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Long Term Disability (LTD)

Monthly income benefits range from 40% to 66 2/3% of an employee's predisability earnings, although most employers chose 60%.

Elimination periods (EP) work like deductibles to lower your premium. If short-term disability coverage is carried, the EP normally matches the STD benefit duration to provide seamless coverage. Otherwise, the EP ranges from three to six months.

Long term disability benefit are normally paid until the disabled employee reaches age 65 if disability occurs before age 60. If the disability begins after age 60, a "reducing benefit duration" schedule applies.

LTD policies normally define "disability" very broadly for the first two years after disability, typically stating that the employee must be unable to perform all of the duties of that employee's job. This is often referred to as the "own occupation" definition.

After that point, the definition becomes more restrictive, meaning the employee must be unable to perform the material duties of any occupation for which he or she might be qualified based on education, experience or training. This is often referred to as the "any occupation" definition.

Chartwell recommends that employers look carefully at who might be affected by the more restrictive "any occupation" definition after two year. We usually suggest that a separate class of employees consisting of key executives be "carved out" and provided with the better "own occupation" wording until they reach normal retirement age, not just for the first two years of disability.

For more information, please download "An Employer's Guide to Disability Income Insurance" offered by the Americas Health Insurance Plans by clicking here.

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