Disability Insurance Calculator
What your group LTD actually pays after tax, and the gap it leaves.
Your Disability Insurance Calculator Result
Generated from the inputs below — a record you can revisit, or share with anyone helping you plan.
Your detailsInput Parameters
Your Income
Housing, food, utilities, insurance, minimum debt payments, childcare. What you cannot stop paying.
Federal plus state. Used to work out what a taxable benefit is actually worth in hand.
Existing Coverage
Most group plans replace 60% of base salary — and usually only base, excluding bonus and commission.
Nearly every group policy caps the monthly benefit. High earners hit this cap and end up replacing far less than the stated percentage.
This is the single most misunderstood point in disability insurance. If the employer pays the premium, your benefit is TAXABLE. If you pay with after-tax dollars, it is tax-free.
What bridges the elimination period before benefits start.
The waiting period before benefits begin. A longer one lowers the premium but demands more savings.
Your essential expenses of $4,200 less $3,420 of after-tax benefit. An individual disability policy bought with after-tax dollars pays tax-free, so you need roughly this much of additional monthly benefit — not more. This is an estimate for planning, not an insurance quote. Actual pricing is set by the insurer or, in promulgated-rate states, by the state regulator.
Because your employer pays the premium, the benefit is TAXABLE income. At a 24% marginal rate your stated 60% benefit is worth 45.6% of your salary in hand. If your employer offers a "gross-up" option — paying tax on the small premium yourself so the large benefit arrives tax-free — it is almost always worth taking.
60% of $7,500 monthly salary. Check whether your plan counts bonus and commission — most cover base salary only.
What you would actually live on as a share of current gross salary. People routinely assume a 60% policy means 60% — after tax and the monthly cap, it frequently lands closer to 40%.
Your $15,000 of savings covers the 90-day wait before benefits begin.
Definition of disability matters more than the benefit amount. "Own occupation" pays if you cannot do YOUR job; "any occupation" pays only if you cannot do any job you are reasonably suited for, and is far harder to claim on. Group policies commonly switch from own-occ to any-occ after 24 months — read that clause before assuming you are covered long-term.
Analysis
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Open calculatorYour 60% Disability Benefit Probably Isn't 60%
Most people with group long-term disability coverage through work believe they are covered at roughly 60% of income. Two things usually make the real figure much lower, and neither appears in the benefit summary.
Tax treatment. If your employer pays the premium — which is the usual arrangement — the benefit you receive is taxable income. A stated 60% benefit at a 24% marginal rate is 45.6% in hand. If instead you pay the premium with after-tax dollars, benefits arrive tax-free and 60% means 60%.
The monthly cap. Nearly every group policy caps the monthly benefit regardless of salary. A high earner with a $10,000 monthly cap is not replacing 60% of anything — they are replacing whatever $10,000 happens to be as a share of their income.
Using this calculator's defaults, a $90,000 salary with a 60% employer-paid group benefit produces $4,500 a month stated, $3,420 after tax, against $4,200 of essential expenses — a $780 monthly gap that most people do not know exists until they need the coverage.
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The Tax Rule That Drives Everything
The rule is simple and it is the single most valuable thing on this page:
The premium is small and the benefit is large, so paying tax on the premium to make the benefit tax-free is nearly always the better trade. If your employer offers a "gross-up" option — where the premium is added to your taxable income so the benefit arrives untaxed — it is usually worth taking, and it typically costs a few hundred dollars a year to protect several thousand a month.
The calculation this page runs:
One more limitation to check in your own plan documents: most group policies cover base salary only, excluding bonus and commission. For anyone whose compensation is substantially variable, that alone can halve the effective replacement rate.
This is an estimate for planning, not an insurance quote. Actual pricing is set by the insurer or, in promulgated-rate states, by the state regulator.
Own-Occupation vs Any-Occupation
The definition of disability in your policy matters more than the benefit amount, and it is where group and individual coverage differ most.
- Own occupation — pays if you cannot perform the duties of your job. A surgeon who develops a hand tremor is disabled under this definition even if they could teach.
- Any occupation — pays only if you cannot perform any job you are reasonably suited to by education, training and experience. Far harder to claim on.
Here is the clause worth finding in your own policy: most group plans start as own-occupation and switch to any-occupation after 24 months. Coverage that looked solid can quietly become much weaker exactly when a disability turns out to be long-term. Individual policies more often keep own-occupation for the full benefit period, which is a substantial part of what you are paying for.
Two other clauses to read: whether benefits are offset by Social Security Disability Insurance payments (most group plans do offset), and whether there is a cost-of-living adjustment — a fixed benefit loses substantial purchasing power over a disability lasting decades.
The Elimination Period and Your Savings Bridge
The elimination period is the waiting time between becoming disabled and receiving your first payment. A 90-day period — the most common — means roughly three months of expenses with no benefit income at all.
At $4,200 of monthly essential expenses, a 90-day elimination period requires about $12,600 of accessible savings just to reach the first payment. Note that benefits are typically paid in arrears, so the first cheque may arrive later still.
The trade-off is straightforward: a longer elimination period lowers the premium but demands more savings. If you already have a solid emergency fund, extending from 90 to 180 days can meaningfully reduce cost. If you do not, building the savings is usually cheaper than shortening the elimination period.
Worth putting in perspective: the Social Security Administration estimates a substantial share of today's 20-year-olds will experience a disability before reaching retirement age. Disability is a far more common cause of lost income than death, yet it attracts a fraction of the attention life insurance does. If you are sizing both, the life insurance needs calculator covers the other half.