When faced with an employee who’s been disabled, uninsured employers have few options. Do you continue to pay all or part of a salary? Offer unpaid leave? Terminate employment? For an employer and employee, the choices can be devastating.
An insured Long Term Disability plan will replace up to 66 2/3% of an employee’s income up to the age of 67 in a situation where catastrophic illness or injury exists. A managed LTD plan allows an employer to outsource the difficult decisions surrounding a disabled employee to disability experts. Along with income protection, most disability plans offer rehabilitation and return-to-work services that are essential to the recovery of disabled employees. The goal of Long Term Disability insurance is to financially protect and proactively return disabled employees to a productive life.
- How many people really use their LTD plan?
There is a 1 in 5 risk that a 35 year old will be disabled for 90 days or more before age 65. You are more likely to become disabled than to die during your working years.
- How much will LTD cost the company?
The general rule is that a fully insured LTD plan will cost a company about one half of one percent of the company’s monthly payroll.
- Will an LTD plan pay a disabled employee who returns to work on a part-time basis?
Yes, most LTD plans will pay an employee who is limited from performing all of their job functions, and has suffered a 20% or more loss of income as a result.
- What are the most common income replacement percentages?
Most companies implement a plan that replaces 60% or 66 2/3% of an employee’s income in the event of a disability. The highest percentage available is 66 2/3%.
- Who pays for the plan the employer or employee?
The employer can choose to pay for all or some of the premium or the Employee can pay the entire cost on a Voluntary basis. The total cost of the plan is less expensive if the employer pays for 100% of the premium as compared to the employee paying part or all of the premium.
- Are the benefits taxable?
The percentage of the premium that the employer pays for determines what amount is taxable. For example, if the employer pays 50% of the premium then 50% of the benefit is taxable.
Contact us and we can help you design a comprehensive yet cost-effective plan that will suit your companies needs.