Should I Continue Long-Term Disability Coverage in My 60s?

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Disability can occur out of the blue - a back injury, a car accident, a medical condition you never knew you had. The university’s Expanded Long-Term Disability (LTD) plan provides financial protection from an illness or injury that would leave you unable to work.

But after age 62, special rules apply that limit how long you would receive LTD benefits. For some faculty and staff, it makes financial sense to reduce LTD coverage at age 62 and save more in a 403(b) Supplemental Retirement Account (SRA) instead.

How the LTD Plan Works

If you have two or more years of service, the university pays for coverage on your annual base salary up to $61,800 (capped coverage). You pay for optional coverage on your base salary over $61,800 (maximum coverage).

If you experience a qualifying disability, the LTD plan will replace a portion of your income.

  • About $40,000 annually with capped coverage
  • 65% of your total base salary up to $424,000 with maximum coverage

The LTD plan will also pay the cost to continue many of your other benefits, including your health plan and basic retirement plan contributions. LTD benefits begin after you use up all available short-term sick time, vacation/PTO and extended sick time.

Limited LTD Benefits After Age 62

Generally, the LTD plan pays benefits up to age 65. But special rules apply if you experience a qualifying disability after reaching age 62. These rules limit how long you would receive benefits.

Duration of LTD Benefits by Age
When Disability Occurs Maximum Length of LTD Benefits
Before age 62 Up to age 65
After age 62 but before age 63 42 months
After age 63 but before age 64 36 months
After age 64 but before age 65 30 months
After age 65 but before age 66 24 months
After age 66 but before age 67 21 months
After age 67 but before age 68 18 months
After age 68 but before age 69 15 months
On or after age 69 12 months

If you are eligible to retire, your employment status will change to “retired” when your LTD benefits end. You can also voluntarily retire before your LTD benefits end.

Consider the following to help you decide about your LTD coverage past age 62:

  • Your health status
  • When you plan to retire
  • How much short-term sick time, extended sick time and vacation/PTO you have available (all of which must be used up before LTD benefits begin)

If you do decide to reduce your LTD coverage, you may wish to contribute the amount you save for retirement in an SRA instead. You can increase your contributions to an SRA or open a new account at any time throughout the year.

More Information and Next Steps

If you wish to reduce your LTD coverage, complete the 2018 Expanded Long-Term Disability Withdrawal Form.

Find complete plan information at Expanded Long-Term Disability.