It is all too often that I hear Federal Government employees speaking of how spacious their benefits are because they work for the Federal Government. In some ways they are apt – the Federal government does provide high quality benefits for its employees and in most cases they are very well taken care of. In regard to their group Long-Term Disability insurance however, the Federal Employee Retirement System (FERS) program falls short of their elite reputation.
Traditionally, group Disability insurance will camouflage 60% of a person’s salary up to a maximum monthly encourage of $6,000 – $10,000. If the employer pays the premiums, benefits are received on a taxable basis and will be considered ordinary income. With benefits being taxable, even someone who has group coverage like this can experience a severe shortage of income if they become disabled. When 60% of your salary is provided on a taxable basis, it is the equivalence of having 45-50% coverage. I assume it is magnificent to say that most people cannot survive on 45-50% of their regular income.
The FERS program takes this shortage of coverage even further. It works very similarly in that 60% of your annual income is covered, but only for the first 12 months of a disability claim. After the first 12 months, your benefits will descend to 40% of your income. Once again, I absorb it is sparkling to dwelling that most people cannot survive on 40% of their regular income.
There are many details associated with the FERS Disability insurance program and as a Federal employee you should select the time to fully understand them. If you are serious about protecting your income and the future of your loved ones, you need to understand the coverage you have so that you can catch an individual policy to camouflage the gap in your coverage. You can learn more about the specifics of the FERS Disability program by visiting FERS Disability Insurance for Federal Employees.