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Further reduce hours or consider STD/LTD?

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    Further reduce hours or consider STD/LTD?

    Quick history- I became a pharmacist in 2009, was dx 2011. Within 8 months of diagnosis I made the decision to switch to a less stressful job, taking a 15% pay cut. After working that job for 3 years, I cut back to 4 days a week, essentially taking another 20% pay cut. My symptoms have always been parasthesia/weakness/fatigue/minor walking difficulties (only very rarely requiring a cane)

    I am now making it through a significant exacerbation (my first case of Optic Neuritis). I only took 2 days off of work.

    I'm waiting to get copies of my HR STD and LTD policies. I remember reading somewhere, that at some point it makes sense to consider disability because if you continue to reduce hours , eventually if you are forced into disability the payment becomes must less. Is this true?

    Any advice or opinions would be appreciated. I know I probably should "wait for the dust to clear" from this current exacerbation before making any fool-hearty decisions-- but I just want help gathering my thoughts.. Thanks in advance.
    Diagnosed 7/11/11
    On Copaxone 7/11- 12/13
    On Tecfidera 12/13- current

    #2
    Hi Leah, sorry to hear that you are in a MS exacerbation and not doing well. STD and LTD benefits in general are income based so you are correct that as work hours are reduced and corresponding reduction in income will be the result. A typical income replacement policy would for example replace 60% percent of your pre disability income.

    In addition, employee benefits eligibility is often based on full time employment. For example part time employment status may be considered 35hrs or less per week, and ineligible for benefits. Benefits eligibility is typically established by the employer.

    Without knowing your personal and MS circumstances, if I were in a similar situation I would attempt to return to full time employment in order to become benefits eligible and increase to a full time income. There are typically waiting periods involved, for instance one year of participation/full time employment before claims are honored, plus the possibility of a pre existing condition exclusion. Any of this matters only if you are able to continue working and hopefully return to full time employment status.

    Take good care and best of luck

    Comment


      #3
      Hi Leah,

      MSW gave you great insight. I wanted to work part time and employer was willing, but LTD and SSDI don't acknowledge partial disability. So it was a financial loss if I went part-time.

      Both STD & LTD are usually a % of income at the time you become disabled. So as you work fewer hours, your benefit would be reduced. And as MSW pointed out, most companies don't offer LTD to part time employees. My old company was 32 hours a week. Anything less, lose LTD benefit. This would be in your HR benefits, not in the policy itself.

      SSDI is based on years of employment and income earned. You could log into ssa.gov and find what your benefits would be.

      Also, most LTD policies have an offset clause for SSDI. So the insurer reduces your benefit amount by the amount SSDI pays.

      If you are fortunate to have private LTD, there is usually no SSDI offset. These policies are also dependent on income earned at time of disability.

      You are wise to get copies of your policies. Review them carefully. An important definition is the disability definition. It may be disabled from your own job or disabled from any job.

      Good luck. It is such a hard decision to make.
      Kathy
      DX 01/06, currently on Tysabri

      Comment


        #4
        Thank you both for your insightful responses!

        I know I qualify for both STD and LTD per my Benefits package, b/c I am over 0.5 FTE (over 20 hours per week).

        It's like you said, I have to balance the financial pro /con of further reducing hours or considering disability.

        I'm still waiting to get the actual plan documents from HR.
        Diagnosed 7/11/11
        On Copaxone 7/11- 12/13
        On Tecfidera 12/13- current

        Comment


          #5
          I'd consider talking to a lawyer and your accountant. With high income earners I think its important to weigh the amount of income you'd get from disability vs if you cut your hours back especially because unless you are close to retiring its possible your disease will wax and wane and there might be times when you could work more hours or take a side job for a few years and bank some serious money?

          Worth mentioning I truly don't understand the work:life balance thing. I'm willing to kill myself to make as much money as I can before I'm just not able to work so my perspective could be a bit skewed.

          I hope you feel better soon and good luck with whatever you decide.
          He is your friend, your partner, your defender, your dog. You are his life, his love, his leader. He will be yours, faithful and true to the last beat of his heart. You owe it to him to be worthy of such devotion.
          Anonymous

          Comment


            #6
            I see it as trying to juggle all the balls in the air until you cannot juggle anymore. There is a financial hit for decreasing your hours if you then decide to take the disability route- it is reduced from what it would have been. If you do the numbers, remember to factor in that disability payments are taxed at the federal level but not at the state level, at least for my state. IF you have paid for the disability insurance than it is NOT taxed at the federal level. The state level savings actually increases your net. My private LTD gets a once a year bump based on the labor stats for clerical workers. Your LTD might also include a benefit for retirement contributions. Set aside quite a bit of time to read through the policies. It took me multiple readings to understand the ins and outs. Some policies let you earn about 20% of your former pay without decreasing your benefit.

            Comment


              #7
              Very informative thread, I hope people keep adding to this valuable information.
              He is your friend, your partner, your defender, your dog. You are his life, his love, his leader. He will be yours, faithful and true to the last beat of his heart. You owe it to him to be worthy of such devotion.
              Anonymous

              Comment


                #8
                Temagami, good advice about the possible tax consequences of LTD benefits if premiums are employee paid premiums versus employer paid premiums.

                One additional possibility regarding tax liability of employee paid LTD premiums, the benefit becomes taxable income if the employee pays LTD premiums with pre tax payroll deductions.

                Paying LTD premiums via payroll deductions pre tax is only permitted under Sec. 125 of the IRS tax code, often referred to as a Flexible Benefits Plan, sometimes referred to as a Premium Only Plan, or a POP Plan.

                For example, paying LTD premiums of $100 per month with pre tax deductions will save approximately $25 if premiums are paid pre-tax.

                However, if LTD benefits are claimed from a policy paid with pre-tax premiums via payroll deduction, for example $1000.00 per month LTD benefit, will cost $250 in total payroll withholdings, leaving a $750 monthly LTD income. The example assumes 25% total withholdings based on 15% Federal income tax, 7.65% FICA, and 2.35% state income tax withholdings, income amounts are for illustrative purposes only.

                Comment


                  #9
                  My premium was paid pre-tax so now my payments are taxable. I don't remember my company having an option.

                  I did have the option and bumped up to a two-thirds salary plan vs the standard half salary so that was a really good decision now that I'm on LTD...the little things to be thankful for!

                  Comment


                    #10
                    pb909, interesting that you mention 'options' and not remembering if your company offered a pre or post tax LTD premium deductions option.

                    Sec. 125 of the IRS code dictates that employees be offered the option to participate, on an annual basis via annual open enrollment.

                    The tax benefit to the employer is that there is no employer matching FICA contribution on employee pre-tax premium deductions.

                    Over the years, employers adopted a default style benefits election format for annual open enrollments. The default enrollment form is basically an annual benefits statement for the previous year employee benefit election and states no changes will be made for the new plan year without the employee affirmatively stating that an election change be made.

                    More recently, employers have adopted a 'combo' enrollment form, combining enrollment in insurance plans plus a default statement to the effect that by participating in insurance plans, payroll deducted premiums will by default be paid on a pre tax basis.

                    There is a double hit to the employee that results from default style pre-tax benefits elections, or employee pre tax elections. One is the possibility that over time SSDI benefits are lowered because both 7.65% employee FICA contributions and 7.65% employer FICA contributions are reduced, for a total reduced FICA contribution of 15.3%, reducing FICA income by $1836 annually based on the $1,000 example. This reduced amount is the income amount SSDI disability and future retirement benefits are calculated.

                    The second of the financial consequences to the employee is that LTD premiums paid pre tax become taxable income.

                    Leah27, sorry your thread has gone off topic and I apologize, but hopefully the info has justified the lapse in proper 'thread' etiquette.

                    Comment


                      #11
                      I need to correct the last illustration for FICA reduction from:

                      FICA contributions are reduced, for a total reduced FICA contribution of 15.3%, reducing FICA income by $1836 annually based on the $1,000 example. This reduced amount is the income amount SSDI disability and future retirement benefits are calculated.




                      FICA contributions are reduced, for a total reduced FICA contribution of 15.3%, reducing FICA contribution by $183.00 annually based on $100.00 LTD monthly pre tax deductions in the $1,000 income example. This reduced amount is the income amount SSDI disability benefits and future retirement benefits are calculated.


                      I incorrectly based calculation for reduced FICA contribution on the $1,000 total monthly income versus the $100 monthly pre tax LTD premium deduction. Sorry for the error!

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