Long-Term Disability Insurance (LTD)


Getting Benefits

If you get injured or become ill, contact your Human Resources department (if you have a group policy) or your insurance company or agent (if you have an individual policy) as soon as possible to begin the application process. You are eligible to get disability benefits if you cannot work for any health-related reason; your injury or illness does not have to be work-related.

Once you apply for cash benefits from your disability income insurance plan, there is usually a waiting period before you can begin to get benefits. For Long-Term Disability (LTD) Insurance, the waiting period typically is at least 30 days. Usually, it is longer and can be up to a year. Many disability income insurance policies offer shorter or longer waiting periods. Generally, the lower your premium, the longer the waiting period will be.

If your claim is approved, once the waiting period is complete, you should get your benefits about a month later.

The Benefits

Each policy has a different way of figuring out how much money you will get. Some send you a set dollar amount, while others give you a percentage of the wages you made before becoming disabled. Depending on your plan, bonuses, tips, and commissions from your job may or may not be included in the calculation of your wages.

Depending on how your disability income insurance is paid for, your benefits may or may not be taxed when you get them. If your employer paid your premium, you usually will have to pay taxes on your benefits. If you paid for an individual policy with your own taxed income, you probably won’t have to pay taxes on the benefits. Contact your income tax professional or Human Resources department for more information.

Public Disability Benefits

While you are getting private disability benefits, you may want to apply for public benefits like Social Security Disability Insurance (SSDI). For example, if you know that your LTD will soon end, it is important for you to apply for SSDI as soon as possible.

If you get benefits from other programs, like SSDI or Supplemental Security Income (SSI), at the same time as you get LTD, most private disability income insurance policies will reduce your benefits by the amount those benefits programs pay you. For example, if your LTD benefits check is $2,000 per month and you begin to get $800 in SSDI benefits per month, your LTD benefits will be reduced to $1,200 a month.

Some LTD policies even require you to apply for SSDI. Once you are approved for SSDI benefits, your private disability income insurance benefits may not be automatically or immediately reduced. As a result, your disability income insurance policy provider may overpay you. If you are overpaid, you will be required to pay back the difference.

The advantage of being enrolled in SSDI or SSI while getting LTD is that they can make you eligible for Medicare or the Arizona Health Care Cost Containment System (AHCCCS), health coverage that isn’t supplied by disability income insurance.

Health Coverage

LTD insurance gives you money, not health coverage. For the first 12 weeks that you are unable to work due to a medical condition, you may still be entitled to be covered by your employer's benefits (including your employer's health plan) under the Family and Medical Leave Act (FMLA). For more details, read DB101's article about FMLA.

After the 12 weeks of leave, your employer has the right to let you go if you are still unable to return to work. If you want to continue to get your health coverage through your employer’s health plan after you are laid off, you may be able to continue that coverage by paying out of pocket for COBRA.

Another option for private health coverage is to find an individual plan on HealthCare.gov. Depending on your situation, the government may help pay for your premium for an individual plan through tax subsidies. Or, you may become eligible for public health coverage like AHCCCS or Medicare. To learn more about different health coverage possibilities, see DB101's Health Care Coverage section.

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