Long-term disability benefits replace part of your income when you cannot work due to illness or injury for an extended period

Long-term disability (LTD) benefits are monthly payments from an insurance policy—usually provided by your employer—that cover a portion of your wages while you are unable to work. Unlike short-term disability, which typically covers weeks or a few months, long-term disability can last for years or until you reach retirement age, depending on the policy terms.

Most long-term disability policies replace between 50 and 70 percent of your gross income, though the exact amount depends on what your employer's plan specifies. The payments begin after a waiting period called the elimination period, which is usually 90 days but can range from 30 to 180 days. During that waiting period, you receive no LTD payments—you may instead use short-term disability, sick leave, or unpaid leave.

Long-term disability is distinct from Social Security Disability Insurance (SSDI). SSDI is a federal program with its own rules, medical standards, and payment amounts. You can receive both LTD and SSDI at the same time, though many LTD policies include an offset clause that reduces your LTD payment by the amount you receive from SSDI or other government programs.

Key Takeaways

  • Long-term disability replaces 50 to 70 percent of your income while you cannot work, with payments starting after an elimination period of typically 90 days.
  • Your employer's plan document specifies the exact benefit amount, elimination period, definition of disability, and how long benefits last.
  • LTD policies often reduce your payment if you receive SSDI, workers' compensation, or unemployment benefits—a practice called offsetting.
  • You must provide medical evidence that you meet your plan's definition of disability, which varies by policy and may require periodic recertification.
  • Long-term disability is not the same as SSDI; you may receive both, but the LTD payment is usually reduced by the SSDI amount.

How the elimination period works and why it matters

The elimination period is the number of days you must be unable to work before long-term disability payments begin. Common elimination periods are 30, 60, 90, or 180 days. During this time, you receive no LTD income—you are expected to use accrued paid leave, short-term disability, or go without pay.

Longer elimination periods (like 180 days) usually mean lower insurance premiums for your employer, so they are more common in group plans. Shorter elimination periods (30 or 60 days) cost more but get you paid sooner. Your employer chooses the elimination period when they purchase the policy; you cannot change it on your own.

The elimination period clock starts on the date your doctor says you became unable to work, not the date you filed a claim. If you are on short-term disability, the days you receive short-term payments usually count toward the elimination period, so long-term disability begins when short-term ends—assuming you still meet the disability definition.

What "disability" means under your employer's plan

Long-term disability policies define disability in specific ways, and the definition in your employer's plan may differ from SSDI's definition. Most employer plans use one of two definitions: own-occupation or any-occupation.

Under an own-occupation definition, you are disabled if you cannot perform the duties of your specific job, even if you could work in another field. This is the more generous definition. Under an any-occupation definition, you are disabled only if you cannot perform any job you are reasonably suited for by education, training, or experience. This is more restrictive and is used in most group employer plans.

Some plans also specify a partial disability or residual disability benefit, which pays a reduced amount if you return to work part-time or in a lower-paying role. The plan document spells out the exact definition, the medical evidence required to prove it, and whether you must be examined by the insurance company's doctor.

How offset clauses reduce your payment

Many long-term disability policies include an offset clause that reduces your monthly LTD payment by the amount you receive from other sources. The most common offsets are for SSDI, workers' compensation, and state disability insurance.

For example, if your LTD policy pays $3,000 per month and you receive $1,500 per month from SSDI, your LTD payment may be reduced to $1,500 (so your total income is $3,000). Some policies offset only SSDI; others offset SSDI plus workers' compensation plus unemployment. The offset rules are in your plan document.

This matters because it means receiving SSDI does not increase your total monthly income—it straightforward shifts which program pays. However, SSDI also provides Medicare may be able to access after 24 months, which LTD does not, so the programs serve different purposes even when offset applies.

How long benefits last and what happens at retirement

Long-term disability benefits last until one of several events occurs: you return to work, you reach the plan's maximum benefit period, you reach retirement age, or you no longer meet the disability definition. Maximum benefit periods vary widely—some plans pay until age 65, others for a fixed number of years (like 5 or 10 years), and a few pay indefinitely.

When you reach your plan's normal retirement age (usually 65), LTD payments typically end and you become responsible for claiming Social Security retirement benefits or other retirement income. Some plans allow you to continue LTD past retirement age if you have not yet reached it, but this is less common.

If you improve and return to work, even part-time, you must report this to the insurance company. Continuing to receive LTD while working without disclosing it is considered fraud and can result in repayment demands and legal action.

Medical evidence and ongoing proof of disability

To begin receiving long-term disability, you must submit medical evidence that you meet your plan's disability definition. This usually includes a statement from your treating physician, medical records, test results, and sometimes a report from a specialist. The insurance company reviews this evidence and decides whether to approve your claim.

After approval, most plans require periodic recertification—usually annually or every two years—to confirm you still cannot work. You may be asked to submit updated medical records, attend an examination by the insurance company's doctor, or provide a new statement from your physician. Failure to provide this evidence can result in suspension or termination of benefits.

The insurance company may also conduct surveillance or request vocational assessments to determine whether you could perform other work. This is legal and common, especially as you approach the end of the elimination period or if your claim lasts several years.

The relationship between long-term disability and SSDI

Long-term disability and SSDI are separate programs with different rules, but they can work together. You can receive both at the same time, though as noted above, your LTD payment is usually reduced by your SSDI amount.

Many people on long-term disability also file for SSDI because SSDI provides health insurance (Medicare after 24 months) and because SSDI benefits may continue longer than the employer's LTD maximum period. However, SSDI has a strict medical standard and a lengthy approval process, so approval is not certain.

If you are on LTD and considering SSDI, file for SSDI sooner rather than later. The SSDI process process takes months, and benefits are not retroactive beyond 12 months before the approval date. The sooner you file, the sooner your waiting period for Medicare begins.

What to do if your long-term disability claim is denied

If your LTD claim is denied, the insurance company must provide a written explanation of the reason. Common reasons include: the condition does not meet the plan's disability definition, insufficient medical evidence, or a pre-existing condition exclusion in the policy.

You have the right to appeal a denial. The appeal process is outlined in your plan document and usually requires you to submit additional medical evidence or a written statement explaining why you believe the denial was wrong. Appeals must be filed within a specific time frame—often 30 to 90 days—so check your denial letter for the important date.

If the appeal is also denied, you may have the right to sue the insurance company under the Employee Retirement Income Security Act (ERISA). This is a complex legal process, and many people consult an attorney who specializes in disability insurance before pursuing it.

Frequently Asked Questions

Can I receive long-term disability and Social Security Disability Insurance at the same time?

Yes. Most people receive both, though the long-term disability payment is usually reduced by the SSDI amount due to an offset clause in the employer plan. The total of both payments is typically what the LTD policy would have paid alone.

What happens to my health insurance while I am on long-term disability?

This depends on your employer's policy. Some employers continue your health insurance while you are on LTD at no cost to you; others require you to pay your share of the premium. Check your plan document or ask your HR department. If coverage ends, you may be able to continue it under COBRA for up to 18 months, though you pay the full premium.

Does long-term disability count as income for tax purposes?

Long-term disability paid by your employer is taxable income if your employer paid the premiums. If you paid the premiums with after-tax dollars, the benefits are not taxable. The insurance company will send you a 1099 form showing the taxable amount. SSDI is not taxable, but the offset means you are receiving less LTD, so your overall tax liability may be lower.

What if I improve and can work part-time—do I lose all my benefits?

Not necessarily. Many plans offer a residual or partial disability benefit that pays a reduced amount if you return to part-time work or earn less than you did before. The amount depends on how much your income has decreased. You must report any work to the insurance company; failing to do so is fraud.

How do I find out what my long-term disability plan actually covers?

Ask your HR or benefits department for a copy of the plan document (also called the Summary Plan Description). This is a legal document that spells out the elimination period, benefit amount, definition of disability, maximum benefit period, offset rules, and appeal process. You have the right to receive this document at no cost.