Long-Term Disability Insurance FAQs
- What is LTD, and how does it work?
- How much does coverage cost?
- What is a waiting period?
- Why would I want LTD insurance?
- Where can I find my current coverage information?
- How is LTD different from Workers Compensation?
- Why are the 30 and 60 day waiting periods ending? If I have a 30 or 60 day plan, what will happen to my coverage?
- If I am eligible for Paid Family Medical Leave in January 2020, do I still need LTD?
- I have a pre-existing condition. Can I still apply? When could I expect to be covered for that condition?
- How do I enroll or change my optional LTD waiting period?
- How long could I expect an LTD benefit to be paid?
- Are there any employees that are not eligible for LTD coverage?
- How will my current leave accruals affect an LTD policy?
- Can I purchase LTD for my family?
- Can I continue my LTD coverage after I resign/separate or retire from WSU?
What is LTD, and how does it work?
Long Term Disability (LTD) insurance is a wage insurance policy to help provide financial replacement should you become medically unable to work due to health reasons.
WSU automatically provides a basic policy for all benefit-eligible employees. After a 90 calendar day waiting period, this basic policy would pay a minimum $50 monthly benefit, up to a maximum $240 a month. This portion of the benefit is taxable.
The optional policy ensures that up to 60% of eligible wages are covered, in an effort to provide a proximate replacement of an employee’s net pay. The majority of this portion is non-taxable. This policy insures the first $120,000 worth of annual salary; in other words, for employees who make more than this amount annually, only the first $120,000 will be covered.
Examples:
| Appt Length | Monthly Salary | Basic Benefit (taxable) | Supplemental Benefit (non-taxable) | Retirement Plan Contribution*** | Total Benefit |
|---|---|---|---|---|---|
| 12 months | $2,500 | $240 | $1,260 | PERS- $0 | $1,500 |
| 12 months | $5,000 | $240 | $2,760 | WSURP- $750 | $3,750 |
| 12 months | $10,750* | $240 | $5,760 | WSURP- $1,500 | $7,500 |
| 9 months | $4,500** | $240 | $1,785 | TRS- $0 | $2,025 |
*Since insurance only covers the first $120,000 of salary, this individual’s claim will be based on a $10,000 monthly salary instead of their full salary.
**For less than 12 month appointments, salary is converted to a 12 month salary rate to determine the benefit. For example, $4500 x 9 months/12 months = an equivalent $3375 a month salary over a 12 month period. The LTD benefit normally pays over 12 months for all employees, not just during the normal appointment period.
***Participants of the WSURP will receive an additional benefit in the form of a retirement contribution. DRS participants (PERS, TRS, LEOFF) will not receive retirement contributions, but in the event of a permanent or long-term condition, they may be eligible for a possible pension benefit through LTD coverage at the time of their normal social security retirement age.
How much does coverage cost?
Premiums are determined by: 1) the selected waiting period, 2) how much you earn, and 3) what retirement plan you participate in.
Employees participating in the Higher Education Retirement Plan, or what WSU refers to as the Washington State University Retirement Plan (WSURP), will also receive a 10% (under age 35) or 15% (age 35 and over) contribution to their WSURP account in addition to the 60% salary replacement.
| Benefit Waiting Period | WSURP Participants | TRS, PERS, Other Plan Participants |
|---|---|---|
| 90 days | 0.72% | 0.60% |
| 120 days | 0.42% | 0.36% |
| 180 days | 0.32% | 0.28% |
| 240 days | 0.30% | 0.27% |
| 300 days | 0.28% | 0.25% |
| 360 days | 0.27% | 0.24% |
Example: An employee earning $3,500 a month would pay the following monthly premiums:
| Waiting Period | WSURP | PRS/TRS/Other |
|---|---|---|
| 90 day | $25.20 | $21.00 |
| 120 day | $14.70 | $12.60 |
| 180 day | $11.20 | $9.80 |
| 240 day | $10.50 | $9.45 |
| 300 day | $9.80 | $8.75 |
| 360 day | $9.45 | $8.40 |
What is a waiting period?
The waiting period is the number of calendar days that must pass before an LTD insurance benefit would begin to pay out. Waiting periods may be affected by your sick leave balance; for more information on this see How will my current leave accruals affect an LTD policy?
Why would I want LTD insurance?
When considering whether you may need LTD coverage, ask yourself the following questions:
• How long could you get by without your salary if you were unable to work?
• Do you have other sources to rely upon, and if so, for how long? For example, do you have savings you could tap into, or are you a two income family that could get by on one salary for a period of time?
• What is your family history? Are there chronic or terminal medical conditions in your family history that may arise in your future as well?
• Do you have an existing condition that could cause a future period of disability?
• Have you previously been denied for LTD coverage?
Keep in mind that the LTD benefit will cover:
• Temporary conditions: These are usually one-time events where you are off work for a period of time for treatment and recovery, and expected to return to full work capacity following your period of leave.
• Permanent disabilities: These are conditions that may require you to stop working completely and go onto full disability.
• Partially permanent disabilities: These could be conditions that impact your ability to work full time, and reduce your work schedule on a permanent basis. The LTD benefit does have the ability to provide a benefit for reduced workloads on a permanent basis.
• Part-time disabilities: These could be one-time events where you can work, but perhaps not full time, for a period of time.
Where can I find my current coverage information?
Employees can verify if they have optional LTD coverage and view their selected waiting period through Workday. Once logged in, click the Benefits tile, then View Benefit Elections. Basic/Employer-paid LTD will be displayed for all benefit-eligible employees, and Supplemental/Employee-paid will be displayed for those who are enrolled, with the waiting period detailed in the Coverage column.
How is LTD different from Workers Compensation?
Workers Compensation covers work-related illnesses and injuries, and provides a salary replacement for employees on approved claims. LTD insurance will cover any eligible injury or illness, work-related or otherwise. Employees on approved Workers Compensation claims could still be eligible to receive the minimum benefit from LTD insurance. For non-work related disabilities, the full basic and optional benefit could be payable.
Why are the 30 and 60 day waiting periods ending? If I have a 30 or 60 day plan, what will happen to my coverage?
The shorter waiting periods are being replaced by the new Washington State Paid Family & Medical Leave program, which will offer eligible employees 12 to 18 weeks of paid leave after a qualifying event.
Newly eligible members enrolling in optional LTD are no longer able to choose a 30 or 60 day waiting period. Employees who enrolled before January 1, 2019 and chose a 30 or 60 day waiting period can keep that level of coverage through December 31, 2019. You can request to extend your waiting period to 90 days or more at any time and it will go into effect the first of the following month, however inaction on your part will automatically result in a change to the 90-day waiting period occurring on January 1, 2020.
If I am eligible for Paid Family Medical Leave in January 2020, why would I need LTD?
The maximum payout period under Washington PFML will range from 12 to 18 weeks. If you need to be off work for more than 12 to 18 weeks, an LTD policy could offer you continued protection at this point.
I have a pre-existing condition. Can I still apply? When could I expect to be covered for that condition?
Newly eligible employees who apply for coverage during their initial enrollment window cannot be denied for pre-existing conditions. However, you will need to have 12 months plus one day of continuous coverage before the pre-existing condition would be covered. Unrelated medical conditions or disabilities that occur after your policy goes into effect could be immediately covered; only pre-existing conditions require a waiting period of one year before being eligible for a claim. The exclusionary period ends after one year and one day, at which point pre-existing conditions may be considered for coverage as any other medical condition would.
A pre-existing condition is defined as a mental or physical condition for which you sought medical treatment or services or took prescribed medications within 90 days prior to your plan’s effective date.
How do I enroll or change my optional LTD waiting period?
Hard copy enrollment forms are available at HRS Benefits, French Administration Room 139 in Pullman, and PDF versions are available for download at the Benefits Forms web page.
Forms can be submitted to HRS Benefits at PO Box 641014, Pullman, WA 99164-1014, by fax at 509-335-1259, or delivered to your campus’ HRS office.
If you are applying for coverage or attempting to shorten your optional waiting period outside of your initial enrollment window, you will be required to fill out an evidence of insurability form to be reviewed for possible approval by The Standard Insurance Company. Optional waiting periods may be lengthened at any time without evidence of insurability.
How long could I expect an LTD benefit to be paid?
The basic and optional benefit duration is based on your age when the disability begins. For DRS participants (PERS, TRS, LEOFF), there may be a possible pension benefit paid at the end of the maximum benefit period identified below.
| Age | Maximum Benefit Period |
|---|---|
| 61 or younger | To age 65, or normal retirement age (SSNRA), or 42 months, whichever is longest |
| 62 | To SSNRA or 42 months, whichever is longest |
| 63 | To SSNRA or 42 months, whichever is longest |
| 64 | To SSNRA or 42 months, whichever is longest |
| 65 | 24 months |
| 66 | 21 months |
| 67 | 18 months |
| 68 | 15 months |
| 69 or older | 12 months |
Are there any employees that are not eligible for LTD coverage?
Employees who are not eligible for the public employee benefit board (PEBB) benefit package are not eligible to enroll in LTD insurance. Additionally, employees who work on a seasonal basis and whose appointment term is less than 9 months are not eligible for this benefit.
How will my current leave accruals affect an LTD policy?
If an LTD claim is approved, benefits will begin at the end of the elected waiting period OR when your sick leave balance would be depleted, whichever is longer. For example, if you select a 90-day waiting period, but you have 110 days of accrued sick leave, 110 days would need to pass before the LTD benefit would be paid.
Many people will keep this in mind when selecting their waiting period, and choose a waiting period that is equivalent to or greater than their sick leave balance. This will be a logical plan for a first disability occurrence, however if a second disability occurs and this person had depleted the majority of their sick leave balance, they would no longer have a large sick leave accrual to rely upon.
Can I purchase LTD for my family?
No. Since LTD coverage is a wage insurance policy, only wages earned at WSU are insured. This coverage is only available to eligible WSU employees.
Can I continue my LTD coverage after I resign/separate or retire from WSU?
It depends. If at the time of separation you are not on an existing LTD claim, your coverage will end. Since this insurance is essentially a wage insurance, and you will no longer have WSU wages to insure, coverage will cease.
However, if a disability arose prior to your separation date, and that disability caused you to separate on a full or part-time basis, you could potentially be eligible for a benefit even though you are no longer employed. The determining factor in this is whether or not the disability occurred prior to your last day of work. For more information on this, see How long could I expect an LTD benefit to be paid?