Premium: How Much Makes Sense
A big deterrent to the purchase of private long-term disability coverage, especially for those starting out at an older age, is the premium, particularly when viewed in contrast to the benefit that may be received. Suppose a policy with a maximum two-year benefit coverage that will pay out $3,000/month or a maximum of $72,000 overall. How many years would it make sense for a 50-year-old to pay a premium of $3,000/year for this coverage? Would it make more sense to simply save $3,000/year instead, as a form of self-insurance? These are difficult choices to make. Ideally they would be made with the assistance of a financial advisor who can evaluate the whole financial picture and gauge the risks.
Long Term Disability Insurance
Available through the workplace, this coverage helps maintain your standard of living if you’re unable to earn a paycheck due to an accident or illness
Covers essential living expenses: can help pay for food, clothing, utilities, your mortgage, car payments and more
Direct monthly payments: receive a portion of your salary paid directly to you each month if youre unable to work
Rehab incentives: coverage may include financial incentives designed to help you transition back to work
Easy claims filing: report claims online or by phone
Competitive rates: this group coverage is offered only through your employer
For complete plan details, talk to your companys benefits administrator.
When ‘until Retirement Age’ Is The Right Benefit Period
Having long-term disability insurance that lasts until retirement age is particularly beneficial for people who work in certain fields or specialty professions that rely on a particular set of skills.
For example, doctors, dentists, or nurses need fine motor skills for procedures. They can protect their future income if a disability prevents them from using those skills by getting long-term disability insurance that lasts until they retire.
Additionally, if you have accrued a lot of debt, you can benefit from long benefit periods so you can still make payments even if you can’t continue to work in your expected career.
If you can afford the modest rate increase, springing for a long-term disability insurance policy that will last until retirement is a good option.
Whatever you opt for in your specific policy, make sure you understand exactly how long your long-term disability insurance benefits will be in place. A licensed agent at Policygenius can help you compare quotes and find a policy that lasts the right amount of time for your needs.
Contact Chisholm Chisholm & Kilpatrick Ltd
At Chisholm Chisholm & Kilpatrick LTD, our team of experienced attorneys and professionals have helped many claimants aged 65 or older get the benefits to which they are entitled. We understand that becoming disabled in your 60s but not being ready to retire can be scary and that getting long-term disability benefits is extremely important. We can deal with the insurance company for you and ensure you have the strongest long-term disability claim possible. Contact us at 237-4612 for a FREE consultation to see if we can assist you with your claim.
Employer Required To Cover Long
This blog is co-written by our former articling student, Linda Noorafkan.
On November 19, 2018, an Ontario arbitrator determined that a hospital employer was required to continue paying 75% of the billed premium towards the Long Term Disability coverage of employees that continued working beyond the age of 65.
CUPE, Local 1999 and Markham Stouffville Hospital, Re involved a Union that filed a grievance against the Markham Stouffville Hospital . The Union took the position that the Hospital had violated the collective agreement by discontinuing LTD coverage for Hospital employees who were 65 years of age and older.
With respect to LTD coverage, Article 13.01 of the collective agreement stated as follows:
The Hospital will pay 75% of the billed premium towards coverage of eligible employees under the long-term disability portion of the Plan ), the employee paying the balance of the billed premium through payroll deduction.
While the insurers benefits plan indicated that there would be limited eligibility for LTD once employees turned the age of 65, the HOODIP Long Term Disability Benefit booklet for August 1992 stated that LTD benefits would be provided until the employee reaches age 65, or life in some cases. The booklet also added that LTD benefits would end at the earliest of the following events:
Your 65th birthday, if you become disabled after age 64 and you have completed fewer than 10 years of Continuous Service, when you become disabled.
Read Also: American Disabilities Act Of 1990
How To Choose A Disability Policy That Fits Your Needs
If your employer offers STD insurance as mandatory or voluntary part of your employee benefit package, thats great but its just a start. You should also see if they offer a long term group plan if youre self-employed you may be able to get coverage through a professional association. Either way, group insurance can be an excellent choice. The company or association is buying for a large group of people, so the premium is typically lower than for an individual policy. In addition, your HR department will likely have more expertise and leverage to negotiate favorable terms. On the other hand, youll probably have less opportunity to tailor the policy to your needs, compared to an individual policy. If the premiums are paid with pre-tax dollars then the income benefit you get down the road will typically be taxed. Finally, if you leave the company or association, in most cases youll also lose your coverage.
Basic Benefit And Offsets
The monthly long-term disability benefit is equal to 1/12 of 70% of your Highest Average Compensation, as determined immediately prior to your disability.
The long-term disability benefit will be offset by any compensation benefits under workers compensation laws, occupational disease laws, or similar laws pension benefits from plans sponsored by CPF and Social Security disability benefits or other government disability or retirement benefits that you earn or receive, but only if the total amount you receive from all sources exceeds 100% of your Highest Average Compensation as adjusted by cost-of-living increases.
Please note that your Highest Average Compensation for pension purposes will not be affected by the long-term disability benefit paid to you or the cost-of-living increases that may be applied to determine whether any offsets should be applied to the long-term disability benefit.
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Annual Premiums By Gender
By locking in your premiums early, you ensure that theyll be the same low rate even as you climb the career ladder throughout life. You can even make sure your benefits match your rising income levels if you purchase the future increase option rider.
If you put off purchasing disability insurance too long, you may develop a pre-existing condition in the intervening years that could make you ineligible for coverage. Other, less serious conditions could result in an exclusion in your policy, meaning that any disability caused by the pre-existing condition is not eligible for benefits.
How Disability Policies Work
There are two main types of policies: Short term disability insurance is for temporary disabilities and is designed to provide benefits 3-6 months , or until you can get back to work. Long-term disability insurance is for more severe and even permanent disabilities.
Long term disability insurance is sometimes offered as a workplace benefit, but it can also be purchased as an individual policy. The benefit is designed to last for many years through retirement if needed replacing up to 60%-80% of your income if something happens and you can no longer work. Every policy whether long term or short term, should clearly define these three items:
- The benefit period: The total length of time you can receive benefits. For STD this will typically not be more than a year for LTD it could range from two years to retirement, or until you recover and are no longer disabled.
- The waiting period: Also called an elimination period, its the amount of time after you are disabled until you can start receiving benefits. It will generally be shorter for STD and longer for LTD.
- The definition of disability: Every policy has a specific definition of disability insurance stating what is needed to qualify for benefits. A long term disability policy further distinguishes between own-occupation disability and any-occupation disability which can qualify you for various percentages of your total benefit amount.
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Can The Insurance Company Force Me To Apply For Cpp Disability
Yes, an insurer can force you to apply for CPP disability. Again, the policy gives them this right. Most policies do this, but not all. Technically, you can refuse to apply for it. If you do, then they will guess what CPP would pay you. Then, they can deduct it from their payment.
They can also force you to apply for other benefits, including:
- Workers compensation
- Other disability insurance policies
Successive Period Of Disability
A successive period of disability is a disability that
- occurs within 120 days after you return to active ministry or are determined to be no longer disabled, and
- is related to the prior disability for which long-term disability benefits were previously paid.
If you receive long-term disability benefits due to a successive period of disability, it will be treated as part of the prior period of disability.
Can You Earn Disability Benefits From The Ei And The Cpp In Any Taxable Year
If you are wondering whether you can still earn disability benefits and be taxed, the answer would be yes. If a person earns more than $50,000 in a taxable year or has accumulated $3,500 in unused contributions to either of these two plans, they will not receive any benefits.
In general, Canada’s CPP disability benefits are not taxable. However, if the NO were to be used to supplement your income, you could potentially incur a tax liability for that year. Yes, you can. When you accumulate enough insurable hours, the Canada Pension Plan and the Employment Insurance Act make it possible for you to receive benefits even if your income is above the low-income level.
In most cases, the answer is no. However, it is possible to earn these benefits in some years. For example, if one has been working with a permanent and total disability for 10 years then they may be in a position to claim benefits from the CPP.
You may be able to collect social security benefits if you are qualified for the disability benefit, even if you don’t need it. Both the Employment Insurance and Canada Pension Plan Disability can provide you with benefits, but in most cases, it is only available for use within the year of your claim.
If you earned income or engaged in self-employment, you must file a self-assessment tax return for every year when you received income.
Switch To An Advantage Plan
First, you can switch from your Supplemental plan to an Advantage plan. Again, everything is going to be tied to your 65th birth month, so you have three months before and after your birth month to make that switch.
If you switch from a Supplemental plan to an Advantage plan during this time, any Advantage company is going to take you.
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Does Long Term Disability Last Forever
No. The benefit period is always limited to a certain number of years which is clearly stated in the policy. Standard choices include 2, 5, or 10 years to age 65 and to age 67. A few companies, offer coverage to age 70.
1 The Social Security Administration Fact Sheet, June 2022
2 Integrated Benefits Institute, 2018 Health and Productivity Benchmarking, Long-Term Disability.
3 Council for Disability Awareness ,
Employment Termination And Long
Can I be fired while I am on long-term disability? We get this question all the time.
Unfortunately, the short answer is yes. Generally speaking, employers can fire employees at any time. They cant just fire you because of your disability that would be a human rights violation. Legally, they have to provide termination or severance pay.
So, in some cases, you may have a legal claim against your employer. For instance, if you are terminated without severance pay. You would also have a case if you believe it was because of your medical condition or disability. In these cases, you can win compensation in court.
Most employers wont terminate you if youre on long-term disability because they know it looks bad. They want to avoid lawsuits and human rights claims. Therefore, cautious employers will allow you to be on sick leave for up to two years.
But, after two years, your employer may have the option to terminate you for cause. This means they would only have to pay the minimum severance allowed under provincial laws. This type of termination is based on the frustration of employment. This is a complicated area of law. If this is your situation, I urge you to get specific legal advice.
To read more about this, check out our article on Long-Term Disability and Termination of Employment.
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Your Houston Ltd Disability Attorney
If youre facing an absence from work due to a long-term disability but are having trouble with the insurer paying your benefits, were here to help. We can help with all facets including questions about the age limit for long-term disability.
Weve helped over 4,000 Houstonians have received the LTD benefits they need. The Herren Law Firm can help you with your application, appeals and help you through the process, and give you one less thing to worry about. Contact us today at 713-682-8194 to schedule your free consultation. Theres no obligation and no up-front fees. We only collect if we win your case.
After Approval Of Long
You still have to deal with the insurance company after they approve you for long-term disability. They will continue to monitor your condition and treatment. They may ask you to see a doctor. Or, they might enrol you in a treatment program. Ultimately, its your responsibility to follow the rules laid out by your provider.
So, to keep your benefits, you must carefully manage your relationship with the insurance company. You will need to do what they ask, even if you disagree with it. The following are common issues that happen after claim approval.
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Other Reasons To Buy A Disability Policy
So far, weve covered the feasibility of purchasing disability insurance in two different scenarios:
- Where someone has saved a lot, and therefore probably doesnt need long-term disability insurance.
- Where someones savings are inadequate, and therefore very likely needs long-term disability insurance.
Theres one more category we havent yet covered: where a household has a large nest egg and a huge appetite for spending.
Recently, we worked with an engineer who received a large windfall. Outside of this windfall, this gentlemen had very limited savings.
The new money wouldnt last long as a nest egg if this individual maintains his current lifestyle into retirement.
While the total of his investments could provide for a modest lifestyle in retirement, this gentlemans spending rate meant he would blow through this new money quickly were he to retire today.
Big spenders near retirement should consider a long-term disability policy if their current savings cant support their lifestyle goals.
For this gentlemen, the simple solution is to spend less. But while it is simple, its not easy it can be challenging for people to change especially if that change would impact their quality of life.
In the absence of a solid financial plan to track and decrease expenses, a long-term disability policy is a must for this individual. Thats because he simply cant afford to not have the income hes so accustomed to.
Getting Social Security Disability After Age 65
Disabled adults can start receiving disability benefits at literally any age . However, for disabled adults over age 65, it is better to apply for SSDI benefits than retirement benefits.
According to a report, the average age at which American people retire is 62 . However, the poll also suggested that baby boomers seek to retire till full retirement age . Many people at age 65 do not wish to retire early since it could cost them a reduction in retirement benefits. Unfortunately, they could become disabled/contract a condition or impairment that prevents them from working any further. You can read more on why collecting SSDI is better than applying for retirement benefits in this case.
**Note: You can’t collect both SSDI and retirement benefits at the same time.
Getting Social Security Disability after Age 65
The Social Security Administration requires a claimant to have been disabled for atleast 5 full months with medical proof that their disability is going to last for another 12 months. However, payments for SSDI may start as soon as the sixth month of the onset of their disability.
For people aged over age 65, the Social Security has setup special distinctions to the rules to help for evaluation process.
Special Age-Related Rules for Medical Vocational Allowances for People Aged over 65
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Disability Insurance Coverage: How Do You Enrol
Applying for insurance coverage is how you enrol in a plan or policy. Without coverage, you cannot file a claim should the need arise. How you apply for coverage will depend on the type of disability policy:
Applying for Group Insurance Coverage
You apply for group insurance coverage through your employer, union or association. You are eligible to enrol because of your status as a full-time employee or member of a union or professional association.
The application involves filling out a form. If the group covered by the insurance is small, you may also have to fill out a medical questionnaire. Or undergo medical tests. With large organizations, there are no barriers to enrolment other than your status as a member of the group. Once enrolled in the plan, you are considered a covered person under the plan. If you later become unable to work, you can file a long-term disability claim under the insurance policy.
Applying for Individual Insurance Coverage
Applying for individual insurance is more complicated than group insurance. You will have to provide detailed information about your medical history and undergo a medical assessment and bloodwork.
The insurance company then reviews your medical information to determine if they will agree to offer you a long-term disability insurance plan.