Working age adults are much more likely to suffer from a lengthy disability in a given year than to suffer death. Employers are constantly challenged to find ways to provide valuable employee benefits without increasing costs to the company. Long term disability plan is designed to protect your financial security in the event you experience a long lasting injury or illness. Disability benefits are usually provided through group long term disability plans (Group LTD) and through pension plans. In Group LTD plans, benefits end at some assumed retirement age while benefits through pension plans continue until your death.

Generally, a Group Long term disability plan is designed to provide an income to a disabled employee after a specified period of time. This plan will replace lost income after a short waiting period until an employee reaches the age of 65. Group LTD plans is an advantage on the employees part. This is because employee contributions to a Group Long term disability plan are income tax deductible to the employer. If an employee becomes disabled and receives benefits under the Group LTD plan, the benefits are fully taxed to the employee. If, however, the employee contributed to the plan, a corresponding part of the benefit is tax free to the employee.

Many pension plans supplement a Group Long term disability plan to protect disabled worker’s income after retirement. In this instance, the Group LTD plan provides income before retirement age and the pension plan provides for income after retirement age.

A pension plan is a promise by a pension plan sponsor to a plan member to provide a pension after retirement. Disability early retirement is available as early as age fifty-five and is reduced for each month you are younger than sixty-two if you qualify. In addition, disability early retirement is only allowed if the worker is totally or permanently disabled. In general, conditions for disability early retirement pension plan includes conditions such as benefit will continue throughout the lifetime of the employee, an additional benefit may be granted in respect to projected service to age sixty-five and benefit begins at the end of a short waiting period after disablement.

Organizations nowadays often sponsor both Group LTD plan and disability early retirement pension plan to provide a reasonable disability coverage for employees. However, sponsoring both this plan has some drawbacks. If a claimant can collect disability benefit from the pension plan then the monthly benefit payable to the Group LTD program is reduced. If this provision is administered inconsistently disabled workers will receive excessive income replacement. Further, claimants of a disability pension are rarely able to return to work. Thus, the administration of both disability pensions and Group LTD benefits should be coordinated properly.