Disability insurance: what the benefit really pays you

Why the plan data changes the answer

Most pages about disability insurance stop at the rule of thumb: a group plan replaces about 60% of pay. The number is right, and on its own it misleads. The Bureau of Labor Statistics survey of March 2026 finds that the median private plan with a fixed formula pays 60% of earnings, but also that the same plans cap the monthly benefit: the tenth percentile of those maximums sits at $4,000, the median at $10,000 and the ninetieth percentile at $15,000. A plan capped at $4,000 stops replacing 60% at a salary of $80,000; above it, every raise widens the gap.

The survey also shows who has a plan at all. Access to long-term disability coverage reaches 81% of workers in the information industry and 7% in accommodation and food services, 66% in companies of 500 workers or more and 22% in companies of fewer than 50, 67% of the best-paid quarter of private workers and 10% of the lowest-paid. Part-time workers have 5%. The employer lookup gives each of the 37 groups the bureau publishes.

Then comes tax, which most quotes leave out. IRS Publication 525 taxes a disability benefit when the employer paid the premium, and also when you paid it through a pre-tax payroll deduction, because a premium that never entered your taxable income counts as paid by the employer. A benefit bought with after-tax money is not income at all. Two coworkers with the same plan and the same salary can therefore receive the same check and keep different amounts. The tax page works through each arrangement, including a plan whose cost is shared.

Short-term and long-term disability work as a relay

Short-term disability pays first, usually after a waiting period of a few days and for a limited number of weeks; long-term disability starts when its elimination period ends and can run for years. The survey puts the median short-term plan at 60% of weekly pay with a median weekly maximum of $1,030, paid for 26 weeks at the median. At $80,000, that formula gives $923 a week before tax; an employer-paid plan is sick pay under IRS Publication 15-A, so federal income tax, Social Security and Medicare come off and about $711 a week remains over a thirteen-week absence, against a take-home pay of $1,252.

The short-term disability calculator handles the weekly cap and the waiting period; the elimination period page shows how long your savings have to carry you before the long-term plan pays, and the long-term disability calculator takes the plan formula, the maximum and the offsets into account.

The Social Security offset: why the check shrinks

A group long-term plan lists in its contract the other disability income it subtracts from its benefit: Social Security disability, family benefits paid on your record, workers' compensation, a state disability program, sometimes a pension. With a $4,000 monthly benefit and a Social Security award of $2,000, the plan pays $2,000, and your total income stays near $4,000 before tax. A contract can require you to apply for Social Security and may estimate the award before it arrives. When the award is paid for past months, the plan asks back what it paid in the meantime.

The offset also decides how the benefit moves with time. A contract that freezes it at the first award lets later Social Security cost-of-living raises stay with you; a contract that subtracts each raise keeps your total flat for years. The offset calculator compares both clauses. Social Security benefits have their own tax rule: under the Publication 915 worksheet, up to 50% and then up to 85% of them become taxable once other income passes $25,000 for a single filer.

What a policy costs, measured against what it pays

Premium ranges found online come with no source and no date, and this site publishes none. What it does instead is take the premium on your own quote and measure it: as a share of income, per $100 of monthly benefit, and in months of claim needed to return the premiums of a working life. The cost page does this for an individual policy; the pre-tax or after-tax page answers the question asked at every open enrollment, whether to let the employer deduct the premium before tax. Paying $300 a year pre-tax saves a single filer at $80,000 about $89 a year, and a one-year claim would then cost about $5,416 in tax.

The terms matter as much as the price. The own-occupation page measures the benefits that depend on the definition of disability after the first months, and the needs calculator converts a monthly budget into the gross benefit to buy, taking the tax of your arrangement into account. Self-employed readers, who have no group plan, have their own page.

Long-term care insurance: the 2026 IRS limits

Long-term care insurance pays when you need help with daily activities over a long period. The tax code treats a qualified contract like health insurance, within limits that move every year. For 2026, Revenue Procedure 2025-32 lets a premium count as a medical expense up to $500 at age 40 or under, $930 from 41 to 50, $1,860 from 51 to 60, $4,960 from 61 to 70 and $6,200 above 70. Counting as a medical expense is not the same as saving tax: an employee who takes the standard deduction saves nothing, and an itemizer only deducts medical costs above 7.5% of adjusted gross income. The self-employed, and anyone paying the premium from a health savings account, use the same limit without the floor. The deduction calculator works through all three routes.

Benefits are tax-free when the policy reimburses actual care costs. A policy that pays a flat daily amount is tax-free up to $430 a day in 2026 or the actual costs if higher; the rest is reported on Form 8853 (per diem calculator). The cost page shows what a daily benefit grows to with inflation protection, and the hybrid page how a life policy pays its death benefit out as care.

Accident, hospital and critical illness policies

These policies pay a fixed sum when an event in the policy happens, whatever your medical bills. Their value depends on the health plan they sit beside: a high-deductible plan that qualifies for a health savings account must have a deductible of at least $1,700 for self-only coverage in 2026 and caps out-of-pocket costs at $8,500 (Revenue Procedure 2025-19). The calculators on the accident, hospital indemnity and critical illness pages compare the payment with those two figures and with the premium. Accidental death and dismemberment coverage follows a schedule; the federal employees' plan publishes one, used on the AD&D page.

How to read your plan summary

Four lines of the summary plan description give the calculator what it needs: the percentage of earnings, the maximum monthly benefit, the elimination period and the list of other income benefits the plan subtracts. A fifth tells you who pays the premium, and your pay slip confirms it: a disability deduction marked pre-tax means the benefit will be taxed. The definition of earnings, often base salary without bonus or commission, explains why a sales employee's benefit can fall far below 60% of total pay. The method page lists every rule the calculators apply and what they leave out.