What long-term disability insurance covers, how it pays and what it costs an employer.
How the definition of disability, offsets, limitations and benefit periods work, and what to settle with a carrier before you buy or renew. Written for the owner or HR lead.
What Long-Term Disability Insurance Is
Long-term disability replaces part of an employee’s income when a serious illness or injury keeps them out of work for months or years. It is the plan that protects against the largest income loss most employees will ever face.
Protection for Long Absences
It starts after a long elimination period and, depending on the plan, can pay for years or until a stated age. Short-term disability or sick time usually bridges the gap before it. Employers should confirm how long the waiting period runs and make sure the short-term bridge, whether a disability plan or paid leave, lines up with it so employees are not left without income. Try our free short-term disability benefit calculator to run the numbers for your own group.
Monthly Benefit
Benefits are generally a percentage of monthly earnings up to a maximum monthly benefit. Both numbers are plan design choices. Because both numbers are design choices, a plan can look generous on paper and still pay little to higher earners. Review the percentage and the cap against actual salaries before choosing. Try our free long-term disability premium calculator to run the numbers for your own group.
Medical Proof and Ongoing Review
The carrier decides the claim using medical evidence and keeps reviewing it. Benefits can end if the employee no longer meets the definition of disability. Employees should expect to supply physician statements and updates throughout a claim. Understanding that ongoing proof is part of the process helps HR set expectations before anyone needs to file. You can test your own figures with our carrier switch savings calculator.
Total Contract Matters
The definition of disability, offsets, limitations and duration are all in the certificate. Two plans with the same percentage can pay very differently. Compare the certificates side by side rather than the summary pages, and ask how each plan defines disability after the first couple of years, since that definition often tightens over time. You can test your own figures with our paid family leave cost calculator.
Job Protection Is Separate
Long-term disability pays income. It does not protect a job. FMLA leave is 12 workweeks, so a long absence may outlast any legal job protection. HR should coordinate leave tracking with disability claims so employees understand when job protection ends and when only income replacement continues. Other state or employer leave policies may add protection, so check each one.
Pairs With Short-Term
The two plans should run on one calendar. See the Short-Term Disability Insurance Guide and Disability Plan Coordination.
How a Long-Term Disability Benefit Is Calculated
We do not state typical percentages or maximums because they are plan design choices. One carrier’s published sample shows the structure, not a standard.
Benefit Percentage
The plan pays a stated percentage of pre-disability monthly earnings. MetLife’s published sample schedule pays 40 percent. Your employer chooses the percentage when the plan is built. A higher percentage replaces more income but costs more in premium, so the choice is a balance between what employees would receive and what the employer is willing to spend each month.
Maximum Monthly Benefit
A cap limits the benefit regardless of pay. MetLife’s sample uses $6,000 a month. Higher earners can have a much smaller share of income replaced if the cap is low relative to pay. Test the cap against your own payroll. If many managers or specialists earn more than the cap supports, consider whether the plan fits them or whether they need additional protection.
Definition of Earnings
Plans define covered earnings. Some include bonuses and commissions and some use base pay only. This matters for sales roles and executives. Decide who is affected before selecting the plan. If a meaningful part of pay comes from variable compensation, base-pay-only definitions can leave those employees with a much smaller benefit than they expect.
Minimum Benefit
Some plans guarantee a minimum monthly benefit even when offsets would reduce the check. The MetLife sample lists none. Ask whether yours has one. A minimum can matter for lower-paid employees whose benefit may be reduced to near zero by other income sources such as Social Security. Compare this feature when weighing plans that otherwise look similar.
Benefit Paid Monthly
Long-term benefits are paid monthly, often through the carrier. Confirm how payments are issued and how tax withholding works. Ask HR and payroll to agree on who handles tax reporting and how employees are told about it, and refer employees to a tax adviser for questions about how benefits are taxed.
Cost-Of-Living Features
Some plans offer adjustments to the benefit over time. Not every plan has them, so ask by name if it matters to you. If an adjustment feature exists, find out how it is triggered, whether it has a cap and how it affects the premium. Those details decide whether it keeps pace with rising living costs during a long claim.
Elimination Periods and Maximum Benefit Periods
These set when long-term benefits begin and how long they can last.
Elimination Period
The days of continuous disability before benefits begin. MetLife’s sample uses 90 days. The elimination period should line up with the end of short-term benefits. A longer elimination period usually lowers the premium but lengthens the time employees must cover on their own. Check that the gap between short-term coverage ending and long-term benefits starting is closed.
Maximum Benefit Period
How long benefits can be paid. In MetLife’s sample, disability before age 60 pays until age 65, and benefits end at age 70 or later. Your plan may differ. Because the duration can depend on age at onset, a younger employee and an older one can have very different protection under the same plan. Read the schedule carefully and explain it to employees.
Age-Based Schedules
Many plans tie the duration to the age at disability, often by a table. Ask for the full table, not just the headline. Employees disabled later in their careers can see much shorter benefit periods than the headline suggests. Reviewing the whole table helps HR describe the coverage accurately during enrollment and avoid surprises at claim time.
Retirement Age and Social Security
The maximum benefit period is often linked to normal retirement age. Confirm how the plan defines it. Ask the carrier to show in writing how normal retirement age is determined for employees of different birth years. That definition can change how long benefits last, so it is worth confirming before you buy.
Continuous Disability
The employee generally must remain disabled through the elimination period. Brief returns to work may restart it unless the plan allows otherwise. Employees should tell HR and the carrier about any attempt to return to work, even for a short time, so claims are handled correctly. The certificate explains how return-to-work periods are counted.
Gap Check
If the long-term elimination period is longer than the short-term benefit period, the employee has no disability income in between. Check this at every renewal. Mismatches usually appear when one plan changes and the other does not. Put the review on the renewal checklist so a change in either coverage prompts a look at how the two fit together.
Own Occupation, Any Occupation and Why the Switch Matters
The definition is the most important clause in the certificate, and it often changes after the first period of a claim.
Own Occupation
Asks whether the employee can do their usual job. MetLife’s published sample uses this test for the first 24 months. It is the easier test to meet. This test favors employees in specialized roles, since a surgeon or tradesperson may be unable to do the usual job while still able to do other work. How the plan words the job duties matters.
Any Occupation
Asks whether the employee can do any job they are reasonably qualified for by training, education or experience. It is the stricter test. Under this test, an employee who can work in another field may lose benefits even if they cannot return to their own career. Make sure employees understand this shift before they need to file.
When the Switch Happens
The length of the own-occupation period is a plan design choice. Ask when the change happens and whether the plan offers a longer own-occupation period. Employers can weigh a longer own-occupation period against the premium. For workforces with many specialized or licensed roles, this single design choice may be worth more than a small difference in monthly cost.
What Reasonably Qualified Means
The wording and any earnings test, such as a percentage of prior earnings, determine how hard it is to meet. Read the exact definition. Ask the carrier how the phrase has been applied in practice, including what training and experience count and what earnings level makes a job a suitable alternative, before you commit to a plan.
Different From Social Security
The Social Security Administration requires inability to engage in substantial gainful activity. An employee can be approved under one definition and not the other. Employees should not assume a Social Security decision predicts the outcome of a private claim, or the reverse. The two programs apply separate rules, so each decision stands on its own record.
Vocational Review
Carriers may use vocational experts to say what other work the employee could do. If your plan uses any occupation, ask how that analysis works. A vocational review can change the outcome of a claim, so employees benefit from knowing it may happen. Ask whether the plan describes what the analysis considers, and keep job descriptions current.
How the Pre-Existing Condition Limitation Works
This limitation affects new hires and employers who change carriers.
The Basic Idea
A limit on benefits for conditions the employee had treatment for before coverage began. The plan can deny or restrict claims for those conditions for a period. Employees who recently enrolled or were just hired are the most affected, so HR should explain this limit at enrollment. Ask the carrier how it treats employees moving over from a previous plan.
Three Parts
Most clauses combine a look-back period, a treatment-free test and a requirement to be insured for a set time. MetLife’s sample uses a three-month look-back and 12 months of continuous coverage. Employees can lose coverage for pre-existing conditions during the early months, so new hires should understand the timeline. Ask whether time under a prior plan counts toward the requirement when you switch carriers.
Effect on New Hires
New employees may not be fully covered for related conditions in the first year. Tell them clearly, so they do not assume they are fully covered. A short note in the enrollment materials, along with the plain-language terms of the limit, helps avoid disputes later. Employees can then judge whether other savings or protection are worth considering during that first year.
Changing Carriers
Ask whether the new carrier credits time under the prior plan, so employees already covered are not restarted on the limitation. Raise this question before you sign, because a poorly handled transition can leave long-tenured employees with less protection than before. Get the carrier’s answer in writing and share it with employees.
Evidence of Insurability
If coverage above the guarantee issue amount requires health questions, ask how that evidence interacts with the limitation. If employees must answer health questions to obtain higher amounts, the answers can affect both approval and later claims. Find out how the underwriting decision and the limitation work together, and explain the process clearly to employees who apply.
Read the Wording
Words such as “treatment,” “symptoms” and “diagnosis” are defined differently by plan. Read them closely, since they decide the result. Ask the carrier for the definitions and examples of how each term is applied to common conditions. Small differences in wording can decide whether a claim is paid, so compare plans line by line.
Limits on Mental Health, Substance Use and Other Conditions
Plans often limit how long benefits are paid for certain conditions. The limit is in the contract and varies.
Duration Cap
Benefits for mental illness, drug addiction and alcoholism may be limited to a set period. MetLife’s sample limits them to 24 months. Employers with younger workforces or high-stress roles may care more about these limits. Check which conditions fall under the cap and whether the benefit period resets after a return to work or a long recovery.
Hospital Confinement Exceptions
Ask whether the cap has exceptions, such as for hospitalization, and how they apply in your plan. Details such as the length of stay required and whether the cap restarts can change how the provision works. Request the exact language and have counsel or your adviser review it when the plan has unusual terms.
What Counts as Mental Health
Definitions vary and can include conditions with physical causes. Disputes often turn on definition, so read it. Ask whether the plan lists specific diagnoses, how it treats conditions with both physical and psychological components, and who decides the category. Having those answers before a claim helps HR guide employees accurately.
Other Limited Conditions
Plans may limit self-reported symptoms or other categories. Ask for a full list of limitations. Some conditions are harder to confirm with objective tests, so plans may treat them differently. Reviewing the full list before purchase lets you compare plans fairly and tell employees which situations might face a shorter benefit period.
Why It Matters to Employees
Employees on long claims may reach the cap and lose benefits. Communicate the limit in enrollment materials. The cap can arrive after a long, difficult recovery, which is when employees are least able to adjust. Plain language in the guide and a reminder at claim time keep expectations realistic and reduce frustration.
Parity Questions
Ask counsel whether mental health parity or other laws affect your plan, and confirm the carrier’s position in writing. Rules in this area change and apply differently by plan type and state, so this is a question for qualified counsel rather than assumption. Keep the carrier’s written answer in the plan file for future reference.
When an Employee Can Work Part-Time
Residual provisions encourage a return to work by paying a reduced benefit.
What Residual Means
A benefit paid when an employee can work in a reduced capacity or at reduced earnings. MetLife’s sample refers to residual disability after the own-occupation period. It can help employees ease back into work after a serious illness instead of choosing between full duty and no income. Ask whether the plan includes this feature and what conditions must be met.
How Earnings Are Counted
The plan compares current earnings to prior earnings and reduces the benefit based on the result. Ask for the formula. Small differences in how earnings are measured and when the reduction begins can shift the check by a meaningful amount. Ask for a worked example using a typical employee, and compare it across the plans you are considering.
Protecting the Incentive
A good design lets the employee earn more by working than by not working. Ask whether earnings plus benefit can exceed pre-disability pay. Most plans cap combined income from the benefit and earnings at a stated share of prior pay. Knowing where that cap sits tells HR whether partial work will actually improve an employee’s total monthly income.
Trial Work Periods
Some plans allow a trial return without ending the claim. Ask whether the plan has one. A trial period can give an employee the confidence to test a return without risking the claim. Find out how long it lasts, what counts as work during that time and what happens if the attempt fails.
Communication
Employees often avoid part-time work for fear of losing benefits. Explain the rules in plain language. Fear of losing benefits can delay recovery and keep people from returning when they could. Include a short example in enrollment materials and train HR contacts to explain how partial work affects the benefit.
Employer Accommodations
Part-time returns need job modifications. Counsel should review accommodation duties under the ADA and similar laws. Employers should plan ahead for how modified duties, reduced hours or remote arrangements will be handled so a return is practical. Document the process consistently and work with counsel on each situation as it arises.
Other Income That Reduces the Long-Term Benefit
Offsets are how a long-term plan avoids paying on top of other disability income. Read the list before you compare quotes.
Social Security Disability
Many plans reduce the benefit by the Social Security disability amount the employee receives, or by an estimate. MetLife’s sample schedule lists primary and family government benefits as offsets. Employees may be asked to apply for Social Security and keep the carrier informed of any award. Explain the offset to employees, since it can reduce the monthly payment they expect once approved.
Workers’ Compensation
Wage-loss benefits from workers’ compensation are commonly an offset or an exclusion. Michigan’s agency says wage loss is roughly 80 percent of after-tax wages. For the long-term disability plan, the point is how the contract coordinates with other wage-loss payments. Ask whether it is an offset or an exclusion and how the carrier learns of those payments.
State or Government Plans
Benefits from state disability programs or public plans are often listed. Michigan has no temporary disability program, but employees elsewhere may have one. Check where employees live and work, since the offset list may be written broadly. Ask the carrier how it applies to employees in other states and whether any local program changes what the plan pays.
Employer-Funded Income
Salary continuation, sick pay and some retirement or severance payments may be offset. Ask which are counted and for how long. Offsets for employer-provided income can overlap with the short-term bridge or payouts at separation. HR should map each pay type to the plan language so employees are not surprised by a smaller check.
Minimum Benefit
Without a minimum, offsets can reduce the monthly check to zero. Ask whether yours has a minimum. This feature matters most for employees with modest pay or large offsets. Compare it across carriers, since it is easy to overlook and can change how the plan treats those who most need predictable income.
Overpayments
If an offset is later approved, the carrier may seek repayment of the overlap. Ask how the plan notifies the employee and how repayment works. Employees often spend benefits as they receive them, so a repayment demand can cause real hardship. Ask whether the carrier allows installments or deducts from future payments, and tell employees before they file.
How Social Security Disability Fits With Long-Term Disability
Facts below come from the Social Security Administration. Employer plans often build around them.
Total Disability Only
Social Security pays only for total disability. It must prevent substantial gainful activity and be expected to last at least 12 months or result in death. Social Security applies a stricter standard than many private plans, so employees whose conditions are partial or temporary may be denied even when their private claim is approved. Plan for that gap in communications.
Work Credits
Generally an employee needs 40 credits, 20 earned in the last 10 years before disability starts. Younger workers may need fewer, the SSA says. Employees with gaps in work history, such as years out of the workforce or in non-covered jobs, may not qualify. Encourage them to check their own earnings record through the agency rather than assume.
Five-Month Waiting Period
There is a five-month wait, and the first payment comes in the sixth full month after disability began. Private long-term disability can be an employee’s main income during this wait, which is one more reason to match the elimination period carefully. Encourage employees to apply early, since approval can also take time.
Earnings Threshold
For 2026 the substantial gainful activity threshold is $1,690 a month for people who are not blind, according to the SSA. Employees who earn above this level generally will not qualify, and the amount is adjusted periodically. Point employees to the agency’s current figures rather than relying on a number printed in an older guide.
Carrier Assistance
Many long-term carriers help claimants apply for Social Security, partly because it offsets their benefit. Ask what help your carrier gives. Assistance can speed an application and improve the odds of approval, which benefits both the employee and the plan. Ask who helps, whether it is a vendor or the claims team, and what it costs.
Plan Wording on Estimates
Some plans reduce the benefit by an estimated Social Security amount even if the employee has not been approved. Ask whether yours does. An estimated offset can lower the check before any award arrives and may be corrected later. Ask how the estimate is calculated and what happens if the actual award is different or denied.
Waiver of Premium, Survivor Benefits and Rehabilitation
These features add real value in a long claim. Ask for each by name.
Waiver of Premium
If included, the employee stops paying premium while receiving long-term benefits. MetLife’s sample includes it. Ask whether yours does and what proof is needed. Employees should know whether the waiver applies only after a qualifying period and whether premiums already paid are refunded. Clear terms prevent confusion when a claim begins and payroll deductions need to stop.
Survivor Benefit
Pays a beneficiary if the employee dies while receiving benefits. MetLife’s sample pays a three-month lump sum. Amounts, eligibility and timing differ. This feature gives a family some support during a difficult time, though it may not replace much income. Review who qualifies as a beneficiary and make sure employees keep their designations up to date.
Rehabilitation Incentive
Some plans increase the benefit for approved training or programs. The MetLife sample includes this feature, so ask what yours offers. Ask what services count, who approves them and whether any extra benefit is reduced from the regular payment. A useful program can help an employee return to work sooner and keep a claim from stretching on.
Recurrent Disability
If a disability returns soon after a return to work, the plan may treat it as continuing. Ask how long the window is. The window affects whether a new waiting period applies after a relapse. A longer window can protect employees who try to return and then have to stop, so compare how plans treat this situation.
Continuity When You Change Carriers
Ask whether employees already on claim stay with the old carrier and whether the new carrier credits prior coverage time. Timing matters most for employees already on claim, since a switch could change who pays and under what terms. Get the transition rules in writing and share them with anyone currently receiving benefits.
Portability or Conversion
Ask whether an employee who leaves can keep any coverage and under what terms. It varies by carrier. Many plans offer little or none, so employees who leave may lose protection just when they need to find new coverage. Tell departing employees what exists and refer them to the carrier for any options.
How Long-Term Disability Benefits Are Taxed
We are not tax advisers. IRS Publication 525 and Publication 15-A describe the rules, and your tax professional should confirm them.
Employer Pays, Not Taxed to Employee
If the employer pays the premium and does not include it in the employee’s pay, the benefit is generally taxable. IRS Publication 525 says benefits are taxable when the employer paid for the plan. The premium itself usually remains tax free to the employee, but the benefit check is taxed when it arrives. Employees should talk with a tax adviser about how that will affect their take-home pay.
Employee Pays After Tax
IRS Publication 525 says benefits are not taxable when the employee paid the premium. This can mean a much larger net check for the same gross benefit. The tradeoff is that the employee pays the premium out of taxed pay in exchange for a benefit that is generally not taxed later. Consult a tax adviser to decide which approach suits your group.
Pre-Tax Through a Cafeteria Plan
Premiums paid pre-tax through a cafeteria plan are generally treated like employer-paid premiums for this purpose, so the benefit is generally taxable. Because tax treatment depends on how premiums are paid, employers should confirm the payroll setup before enrollment and explain it to employees. A tax adviser can confirm how the rules apply to your plan.
Taxed Premium Election
Some carriers describe a method where the employer pays the premium and reports it as taxable wages, so the benefit is not taxed. This is sometimes called a gross-up. Ask your carrier and payroll provider. Whether this approach fits depends on the carrier, your payroll system and your tax position, so involve a tax adviser before choosing it and make sure employees understand what appears on their pay stub.
Why It Matters for Long Claims
A taxable benefit replaces less take-home pay than the percentage suggests. The tax choice should be made with the benefit percentage in mind. A person who relies on the benefit for rent and groceries feels the difference quickly. Model take-home income for a typical employee under each option before settling on a percentage, a premium arrangement or a cap.
Sick Pay Payroll Taxes
IRS Publication 15-A says Social Security, Medicare and unemployment taxes generally do not apply to sick pay paid more than six calendar months after the last month the employee worked. This is a payroll detail rather than a plan design choice, but it can affect how benefits are reported. Ask payroll and a tax adviser to confirm how it applies to the benefits your plan pays.
What Moves the Cost of Long-Term Disability
We compare quotes and negotiate for clients, and we do not guarantee carrier pricing.
Benefit Percentage and Cap
Higher percentages and higher caps raise premium. Test combinations against your payroll. Raising the percentage and the cap together can add up quickly, while a lower cap may leave senior staff underinsured. Ask for quotes at several combinations and compare the premium change against the added income protection.
Elimination Period
A longer wait lowers premium but raises the stakes of the short-term plan and sick-time bank. Employers who pick a longer wait should confirm that sick leave and short-term coverage actually fill it. Otherwise the premium savings come at the expense of employees who have no income during part of a long absence.
Definition of Disability
A longer own-occupation period costs more because more claims qualify. A shorter one costs less but is less protective. Weigh the premium difference against the type of work your employees do. If many roles are specialized or physical, the more protective definition may be worth the extra cost to your group.
Maximum Benefit Period
Shorter benefit periods cost less. Age tables matter for older employees. A shorter period can leave employees disabled later in their careers with a small window of protection. Ask for quotes at more than one duration so you can see what the added protection costs.
Class Structure and Earnings
Executives and highly paid staff drive claim size. Carriers may rate or cap classes separately. Ask how the carrier groups employees and whether highly paid staff are rated differently from the rest. Splitting classes may keep costs in check while still giving each group an appropriate level of coverage.
Employer-Paid or Contributory
Employer-paid plans cost the company more but typically enroll everyone. Contributory plans shift cost, and carriers may require participation. Contributory plans lower employer cost but may leave out younger or lower-paid staff who decline coverage. Weigh the participation requirement against your culture and decide whether the plan is meant as a broad safety net.
Who Is Covered, and Under What Rules
Eligibility is set by the contract and is where employees are often surprised.
Eligible Classes
Employers define classes. Benefits can differ by class if the contract defines them. Define classes by objective criteria such as title, location or employment status, and write them down. Clear rules protect against disputes and make it easier to explain the plan to each group of employees.
Hours and Waiting Period
Plans require minimum hours and often a waiting period after hire. Ask what happens to employees who change status. Confirm how part-time, seasonal and newly promoted employees are treated, and how a change in schedule affects eligibility. Share the rules with HR so enrollment mistakes do not leave anyone uncovered by accident.
Guarantee Issue
Carriers set an amount available without health questions. Above it, evidence of insurability may be required. Confirm the limits with the carrier. New hires and employees who raise their coverage later are the ones most likely to face health questions. Tell them early what is required so they can complete enrollment on time and avoid delays.
Active Work Requirement
Coverage generally starts only if the employee is actively at work on the effective date. An employee who is out sick or on leave when coverage would begin may have to wait. HR should track these cases and tell employees what has to happen before protection takes effect.
Participation Minimums
Contributory plans often require a minimum percentage of eligible employees to enroll. Ask for the number. If enrollment falls short, the carrier may decline to issue or renew the plan. Plan communications and enrollment meetings with that threshold in mind, and ask what happens if participation drops later in the year.
Age and Termination
Coverage ends when the employee leaves or reaches an age or status condition in the contract. Ask what ends it. Employees leaving the company, retiring or moving to ineligible status should hear what happens to coverage and whether any option to continue exists. Build that conversation into your offboarding and leave processes.
How a Long-Term Disability Claim Is Decided and Appealed
For private-sector plans, the Department of Labor claims rule (29 CFR 2560.503-1) sets the deadlines and the content of notices.
Decision Deadline
A plan must generally decide a disability claim within 45 days after receipt, with up to two 30-day extensions for reasons beyond its control and written notice before each. Employers and employees should know that timelines can differ by plan type and by situation, and that this general rule is not a substitute for the plan documents. Counsel can confirm which rules apply to your plan.
What a Denial Letter Must Include
The reasons, the plan provisions, any internal criteria, why it differs from the treating doctor or a Social Security finding the claimant submitted, and appeal steps. Employees should keep the letter and share it with anyone helping them appeal. HR can support by explaining the deadlines in plain terms and pointing the employee toward the plan documents.
Right to Documents
The claimant may request, free of charge, the documents and records relevant to the claim. Requesting the claim file early lets the employee and any adviser see what evidence the carrier relied on, spot missing records and prepare a stronger appeal. Keep a written record of each request and when it was made.
Appeal Rights
At least 180 days to appeal. The plan generally decides within 45 days, with one extension of up to 45 days in special circumstances, by a reviewer who was not involved in the first decision. Because these timelines are strict, employees should calendar them as soon as a denial arrives and ask counsel about their options. Rules can differ by plan type, so check the notice itself.
Court Deadlines
The denial notice must state any contractual time limit for suing, and the date it expires, for disability claims. Employees should note it. Missing that date can end the right to go to court even when the claim may have merit. Employees should speak with counsel promptly after a denial, and HR should remind them to read the notice carefully.
Our Role
We help employees and HR understand the process and gather records. We are not legal advisers. See Denied Claims and Appeals.
Questions to Put to Every Long-Term Disability Carrier
Ask the same questions of each carrier so quotes can be compared.
Ask for the Certificate
The certificate is the contract. Read definitions, offsets and limitations in it. Summaries and enrollment guides leave details out, so the certificate is where the answers sit. Ask the carrier for it before you buy, and keep a copy where HR and employees can find it.
Ask When the Definition Changes
Ask how long the own-occupation period lasts and exactly how any occupation is worded. The wording often looks small but changes who can collect after the first stretch of a claim. Request the exact clause from each carrier and compare it side by side with the others you are considering.
Ask for the Offset List
Collect every offset, plus whether a minimum benefit applies. Ask the carrier to list every source of income that can reduce the benefit, in writing, and show a worked example for a typical employee. Then compare the lists across quotes before deciding which plan fits.
Ask About Limitations
Get the pre-existing and mental health language, and the duration caps. Request the full text of these provisions from each carrier and read them side by side. Differences in look-back periods, definitions and time limits are easy to miss in summaries but can decide claims later.
Ask About Claims Support
Ask who decides claims, how appeals work and what help employees get with Social Security applications. Strong support can make the difference between an employee who understands the process and one who gives up. Ask whether a named contact is assigned, how fast the carrier responds and whether outside vendors help.
Ask About Rate Terms
Ask how long rates are held and what the quote assumes about classes and earnings. A quote that looks attractive may rely on assumptions that change at renewal. Ask whether the rate is guaranteed, what triggers an adjustment and what happens if headcount or payroll shifts during the term.
What Michigan Law Does And Does Not Provide
Michigan has no state program for long absences, so long-term disability is the only paid protection behind your short-term plan. Here is the legal backdrop.
No State Disability Program
Michigan has no state-run temporary disability insurance. Only California, Hawaii, New Jersey, New York and Rhode Island run mandatory programs, so in Michigan paid income protection for a non-work illness or injury comes from an employer-sponsored plan or an individual policy.
No State Paid Family Leave
Michigan has no paid family and medical leave program. Federal FMLA gives up to 12 weeks of unpaid, job-protected leave, and only at employers with 50 or more employees. A bill to create a state program has been introduced but, as of October 2026, has not been enacted.
Earned Sick Time Act
Effective February 21, 2025, Michigan employees accrue at least 1 hour of paid sick time for every 30 hours worked. Annual use is capped at 72 hours, or 40 hours at employers with 10 or fewer employees. It covers short absences, not extended disability.
How The Layers Fit Together
Sick time covers the first short absences. Short-term disability starts after its elimination period, and long-term disability follows when the short-term benefit ends. FMLA, where it applies, runs at the same time and protects the job, not the paycheck. Mapping these layers on a single page helps employees see where each protection begins and ends, and shows HR where gaps could appear. Review the timeline whenever one of the plans changes.
What This Means For Employers
With no state program behind them, an employer-sponsored plan is the only paid wage replacement most Michigan employees will have. The gap between sick time and a long absence is the exposure a disability plan is built to close. Deciding what to offer, how much to pay and how to explain it is therefore a real part of how an employer supports people through a serious illness or injury.
Rules Can Change
Leave and sick time rules in Michigan have changed repeatedly in recent years. We confirm current requirements at plan design and at each renewal, and we recommend employers confirm specifics with their own counsel. Because requirements shift, keep plan documents and employee communications current, and revisit them whenever the rules change. Counsel can confirm how new requirements affect your policies, leave practices and disability plan together.
Frequently Asked Questions About Long-Term Disability Insurance
What is the difference between short-term and long-term disability?
Short-term disability pays for a limited period after a short waiting period. Long-term disability starts after a longer waiting period and can pay much longer, depending on the plan. They work best on one calendar.
How long can long-term disability pay?
It depends on the maximum benefit period in the plan, often tied to the age when disability begins. MetLife’s published sample pays until age 65 for disability before age 60. Check your own schedule.
What is the difference between own occupation and any occupation?
Own occupation asks whether the employee can do their usual job. Any occupation asks whether they can do any job they are reasonably qualified for. Many plans switch from the first to the second after an initial period.
Does Social Security disability reduce the benefit?
Often. Many plans list Social Security disability as an offset. Read the offset section and ask how estimates and back payments are handled.
Are long-term disability benefits taxable?
It depends on how the premium was paid and taxed. Employer-paid, untaxed premiums generally make the benefit taxable. Ask your tax professional.
Are mental health conditions covered?
Often with a limit. Many plans cap benefits for mental illness and substance use at a set period. MetLife’s sample uses 24 months. Confirm your plan.
What happens if a claim is denied?
Under the Department of Labor claims rule, the employee has at least 180 days to appeal and the plan must explain the reasons. We help organize records and understand the process.
Does Michigan require long-term disability coverage?
No. Employers offer it as a benefit. Michigan does not operate a state temporary disability program, and Social Security disability is a separate federal program with a stricter test.
Related reading: Short-Term Disability Insurance: What It Covers, How It Pays and What It Costs · Group Disability Insurance · Disability Plan Coordination · Supplemental Life and Disability. We are not tax or legal advisers, and we do not guarantee carrier pricing or outcomes.
Is this legal advice?
No. This page is general information, not legal advice. Rules change and facts differ, so confirm your situation with your attorney or tax advisor.
The rules in one place.
FMLA And Leave Rules For Employers
Eligibility, penalties, benefits during leave and disability, in one place.
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