How to Use the Long-Term Disability Calculator
We have two LTD calculators you can choose from: the basic and the advanced. If you do not have a copy of your long-term disability insurance policy, we suggest using the basic calculator, which will ask generalized questions concerning your:
- Date of birth;
- Date last worked;
- Your policy’s elimination period;
- Whether you have already received LTD benefits;
- Pre-disability annual salary; and
- The amount of any SSDI benefits you receive.
This basic calculator will make certain assumptions to calculate your estimated LTD benefits.
These assumptions include:
- Your policy pays benefits until age 65;
- Your policy’s elimination period is 180 days unless you specify differently; and
- Your policy’s monthly benefit covers 60 percent of your pre-disability earnings.
However, if you do have a copy of your LTD insurance policy, then we recommend using the advanced calculator. The advanced calculator factors in your policy’s specific provisions to calculate a more accurate estimated benefit amount.
Be sure to have a copy of your long-term disability insurance policy next to you so that you may fill in the necessary information as applicable.
Date of Birth and Maximum Benefit Period
When you begin using the long-term disability calculator, you will first enter your date of birth. Knowing your date of birth helps the calculator determine when your maximum benefit period ends. The maximum benefit period is the total period of time for which you can receive benefits under your policy.
Next, you tell the calculator whether your policy states that your benefits are payable up to a certain age or for a certain number of months. You will then be asked to enter the age benefits are payable until or the number of months benefit are payable for, as applicable. This information is typically found in the schedule of insurance or schedule of benefits at the beginning of a policy.
Generally, as long as a claimant remains disabled and otherwise entitled to benefits under the terms of the policy, many policies will provide LTD benefits until a claimant’s retirement age. However, if a claimant was already near or past retirement age at the time they became disabled, then the policy may specify that benefits are payable for a certain number of months, rather than until a certain age. Additionally, some policies may only pay benefits for a set period of time regardless of the claimant’s age.
Whichever your policy specifies and is applicable to your disability is considered the maximum benefit period.
Nonetheless, it is important to mention that, as we will discuss more later, there could also be limitation provisions in your LTD policy that limit the amount of benefits you can receive if they apply to your claim. Thus, the LTD benefit end date is whichever of the following occurs earliest:
Benefit Start Date
Next, you will enter the date you last worked and the number of days in your policy’s elimination period (a.k.a., the benefit waiting period). To determine when your benefits should start, the calculator will take the date you last worked and add the number of days in the elimination period.
If you have not received any LTD benefits yet, then past due benefits will run from the calculated benefit start date. However, if you already received LTD benefits under your policy, then you can input the date you last received a payment; past due benefits will instead run from this date.
Pre-Disability Earnings
Next, you can input whether your policy provides that your benefits will be a specific monthly amount or a specific percentage of your pre-disability earnings. If it is a specific amount, then you will be asked to input that amount and the calculator will use this number to determine your benefit payments.
However, if you select percentage, then there will be a few additional questions:
- What is the benefit percentage?
- What was your pre-disability salary?
- Does your LTD policy include other amounts in its definition of pre-disability earnings (e.g., commissions or bonuses)?
- What is the minimum monthly benefit?
- What is the maximum monthly benefit?
The calculator will use this information to determine your gross monthly benefit. Your gross monthly benefit is either the specific monthly amount you entered, or the benefit percentage multiplied by your monthly pre-disability earnings (as defined by your policy’s definition of pre-disability earnings).
However, if your calculated gross monthly benefit exceeds your policy’s specified maximum monthly benefit, then the maximum monthly benefit is the gross monthly benefit.
Long-Term Disability Offsets Calculation
It is crucial to take offsets into account when calculating your total LTD payout, as these offsets can lower the benefit amount payable by the insurer.
To determine whether your LTD benefit will be reduced, check your policy to see if it reduces your LTD benefits by other benefits you are receiving and, if so, what other benefits are considered offsets. SSDI benefits are the most common, but there may be others, such as:
- Workers’ Compensation Benefits;
- VA Benefits;
- Pension Benefits;
- Third-party settlements;
- And others.
You will be asked whether you are receiving SSDI, and, if so, you will be asked to input the amount you are receiving.
Note: LTD policies may also offset any SSDI benefits you are receiving for dependents.
If you are receiving any other applicable offsets under your policy, then you can input these next. Your SSDI benefits and any other applicable offsets will be subtracted from your gross benefit amount. This is your net benefit amount.
Note: It is important to keep in mind that if you are not currently receiving other benefits such as SSDI or other offsets, they will not be factored into this LTD benefit calculation. If you start receiving such benefits in the future, then your LTD benefits will likely be lower than the estimate provided by this calculator. Moreover, if you are paid LTD benefits without an offset for other benefits, and are later awarded other benefits such as SSDI, that may result in an overpayment on your LTD claim, such that you have to pay money back to the insurer.
It is also important to note that many LTD policies also have a minimum benefit, which is usually around $100 or 10% of your gross benefit amount. If offsets reduce your LTD benefit below this minimum, then the minimum benefit amount typically becomes the net benefit amount.
Importantly, some policies may not contain any offsets at all. If this is the case, then the gross monthly benefit amount will be used in the calculations.
Determining Limitations and Exclusions
Many policies include limitations and/or exclusions which can impact the benefits you receive.
First, the calculator will ask you if your policy contains any limitations applicable to your condition. Some examples include a mental/nervous limitation; a self-reported symptoms limitation; and/or a specific medical condition limitation. Often, such limitations will provide that benefits are only payable for a certain number of months if your disabling condition falls under the terms of the limitation (regardless of what the maximum benefit period would otherwise be). The period for which benefits are payable under such limitations will vary from policy to policy. If your policy has such a limitation that applies to your disabling condition, you will be asked to enter the maximum number of months benefits are payable under this limitation.
When calculating LTD benefits, an applicable policy limitation becomes the maximum benefit period unless it would be longer than the maximum benefit period specified in your policy’s schedule of benefits as discussed above.
For example, if someone becomes disabled and has to stop working due to depression at age 70, and their policy schedule says that benefits are only payable for a maximum of 12 months based on the claimant’s age; then it would not matter if their policy also contained a 24-month mental/nervous limitation: they would still only receive LTD benefits for a maximum of 12 months.
Next, the calculator will ask you about any applicable policy exclusions, i.e., provisions that exclude certain disabilities from coverage altogether. Examples of common policy exclusions include pre-existing condition exclusions or specific medical condition exclusions.
If your policy does not contain any exclusions, then you will receive your final calculation of your estimated LTD benefits. If your policy does have such an exclusion, then you will still receive a calculation of your estimated LTD benefits , but with a warning that the exclusion could have a significant impact on your benefits.
Regardless of the payout calculation our calculator provides, it is important to remember that these numbers only represent estimated potential benefits. The numbers our calculator generates based on the information you provide does not guarantee that you will receive any specific amount of benefits or any benefits at all, and they should not be used for financial planning.
Call Chisholm Chisholm & Kilpatrick for a Free Case Evaluation
Applying for long-term disability benefits can be stressful, and determining how much your benefits will pay can be difficult. There are many variable components that affect how much your LTD insurance policy will provide you, but our calculator can help give you an idea of what to expect.
If you need help filing an initial claim or appealing a denial of long-term disability benefits, then our team at Chisholm Chisholm & Kilpatrick may be able to help. We have over 20 years helping LTD claimants receive the benefits to which they are entitled. Call us today at (800) 544-9144 for a free case evaluation with a member of our team.
