Q: What is LTD?
A: LTD usually means Long Term Disability benefits provided by a public sector or private sector employer. Some employers pay the benefits out of their general assets, but more payments are made by an insurance company. Typically LTD benefits replace a portion of your income if you become disabled for a least 13 weeks or 26 weeks depending on your company plan. Many plans pay 60% of your pre-disability earnings. Generally to qualify you are unable to do the material and substantial duties of your occupation due to injury or illness. Public sector employees are lucky, they are exempt from ERISA.
Q: Who is eligible for LTD coverage?
A: Depends on the terms of your employer’s plan.
Q: Am I guaranteed coverage?
A: Generally, Yes. The trade-off is that you are not covered for an accident or sickness that arises from a pre-existing condition for at least the first year. Sometimes the pre-existing condition look back period is even longer.
Q: How long do my LTD payments continue?
A: You can continue to receive your LTD benefits for as long as your plan considers you disabled, or until you have reached your maximum period of payment, whichever comes first. Many plans provide coverage until your normal social security retirement age or age 65.
Q: Can I file for LTD if I was injured at work?
A: You can file, however, the disability benefit may be reduced by other income replacement benefits from sources such as as workers compensation, other insurance policies, or government programs, such as Social Security Administration disability insurance program, or all of these.
Q: Are my benefit payments subject to taxation?
A: Most of the time employer pays the premiums for coverage. As a result, the benefits you receive are taxable as income. Unless you pay the premiums with post-tax dollars, presume the benefit payments are taxable. If you pay with post-tax dollars, the benefits are received tax free.
Q: Can I return to work and still be eligible for benefits?
A: Often times you can work part time and still qualify for LTD benefits.
Q: Can I keep my coverage if I leave my job?
A: Some LTD Plans have features where you can convert to an individual policy. Others allow you to stay in the LTD plan even if you leave, and others allow you to “port” to a portability LTD Plan . In all instances, you are required to pay premiums. Ask your employer, before you leave work.