I am David Martin with the Martin Law group. We help people with disability policy claims and ERISA claims. This and other videos are posted to help you understand your policy. I post a new term every Thursday. Subscribe to get the Edge in understanding your policy.
Today let's talk about the calculation of your disability benefit. With a private disability policy you should look to see if there's a set amount for the disability benefit. That is often in the schedule of benefits. That is your benefit amount but there can be cost-of-living adjustments if your policy has that. The more complicated calculation is with a group disability policy which pays a percentage of your income. First determine the percentage of your income the benefit will pay. That percentage may be 50% or 60% and I've seen some policies that were 40% and 70%. Then second look at what is included in your income. Policies can exclude over time, shift differential, and bonuses. That is where a danger arises since some occupations require long days or work weeks or pay mostly with bonuses. Third look at the maximum benefit provision. If you multiply that percentage by your covered income is that number larger than the maximum benefit provision? For example if your income is $10,000 per month and your benefit percentage is 60%, your benefit would be $6000 per month. However if the maximum income benefit is $5000, then your benefit is reduced to that amount. Then fourth you have to look at offsets or reductions to that benefit amount. These are called other income and they can reduce your benefit. Another danger arises here too, if you could have avoided an offset by timing or how your received the income – such as a 401k distribution. You subtract that income from your calculation and the net is your actual benefit. For example, if you are receiving $5000 a month, but you receive other income of $3000 per month then your benefit will be $2000 per month. The benefit calculation can be complicated as each part of the calculation usually is a defined term. Watch other videos for more on other income.
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The lawyers in our firm are focused on helping people with disability policies and ERISA claims. We want to give you the edge in understanding your policy. Today, we want to help you understand what the term “calculation of benefits” means in your disability policy. Remember our ERISA attorneys and long-term disability lawyers are here to help if you run into problems. Contact us at the first sign of trouble with your disability claim. Whether you or your client needs advice before applying or appealing for ERISA benefits such as long-term disability, short-term disability, life insurance, pension, or retirement, contact an experienced ERISA disability attorney at The Martin Law Group at 800-284-9309.