The below post is taken from the Video Blog, the Subject Matter Minute. If it’s a little hard to read, it’s because it’s taken from the spoken word. You can view the episode on YouTube if you would like. Find it here: Episode #8 – Short & Long Term Disability Insurance.
If YouTube is blocked for you or your agency, you can scroll to the bottom of this post to view it from Google Drive.
You can also listen to an audio version: Episode #8: Short & Long Term Disability Insurance.
Hello, and welcome to another episode of the Subject Matter Minute. If you’re new here, my name is Matt Nagy and I work for A&I… more specifically HRD or Human Resources Division. I’m a trainer. Thanks for joining us, and if you like what you see in here, please pass
the word to your coworkers!
Before we get started… like usual, I want to thank our subject matter expert from last month who was Employees’ Group Insurance, or EGI. We’re gonna be hitting them up a lot… they are going to be my subject matter expert a lot because they deal with a ton of our benefits. There’s some other stuff but they are the go-to for a lot of them, so thanks again EGI, your a whole crew down there… appreciate what you’ve been doing and appreciate your hard work!
I want to go into my background a little bit again. I am a child of the 80s. I went to high school in the 80s… graduated in 88, so you know what that means? Yes, I loved hair bands… big time. I still do to a certain extent. I was in Casper a lot because Casper was the cultural hub of the hair band era! They somehow brought in all the bands that mattered… we’re
talking Slaughter, Cinderella, Guns and Roses, Bon Jovi… they brought them all in. So I was in Casper and I probably rubbed shoulders with a bunch of you folks out there! You know it’s true, we all loved them.
At the time, a lot of people had really long hair. I was too lazy to grow out long hair so instead, I did with a lot what a lot of lazy people did at that time and I went with the mullet. Yeah pretty hot…
And, if you ask my wife or a lot of my friends they would attest to the fact
that I kept it all at way past its period of usefulness… way past when I
should have. However, I really liked it, I enjoyed having some hair, and now since I don’t anymore…
Eventually I’ll probably be blading it all off because this is getting really thin… it’s that natural progression.
Big shout out to the Casper folks and the Casper Event
Center for getting me in trouble in my youth and allowing me to sneak off to concerts… it was a lot of fun.
All right we’ve got to get to the subject at hand… this month we’re going to be covering short term disability and long term disability insurance.
First, like usual, I need to thank this month’s subject matter expert which, again, is EGI or Employees’ Group Insurance. This is another one of the items in their boathouse. Especially Pam… Pam helped me out, got all this information to me, and i really appreciate it… thanks Pam.
Basically short term disability and long term disability insurance will cover your income in the case of you getting disabled in one way or another. I think I’d better clarify and say that actually they cover a portion of your income, but I’ll get into that later. If something happens, and you’re unable to work, what would you do without
a paycheck? That’s what this is for.
First, let’s go over how it works. Let’s talk about short term disability. Short term disability will cover your income up to 66 2/3 percent.. don’t ask me why it’s that strange number. 🙂 It starts at 14 days after you
become disabled. It’s short term in that it covers the short term. It starts at 14 days and goes through a hundred and eighty days, which is six months. There is a cap… I believe it’s $1,500 a week or six thousand dollars a month. This doesn’t really come into play for most of us because if you’re making six thousand dollars a month at 66 2/3 percent you’re making good coin… congratulations! But most of us don’t need to worry about the cap.
Long-term disability is just what it says… it’s for the longer term. If you have both short term and long term, long term starts when short term ends. Short term ends at six months (180 days) and that’s when long term disability starts. If you don’t have short term then long term starts at six months. It can go up to three and a half years but that depends on your age. If if that comes into play, go ahead and look down in the notes below the show and you’ll see how it breaks down. Basically, as you get older, the long term disability lasts a shorter amount of time.
There’s some differences… long term disability is at sixty percent of your income, so you’re making a little bit less. The premiums are less as well. You’re only getting sixty percent of your income. The cap on long-term disability is sixty-five hundred dollars a month, so a little bit more, but again, if you’re reaching that… good for you! Most of us are not.
As a quick recap short-term disability pays from fourteen days after the disability to six months, and it gives you 66 2/3 of your income. Long term disability starts at six months and goes to potentially three and a half years at sixty percent of your income.
I need to back up a little bit… if you sign up as a new employee within 31 days of eligible eligibility, you’re good to go, but if you don’t and you decide to sign up later, there’s a couple differences. With short-term disability, if you get disabled in the first 12 months then you’re going to have a 60-day waiting period in that first year… just for signing up after the 31 days of eligibility.
The difference with the long term disability is substantial in that if you don’t sign up as a new employee in that 31 days – you sign up later – you have to go through the company that actually gives us this insurance, and you might get turned down. So it pays, if you think you’re gonna need these sorts of things, to do it when you’re a new employee within the first 31 days.
A couple more things… first of all your premiums (premium calculators: Short Term / Long Term) come out post-tax so these aren’t lowering your taxable income… they come out after tax. But when you get paid, if you’re disabled, that money is untaxed income. There’s a trade-off there I guess.
There’s one more item that I forgot to mention early. With short term disability you have to use up all your sick leave first. So really, short term disability is for somebody who has a low accrual of sick leave or uses it often enough that it’s always gonna be a low pile of hours. You are going to have to use that sick leave first and that shortens the amount of time that you can do short term disability. If you are unable to keep a nice balance of sick leave then short term disability is a good idea; if you have a ton of sick leave, which a lot of longtime employees do, long term disability might be a better idea. So once again here is a link (short term / long term) to figure out what your premium would be for both short term and long term. It’s not very expensive… especially long term. I think I figured out mine was six or seven bucks a month or something like that, and of course it’s based on your income and your age.
I think this episode is a little bit shorter than they’ve been in the past (shorter? not even close) I hope I got you all the information that you need. If not, look down on the notes first because we’re gonna post some more stuff down there. You can also call EGI with questions
Feel free to comment below. Feel free to email me. If you have questions, make sure you get them answered.
I think that’s good for this month. I’ll see all you eighties children and the
rest of you next time! Please come back and see the next episode and thanks for watching the Subject Matter Minute.
Here is the full episode!