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How do I calculate benefits and premiums for long-term disability?

LTD benefits and premium amounts depend on an employee's monthly salary.

  • Benefits are usually up to a fixed maximum set by the plan, for example: 50% of monthly salary, to a maximum benefit of $5000.
  • Salary amounts are rounded per thousand for insurance carriers that round salary.
    • Some carriers will round the final volume and not the salary.
  • Premiums are calculated based on total monthly salary, not the benefit amount.
  • Benefits are treated as post-tax by default, but there may be situations where administrators ask employees if they prefer pre-taxdisability benefits. However, these situations are rare, and paying benefits as pre-tax is not advised.
  • The volume in Zenefits is based on the amount of benefits an employee will receive, however, the carrier may reflect the full monthly/weekly salary instead of the amount the employee will receive.


Bob earns $60,500 annually. His carrier rounds down to the nearest thousand ($60,000), so his monthly salary (for the purposes of calculations) is $ 5 ,000.

  • His plan design is 60% of monthly earnings, up to a $ 6 ,000 monthly max benefit (which corresponds to a maximum monthly salary of $10,000)
  • His rate is .30/$100.

According to the plan design:

  • His monthly benefit amount is (.60 x $ 5 ,000) = $3000.
  • His monthly premium is ($ 5 ,000 x . 30 / $100) = $15.00.

Remember, even if the employee makes more than the maximum benefit, the premium is still limited by the maximum monthly salary. So, if his monthly salary was $13,000, for the same plan:

  • His monthly benefit amount is (.60 x $13,000) = $ 6 ,000 (maximum).
  • His monthly premium is ($10,000 maximum monthly salary x . 30 / $100) = $30.00.
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