• David Martin

#FAQuesday: How is Long Term Disability Calculated?



We're bringing back "FAQuesday," highlighting and answering the questions we hear most often from clients. Today's question is "How can I calculate my long term disability benefit?" This can depend on a number of factors, all of which we discuss in today's video.


How Do I Calculate My Benefit?


1. Look for the benefit percentage of your income included within the LTD policy or plan document.

  • Most commonly, it is 60% of your income.

2. Look at what the LTD policy or plan document defines as your "predisability earnings" or the amount you were previously making before your disability.

  • Timeframe for calculating this can vary (e.g. one month, two weeks, one year, etc.).

3. Apply the benefit percentage to you predisability earnings to determine the amount of your long term disability benefit.


4. Calculate when you will begin receiving the benefit as determined by the "elimination period."

  • Definition of elimination period can vary (e.g. 30 days, 60 days, 90 days, etc.).

5. Calculate when you will receive your benefit as defined by LTD policy.

  • This can vary (e.g. once per month, biweekly, etc.).

6. Calculate the end date of your benefit or when payment will stop.

  • This can vary (e.g. five years, until you reach retirement age, retirement age as defined by Social Security, etc.).


Exceptions & Things to Watch For

  • Exception: If someone just became eligible for long term disability insurance, and the period defined as the predisability earnings does not apply. They would average your predisability earnings during the actual time period you were employed.

  • Watch out for what is and isn't included in those predisability earnings (e.g. paid time off, vacation, commissions, etc.).

  • Watch out for prorated amounts due to partial months.


Whether you or your client needs advice before applying or appealing for ERISA benefits such as long term disability, short term disability, life insurance, pension, or retirement, contact an experienced ERISA disability attorney at The Martin Law Group at 800-284-9309.


As required by the Alabama Rules of Professional Conduct Rule 7.2, no representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. The information presented in this video should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. Therefore, no information of any kind that you provide us before such a relationship is created is confidential or privileged.