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Long Term Disability Insurance

Lehigh’s long term disability (LTD) insurance provides income replacement for 66 and 2/3 percent of an employee's LTD Base Salary for periods of disability that exceed 180 days.

LTD Base Salary is an employee’s budgeted salary prior to the date disability begins. That figure is determined by the period of the calendar year in which the benefit starts: 

  • For the period January 1 through June 30, the employee's budgeted base salary as of January 1 or the employee's initial enrollment date, whichever is later.
  • For the period of July 1 through December 31, the employee's budgeted base salary as of the employee's annual salary adjustment date (July 1 or September 1) or the employee's initial enrollment date, whichever is later.

The monthly benefit cannot exceed $15,000 per month.

Pre-Tax versus Post-Tax Premium Payments

The premium cost for LTD insurance is paid by the university. However, employees have the option of having the premiums paid on a pre-tax or post-tax basis.  The benefit is taxed differently depending on which you choose:

  • If the LTD coverage is provided on a pre-tax basis, there is no income tax paid on the premium. Any benefit received under the plan will be subject to federal income tax.
  • If the LTD coverage is provided on a post-tax basis, the employee pays income tax on the value of the premium but does not pay federal income tax on benefits received under the plan in the event of disability.
  • You must receive the benefit on a post-tax basis for a period of thirty-six months in order to exempt the full benefit from federal taxation.

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