Calculator Inputs
Example Data Table
| Scenario | Covered Monthly Earnings | Benefit % | Offsets | Net Monthly Benefit | Coverage Gap |
|---|---|---|---|---|---|
| Employee A | $6,250.00 | 60% | $700.00 | $2,665.00 | $535.00 |
| Employee B | $4,800.00 | 66.67% | $300.00 | $2,851.20 | $148.80 |
| Employee C | $8,100.00 | 50% | $1,200.00 | $2,788.00 | $912.00 |
Formula Used
Covered Annual Earnings = Base Salary + (Bonus × Bonus Inclusion %) + (Commission × Commission Inclusion %)
Covered Monthly Earnings = Covered Annual Earnings ÷ 12
Uncapped Monthly Benefit = Covered Monthly Earnings × Benefit Percentage
Gross Monthly Benefit = Lesser of Uncapped Monthly Benefit and Plan Maximum
Total Monthly Offsets = SSDI + Workers Compensation + Other Offsets + (Rehab Earnings × Rehab Offset Rate)
Monthly Pre-Tax Benefit = Gross Monthly Benefit − Total Monthly Offsets, subject to the minimum monthly benefit assumption when payable
Monthly Tax Impact = Monthly Pre-Tax Benefit × Tax Rate × Employer-Paid Premium Share
Monthly After-Tax Benefit = Monthly Pre-Tax Benefit − Monthly Tax Impact
Monthly Coverage Gap = Monthly Living Expenses − Monthly After-Tax Benefit, never below zero
COLA Adjustment applies annually after benefits begin, increasing projected payments by the selected COLA percentage.
How to Use This Calculator
Enter your annual pay first, then add any bonus or commission amounts and choose how much of each is covered by the plan.
Provide the replacement percentage, plan cap, minimum benefit, elimination period, and the number of months you want to project.
Add common offsets such as SSDI, workers compensation, rehabilitation earnings, and any other monthly reductions that may affect payments.
Set the employer-paid premium share and an estimated tax rate to approximate whether your disability payments could be partially taxable.
Enter monthly living expenses to compare estimated take-home disability income against your budget and identify a likely shortfall.
Submit the form to see the result summary above the form, export the report, and review the payment trend on the chart.
FAQs
1. What does long term disability insurance replace?
It usually replaces part of your covered earnings after a qualifying illness or injury. Most plans do not replace your full paycheck, bonuses, or all variable income.
2. Why are offsets important?
Offsets reduce the insurer’s payment when you receive income from sources like SSDI, workers compensation, state disability, or rehabilitation earnings. Ignoring them can overstate your expected benefit.
3. What is the elimination period?
The elimination period is the waiting time before benefits start. During that window, you may depend on savings, sick leave, short term disability, or other income sources.
4. Are disability benefits taxable?
They can be taxable when premiums were paid by the employer or paid with pre-tax payroll deductions. Employee-paid after-tax premiums often produce tax-free benefits.
5. What is a reasonable replacement ratio?
That depends on your taxes, debt, healthcare costs, and household obligations. Many people need more than the advertised plan percentage to maintain their normal budget.
6. Does COLA matter in long claims?
Yes. A cost-of-living adjustment can protect purchasing power during long disability periods. Without COLA, real benefit value may shrink as living costs rise.
7. Why include bonus and commission fields?
Some plans cover only base pay, while others include a limited share of incentive compensation. Modeling inclusion percentages helps estimate more realistic covered earnings.
8. Is this calculator a claim approval tool?
No. It is a planning tool for estimating potential payments and budget gaps. Actual claim decisions depend on policy terms, medical evidence, employment status, and insurer rules.