What is group long term disability insurance?
Group long term disability insurance protects a percentage of your income should you
become disabled and unable to work. The average worker faces a 3 in 10 chance of suffering
a job loss lasting 90 days or more due to a disability.
How much of my income will be protected?
There are three benefit levels.
- Level 1 protects 50% of your income, up to a maximum of $2,000 a month of tax free
- Level 2 protects 60% of your income, up to a maximum of $4,000 a month of tax free
- Level 3 protects 60% of your income, up to a maximum of $7,000 a month of tax free
There is a Cost of Living Adjustment (COLA) feature on the plan as well. It increases
the benefit after disability by 3% annually, for 5 consecutive years.
How much does it cost?
The rates for each benefit level are the same for everyone, but the premium is tied
to your income (because your benefit amount is based on your income). To illustrate, an employee making $50,000 annually who is participating in Level 3
will pay $11.66 a month for a $2,500 tax free starting monthly benefit. Your premium
can be calculated using the below formulas:
- Level 1: Monthly Earnings (capped at $4,000) X .00146= Monthly Premium
- Level 2: Monthly Earnings (capped at $6,666) X .00237= Monthly Premium
- Level 3: Monthly Earnings (capped at $11,666) X .00280= Monthly Premium
Premiums are paid through payroll deduction.
If I become disabled, when will my benefits begin?
- Level 1: benefits begin 180 days after the disability occurs.
- Level 2: benefits begin 120 days after the disability occurs.
- Level 3: benefits begin 90 days after the disability occurs.
What if I can still work in some capacity?
Lincoln does offer a partial disability benefit which allows an individual to earn
up to 100% of pre-disability income between a combination of earnings paid from your
employer and LTD benefit.
What is the definition of disability?
The plan protects you in your own occupation for 36 months; thereafter, the definition
becomes any occupation for which you are reasonably suited based on your experience,
education, or training.
Are there any limitations on the coverage?
Mental/nervous and substance abuse disorders are subject to a two year limitation.
However, dementia and Alzheimer’s are covered for the full benefit period.
What is the benefit period?
To Social Security Normal Retirement Age. For example, if you are 40, your SSNRA is
67, so you will have 27 years of benefit if you remain disabled. If you have coverage
and are currently over 61, there is a benefit period table that reduces from 5 years
to 1 year. You can maintain coverage as long as you are working regardless of age,
and the benefit period will never be less than a year.