receiving benefits if approved for long term disability.
What is the Elimination Period?
Having a long term disability approved is a significant first step to receiving benefits. The next part is waiting to receive payment; This is called the elimination period. The elimination period is the period of time that you must wait to receive your first check after your benefits are approved. Each policy is different but the elimination period will be stated in your policy. The standard is 90 days; however, some policies can be 180-365 days.
The Importance of Timelines
When you have become injured the best thing to do is file your claim as soon as possible. Many long term disability policies require you to exhaust your sick leave, and your short term disability benefits before applying for long term benefits. By creating a timeline, you can stay on track and know exactly when you need to apply for long term benefits. Keeping a calendar will also help you to understand when you have deadlines. If you miss a deadline, the insurance company will assume you do not need the benefits and will deny your claim. Filing for long term disability right away will help you avoid a long lapse in benefits.
F.A.Q. About Long Term Disability Payments
How Much Will Your Monthly Payment Be?
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.
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 the 90-180 period before receiving payment.
Will I Be Compensated For Inflation?
Cost of living adjustments, known as COLA, are 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 will vary based on your policy. The normal range is between 5 years and retirement age. If you are receiving long-term disability benefits for a mental health condition, the payout range is usually capped at 24 months.
Many questions need answers when you are dealing with disability benefits and insurance companies. If you are not getting the answers you need, give us a call at (888) 321-8131.
Although based in Florida, the Ortiz Law Firm represents claimants across the United States. If you’d like to speak to a Pensacola Long-Term Disability Insurance Attorneys contact us at (888) 321-8131 to schedule a consultation. 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.