Disability Insurance: Long Term: Group

Long Term Disability is insurance that pays a monthly benefit if you are unable to work due to a non-work related disability. To qualify for a group policy, you must be a member of the group. Groups can be any organization that is not created for the purpose of purchasing insurance - such as an employer, union, or professional association.

Many employers offer Long Term Disability Insurance to full-time employees.

Should you become disabled for a period of 6 months or longer, this coverage can provide an important supplement to Social Security Disability Insurance (SSDI).

An employer with a Group Long Term Disability Insurance plan should provide each employee with a Summary Plan Description which provides details about the plan. The main provisions include the following, which are each discussed in other sections of this article:

• Eligibility   
• Probation Period   
• Pre-Existing Condition Provisions  
• Total Disability Definition  
• Whether the policy covers "partial disability" (also known as "Residual Benefits")
• The length of time from the disabling moment until payments begin (known as the "Elimination" or "Waiting" period)  
• The benefit amount, and maximum period during which it is paid   
• Maximum benefit period  
• Survivor Benefits  
• Offsets   
• What happens if you return to work and become disabled again  
• Mental and Nervous Limitation    
• Other Exclusions and Limitations   
• Rehabilitative Training   
• Waiver of Premium    
• Conversion Privilege   
• Insurance Company financial situation   

Most group long term disabliity income insurance policies contain an "initial enrollment period"  - a period during which you can enroll in a group plan without medical underwriting (an examination of your current and past health). This is usually a limited period of time after joining the group, or after the group coverage goes into effect. People who seek to enroll in a group plan after the initial enrollment period are usually subjected to medical underwriting which looks at a person's health condition.

There is no federal law which limits the period of time during which employers and/or insurance companies may exclude coverage for disability due to a pre-existing condition.

This is unlike health insurance in which the right to restrict coverage for people with an existing health condition is limited when you change jobs or insurance carriers by the federal law known as HIPAA.

Whether or not your benefits are taxed depends on how the premiums were paid. Either the premium or the benefits will be taxed, but not both. If your employer has been paying the premium, it is arguable that if you reimburse your employer with after tax dollars for premiums paid during the past two years, the income should not be taxable. It is advisable to consult with an attorney before attempting this transaction.  To learn more, click here.    

If you need to file a claim under a Disability Insurance Policy, see: Disability Insurance: Claims, and Disability Insurance: Appeals.

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