Long Term Disability (LTD) Executive Discrimination

Feb 24, 2014

Many employers are unaware that they are not providing LTD coverage for their executives to the same extent as the majority of their employees.  Group insurance plans may have maximums that cap executive salaries at levels lower than what their full salaries would warrant.  Consider a 50 employee group with a $10,000 maximum benefit.  Any executive with an income over $250,000 would be capped with a properly designed non-taxable Long Term Disability plan.  Unfortunately, many insurers are unable to increase their maximums due to underwriting guidelines.

A solution is to implement Executive Disability programs over and above the group plan.  These may take the form of a Guaranteed Standard Issue (GSI) plan where medical requirements are very low or individual disability programs where the executives have to medically qualify.  In many situations, an employer can utilize both of these plans simultaneously.  If there are 3 or more executives, these plans can qualify as a wage loss replacement plan that will enable the employer to pay for the premiums.  While this will result in a taxable benefit at time of claim, the employee will be saved the cost of the premiums, which can be prohibitive on an individual basis.  Group discounts can also be obtained to help lower the costs.

Please contact your TRG Benefits Consultant for more information.

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