![]() These maximums are determined by the size of the group, the volume of insurance and the nature of the business. There are two types of maximums that apply to a STD benefit: a non-evidence maximum and an overall benefit maximum. A taxable LTD plan will often be based on a schedule as high as 75% of pre-disability gross earnings whereas a non-taxable plan will generally not exceed 67%. The STD benefit will also be non-taxable when the employer pays the premium on behalf of an employee, but the amount of the paid premium is treated as taxable income to the employee.Ī STD plan which is taxable should be based on a higher percentage of the employee's pre-disability gross earnings than a plan that is non-taxable. Unless the plan member is paying the entire STD premium, the benefit will be taxable when received. When determining an appropriate benefit schedule, the tax status of the STD benefit must be considered. The benefit schedule is generally based on a percentage of the employee's pre-disability weekly gross earnings. These plans often provide a benefit that is linked to the employee's length of employment with the organization. During the elimination or qualifying period, most employees are covered through their employer's salary continuance plan (self-insured). A shorter elimination period results in a higher premium. However, the elimination period for accident or hospitalization could be as long as 15 days. ![]() Typically, STD plans provide coverage on the first day following an accident or hospitalization and the 8th or 15th day of absence as a result of sickness. One of the primary purposes of the elimination period for the STD benefit is to reduce administration costs for claims that are short in duration. The main design features of a Short-Term Disability plan are described below. To be eligible to opt out, the STD plan must be at least equal to or better than the E.I. ![]() Employers that provide a Short-Term Disability plan may opt out of the Employment Insurance Sickness Benefit and therefore qualify for a reduced E.I. The Short-Term Disability or Weekly Indemnity benefit is designed to compensate an employee for income lost as a result of short-term absences from work from an accident or sickness. ![]()
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