Long-term disability insurance
Table of Contents
If you’re currently healthy, disability insurance may seem unnecessary. Becoming disabled, however, is more common than you might think — the Social Security Administration estimates that just over one in four people will become disabled at some point before reaching age 67.
While everyone hopes to avoid a debilitating illness or injury, there could come a time when you’re unable to work and earn a paycheck. Should this happen, long-term disability (LTD) insurance protects you and your family by paying you a portion of your income until you can get back to work.
While enrolling in LTD insurance is automatic, understanding how it works can be tricky. Use these pages as a guide to your LTD benefits, and contact us if you need further help.
All eligible UW employees are automatically enrolled in employer-paid LTD and employee-paid LTD.
Employer-paid LTD insurance costs you nothing; coverage is part of your benefits package. Should you lose your income, an approved employer-paid LTD coverage claim pays you, after a 90 day waiting period, $240 per month (it pays less if your salary is below $4,800 per year).
Employee-paid LTD insurance provides additional coverage beyond the employer-paid LTD insurance. You will be automatically enrolled in the default coverage, which is 60 percent of your pre-disability earnings, with a salary cap of $16,667 per month. You have the option to reduce your coverage to 50 percent of your pre-disability earnings or you can waive employee-paid coverage at any time. If after reducing or waiving coverage, you wish to re-enroll or increase your coverage, you will be required to provide an evidence of insurability form which may include a health exam.
Coverage isn’t additive. Your insurance payments may be reduced if you have other sources of income. These sources are called “deductible income” or “offsets,” and they are defined in the insurance plan booklet (PDF). For example, if you receive Social Security while you’re disabled, then your LTD benefit payments will be reduced by the amount of your Social Security benefit.
How much does employee-paid LTD insurance cost?
You pay a monthly premium equal to a percentage of your monthly salary. The cost of the premium depends on the percentage of coverage you choose, and which retirement plan you participate in. Employees with the UW Retirement Plan (UWRP) pay a slightly higher percentage than employees enrolled in a DRS retirement plan (PERS, TRS, LEOFF) or employees who aren’t enrolled in a retirement plan.
|Cost (as a percentage of monthly salary)|
|Coverage Level||UWRP plan||PERS/TRS/LEOFF or no plan|
To calculate your monthly premium use the formula:
Monthly gross earnings x employee rate = monthly premium.
Both employee-paid and employer-paid LTD have 90 day waiting periods. After you suffer a debilitating illness or injury, the waiting period is the length of time between when you stop working and start receiving benefits after your approved claim. In other words, it’s how long you have to wait before the insurance company begins paying you.
During the waiting period you won’t be working, so you won’t be receiving a typical paycheck. You may still be paid, though, if you’ve saved up some sick leave (or another type of leave).
Benefits start after the benefit-waiting period, which is the longer of:
- 90 days;
- The entire period of sick leave (excluding shared leave) for which the employee is eligible;
- The “fractionated period” of paid time off (PTO) for which the employee is eligible, if your employer has a PTO plan, as those terms are defined in the policy;
- The entire period of other non-vacation salaried continuation leave for which the employee is eligible;
- The end of Washington Paid Family and Medical Leave for with the employee is receiving benefits.
Benefits continue during your disability up to the maximum benefit period. The maximum benefit period is determined by your age when your disability begins.
What is considered a disability?
For LTD insurance claim purposes, the word disability has a very specific definition that may differ from your concept of a disabled person.
A person with a disability is one who can’t work due to an illness or injury. In most cases the condition isn’t permanent — based on insurance claims, the average worker who becomes disabled misses work for about two and a half years. While sometimes an unlucky accident is the cause, most disabilities are due to relatively common illnesses such as neck and back pain, cancer, nervous system disorders, mental health problems, and heart conditions.
There are stipulations, of course, such as what differentiates a fully disabled person from a partially disabled one and what “unable to work” means, exactly. These details are important, and you can review them in the insurance plan booklet (PDF) under the “Definition of Disability” section.
But in order to choose how much LTD coverage you need, you simply need to know that LTD insurance protects your income should you lose, either permanently or temporarily, your ability to work.
Waive or change employee-paid LTD insurance
You can waive or change your employee-paid LTD coverage in Workday at any time, follow the instructions on the Decrease Employee-Paid LTD Coverage User Guide. If you waive or change your employee paid LTD, it will go into affect on the first of the following month.
File a LTD claim
Contact the UW Benefits office when you know that you can’t return to work and need to file a LTD claim. Make sure to contact us before you’ve exhausted your paid leave. For more information on filing a LTD claim please review the LTD - PEBB - Submission Form FAQ (PDF).
If your injury or illness is work related, contact Risk Services about workers’ compensation at UW.
When LTD benefits end
In general, the insurance company stops paying you benefits either when you’re no longer disabled or when you turn 65. If you’re older than 61 when you become disabled, you receive benefits for the maximum benefit period shown in the table below, or your Social Security Normal Retirement Age (SSNRA), whichever is longest.
|Age||Maximum benefit period|
|61 or younger||To age 65, or SSNRA or
42 months, whichever is longer
|62||later of SSNRA or 42 months|
|63||later of SSNRA or 36 months|
|64||Later of SSNRA or 30 months|
|69 or older||12 months|