ERISA • Employment Law

Factors That Can Influence Your LTD Payment

06 Oct 2020

Many employers offer long-term disability (LTD) insurance policies intended to protect an employee’s financial interests in the event they cannot work due to a lasting mental or physical disability. But how much can you expect for your LTD payments if you become disabled? It is important to be familiar with your right to benefits so you can make sure you receive the full amount you deserve if you can no longer work. Many factors can impact this payment amount, as follows. 

Your Policy Terms

Each LTD policy should set out the terms for expected payments. Some policies will pay a fixed amount each month regardless of how much you earned prior to your disability. However, most plans will base your payments on the salary you were earning, such as providing a percentage of your prior monthly earnings. Some policies might provide as much as 80 percent of your monthly salary, while others might only pay out 50 percent of your monthly earnings. Always check the terms of your policy, so you know what to expect as your payment amount. 

Cost of Living Adjustments (COLA)

Some LTD policies will regularly adjust benefits based on the changing cost of living. Changes for COLA often happen annually and use the Consumer Price Index to adjust payment amounts for inflation and other factors, which might amount to one to three percent per year. 

Other Benefits You Might Receive

You can be sure that your LTD insurance company does not want to pay full benefits if you are also receiving disability benefits from other sources. Most policies require you to apply for Social Security Disability benefits, and the insurer might even assist in ensuring that your application is successful. If you qualify for SSDI benefits, your private LTD benefits will often be reduced according to the amount of your SSDI benefits. Your LTD insurer might also seek recovery for back benefits provided by SSDI. 

LTD payments might also be reduced if you are receiving benefits from retirement plans, workers’ compensation insurance, injury lawsuit settlements or awards, or other sources. 

Partial Benefits

Some people might still be able to work with their disability, though they need to switch to a job that pays substantially less than your previous employment. In this situation, your LTD insurer might provide partial benefits, which are reduced by the amount you are currently able to earn. People who can only earn a small portion of their previous income might still qualify for their full LTD payments. 

Learn How a Philadelphia Long-Term Disability Attorney Can Help You

At The Garner Firm, Ltd., we work to ensure that employees in the Philadelphia area receive the full LTD benefits to which they are entitled under ERISA. If you have concerns about your benefits or payment amount, please contact us to discuss the matter with a long-term disability lawyer. 

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Mr. Garner is an ERISA employee benefits and employment attorney with over a decade of experience. The laws governing employee benefits, the employment relationship, and the workplace are complex.

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