January 14, 2015
New Long Term Disability Options
We are pleased to pass along to you, news from the Chamber Benefits Plan that they are offering new Long Term Disability (LTD) options.
A new graded schedule has been added for non-taxable LTD benefits available for firms choosing a 2 year, 5 year, or age 65 benefit with a 24 month own occupation definition of disability. The new schedule calculates benefits based on 67% of the first $3500 of monthly earnings, and 50% of any balance and will produce benefit levels closer to the all source maximum when compared to existing options.
To put it in perspective, the existing option is 67% of the first $2,000 and 50% of the balance.
“Closer to the All Source Maximum” – What is an All Source Maximum?
An all source maximum is the percentage of salary that an employee can receive from all income sources. To avoid over-insurance, the LTD benefit payable to a plan member is reduced – or offset – by benefits payable from government plans and other sources. Some of the most common offsets is CPP (Canada Pension Plan) and Workers Compensation.
The all source maximum will vary from person to person depending upon their pre-disability earnings and the benefits schedule. As such, typically benefits are limited to 85% of your gross monthly earnings if your monthly income under this benefit is to be included in determining the insured’s income tax, or 85% of take-home pay if the monthly income under this benefit is to be excluded in determining your income tax.
As mentioned, the new options that the Chamber Plan has now made available may give the insured, depending on their earnings, a higher benefit amount compared to existing options.
What Are the Rates for These New Options?
Rates per $100 are identical for both schedules and any increase in premiums is simply a function of greater benefit volumes created with the new schedule.
If you have any questions or if you would like more information on your benefits plan, please call our office at 604-514-3347.
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- New Long Term Disability Options
- CRA Guidelines for the Taxation of Disability Benefits
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- New Chambers Plan Certificate Numbers
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