Tuesday, May 31, 2005

Disability Insurances - What are they?

(Social Security Disability Insurance)
(Supplemental Security Income)

OBRA Insurance

These are all of the traditional disability insurances. Now we will discuss what they are, and why you should care!

STD is an insurance that you are usually provided by your Employer. It is an Insurance plan that pays out a certain amount of money for a short period of time (normally, no longer than 6 months). There is usually a week of what is called "qualifying" time before the STD payment will kick in. Most folks can take sick leave, vacation time, paid time off, or some other sort of time for this qualifying time. This type of disability payment is for an illness or injury of a limited period of time. An STD payment ranges from a low amount that would equate to a state's Unemployment payment, to a maximum of about 66% of base pay. To know about the specifics of your plan, ask the appropriate people for a copy of your STD plan's Summary Plan Description.

LTD, or long term disability insurance payment usually results from a physical or mental illness that prevents an employee from performing the job that they occupied at the time the illness/injury occurred. To receive the disability benefits insurance payment, the plan participant must qualify, based on the particular plan requirements. There also is a qualifying period of time for LTD, just like for STD, only the average LTD qualifying period of time is usually 6 months. Again, like STD, the payment out of an LTD plan is plan-specific, and can range from a finite dollar amount to a percentage of base pay. Key issues to research in your LTD disability insurance plan include, but are not limited to: pre-existing conditions; "own occupation" vs "any occupation" timeframes; whether or not the monthly benefit payment is taxable or tax free; etc. (Normally, the rule of thumb is that if the company pays for the LTD plan premiums, the benefit is taxable upon receipt; if the covered person pays for the plan premiums, the benefit is tax free.) Again, for specifics about your LTD plan, check out your Summary Plan Description.

Tomorrow, I'll discuss SSDI, SSI, COBRA, and OBRA. If you need information immediately, please check out our website at: http://www.disabilitykey.com.


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