Long-Term Disability (LTD) insurance pays you a benefit if you are unable to work because of a disabling injury or illness. Benefits continue as long as you meet the plan's definition of disability or you reach the plan’s age limit. Accidents and illness can have serious financial consequences for you and your family. LTD provides financial protection to you at a reasonable cost.
Depending on your employee group, you may be eligible for one or both of the LTD plans. The “60% after 6 months” plan pays you 60% of your gross monthly income after a 6 month elimination period. The “65% after 4 months” plan pays you 65% of your gross monthly income after a 4 month elimination period. The “60% after 6 months” plan includes a benefit deposited into a flexible premium deferred annuity account established and maintained by you. If eligible for both plans, you may only elect one plan at a time. The maximum benefit is $4,000 per month.
If you are an unrepresented employee earning more than $80,000 in base pay annually, you may select a supplemental LTD plan. The maximum benefit under the supplemental plan is $20,000 per month.
You and the university share the cost of LTD insurance (unless you choose to waive coverage). You pay your share of the cost with after-tax contributions from your pay. The cost of coverage is based on your annual base pay, length of the waiting period before benefits begin, monthly benefit level and plan limitations.
If you select a supplemental LTD plan, the cost of coverage based on annual base pay above $80,000 is age-based and completely paid by you.
If you receive LTD benefits, part of your disability benefit will be taxable. You will pay income taxes on the part of your LTD benefits related to university contributions. However, you will not pay taxes on the part of your LTD benefits related to your contributions, because you paid for this coverage
You pay the full cost of your LTD insurance (unless you choose to waive your annual coverage). You pay with after-tax contributions from your pay. The cost of coverage is based on base pay, length of the waiting period before benefits begin, monthly benefit level and plan limitations.
If you receive LTD benefits, your LTD benefit will be non taxable as you paid for this coverage with after-tax dollars.
When making a decision concerning LTD coverage, your retirement program may influence your election.
Employees enrolled in the grandfathered TIAA/Fidelity/Vanguard, the OPERS/STRS Defined Contribution, and the Alternative Retirement Plan (ARP) do not have a disability retirement provision in their retirement plan. These individuals may want to consider some level of LTD coverage.
Certain limits apply to these plans including: