Do you have long-term disability insurance coverage from your employer or your spouse’s employer? Your policy is regulated by a federal law called Employee Retirement Income Security Act (ERISA). The policy document should clarify how many benefits you will receive if you qualify. In most cases, long-term disability pays between 50% and 80% of your pre-disability earnings. In this article, our Chicago long-term disability lawyer provides a more comprehensive overview of the key things to know about how much long-term disability insurance pays.
How much does long-term disability pay? It depends largely on your specific policy. Long Term Disability (LTD) insurance policies often base their payout on a percentage of the policyholder’s salary—most often, the benefit is between 50% and 80%. Benefits are designed to provide a safety net during a period of disability, so you can continue to support yourself and your family. Remember, the specific percentage varies based on the terms of the policy, so you need to carefully review your plan’s details.
Partial disability benefits are designed for individuals who can still work but cannot put in the same amount of hours as before due to their disability. It is called a “residual disability.” Insurers may reduce the benefits proportionally based on the decrease in earnings. For instance, if your earnings have dropped by 70% due to the disability, you may receive a proportionate payout.
Notably, some LTD policies include a Cost-of-Living Adjustment (COLA) feature, which increases your disability benefits over time to keep pace with inflation. The aim is to ensure that your benefits maintain their purchasing power and you can continue to afford your necessities.
Finally, your long-term disability benefits may or may not be subject to some form of offset. Indeed, an insurer may implement an “offset” whereby they reduce your LTD benefits by the amount you receive from other sources, such as Social Security Disability Insurance (SSDI) or workers’ compensation. The idea is to prevent “double-dipping,”—defined as receiving more than 100% of your previous salary. Still, offsets are not universal. It is highly case specific.
At Bartolic Law, our Illinois long-term disability lawyer has the specialized skills, experience, and legal expertise that you can count on in complex cases. If you have any questions about how much long-term disability pays, please do not hesitate to contact us for a free, no-obligation consultation. We handle claims and appeals in Chicago, Cook County, and beyond.