Does anyone know what the tax-rate/percentage on SSDI back pay is?For example......if someone has 3+ years of BP,are they liable for that entire amount the next fiscal tax year,or is it broken down into multiple payments over future tax years accordingly?
And do you have to pay FICA taxes "AGAIN" ,which would be double taxation IMO?
So, you are on SSDI and Public Employees Retirement System? I now see why your SSDI is taxable. Is the IPERS for the remainder of your life? Did you have the option of post tax for the retirement? That is the beauty of my LTD. I paid the entire premium with post tax dollars so the benefit I get is 100% tax free but it will only pay until age 65 and is offset by SSDI.
Last edited by BlueSkies14; 10-16-2011 at 08:21 PM.
I don't think I had a choice about pre or post tax. I know my husband does with his retirement.
Together our income definately puts us in a tax bracket. I have taxes taken out of the IPERS. Luckily due to it being disability I only have to pay taxes on 1/2 my income and none of the kids (of course). The IPERS continues until death.
The lifetime benefit is fantastic Pup. Sorry about the taxes tho. LOL You really have two lifetime benefits because the SSDI will eventually convert to SSR (social security retirement) after you reach SSNRA (probably age 66). My LTD will end after age 65 and possibly before if my LTD carrier finds me not disabled anymore. Although the SSDI is a very difficult process to get approved for, many ppl then feel at ease and don't worry too much about them taking away future benefits. LTD is a lot more precarious IMHO because you are dealing with a for profit driven private company and we all know less claims being paid out = more company profit so there is much more of an incentive to drop you if they can. That is why it is imperative to keep all your doctor appointments so you can substantiate continuing disability whenever the carrier requires medical proof. This can cause some ppl ongoing tension headaches (to use a metaphor) but not doing so and getting dropped will give you a chronic migraine.
No, you don't lose the LTD benefit but most of the group policies you purchase as part of an overall employee benefits package are offset by other disability income. The cheaper the policy, the less robust the LTD benefit. All LTD policies may vary slightly but all the group policies that I am aware of offset for other disability income like SSDI. Usually, LTD takes about 2-3 months to get approved for. The policy I had said if you become disabled and no longer able to work, this policy will pay you 50% of your gross annual wages. It also says that you must apply for SSDI to keep your LTD and once you get approved for SSDI, your LTD that we have to pay you will be decreased by the SSDI amount and then we (LTD carrier) will only have to pay the difference. Here is a simple example Mscat.
1. Let's say you are working and make $50,000 / year gross.
2. You might take home $30K per year after all taxes are taken out and benefits paid for.
3. Now you become disabled and file for LTD.
4. LTD carrier approves your claim.
5. Policy says it will pay you 50% of your annual gross with no taxes taken out since you paid for the policy when you were working with post tax dollars.
6. LTD benefit = $50K X 50% = $25K / year.
7. $25K / 12 = $2,083 (your monthly LTD benefit)
8. You apply for SSDI because LTD policy says you must.
9. As long as you are not approved for SSDI, LTD benefit will be $2,083/month.
10. Now, you are approved for SSDI 2 years later.
11. SSDI benefit = $1500 / month.
12. Now, your LTD benefit becomes $2083 - $1500 = $538 / month.
13. Then, most of your SSDI backpay will also go back to the LTD carrier because of the offset when they were paying the full amount because you had not been approved for SSDI.
It is a little crazy how it works. My policy is a little different than the simple example I gave you but you get the picture. The thing about LTD is they always periodically evaluate you and may look for ways to kick you off if they can even after the offset so you have to be sure and keep going to your doctors and get treatment because you have to continually prove to them that you are disabled until the max. benefit duration (age 65 for me) or they will drop you. It can be a real PITA but it is a benefit that most ppl really need in addition to the SSDI. The best thing about LTD is that you have income while you are waiting on SSDI to get approved. LTD approval = in about 2-3 months while it may take 2-3 years to get approved for SSDI.