Long-term disability insurance (LTD). Is it a nice-to-have or a requirement? After all, employees can apply for Social Security Disability Insurance (SSDI) if something serious sidelines them. That’ll cover it, right? Not necessarily.
Knowing these two programs exist isn’t the same as knowing how they actually work. And more importantly, understanding how they work together (or don’t). If you’re responsible for building a comprehensive employee benefits package that supports your team and keeps your budget steady, this is must-know stuff. Understanding this pairing is critical to protecting your people and your balance sheet.
You’ll walk away from this read knowing how each benefit works, where they overlap (and where they leave gaps), and how to offer the kind of support that keeps employees afloat and loyal when life takes a hard left turn.
LTD Is Your Tool. SSDI Is the Government’s.
Think of LTD as the safety net you install. It’s a benefit employers pay for, usually through an insurance policy. It kicks in after a short waiting period (often 90 days) and replaces a portion of your employee’s salary, typically 50% to 70%, for the long haul. That can mean the sick or injured worker gets paid until retirement age.
SSDI, on the other hand, is more like the government’s patch kit. It’s there, yes, but it’s much harder to get. It’s only available to people who meet very specific medical requirements and have worked long enough to earn the credits. Plus, there’s a five-month waiting period after the disability begins. In reality, most people wait much longer than that just to hear back.
LTD is your tool to protect employees and your retention long before any SSDI eligibility kicks in. And while LTD insurers often structure plans to coordinate with SSDI, government approval timelines and partial offsets can complicate coverage and employee experience.
Understanding these differences helps you choose an LTD plan that fills the gap, sets proper expectations, and manages cost without relying on unpredictable government support.
Here’s the key takeaway: LTD is the benefit you control. SSDI is the one you hope might help. Eventually. But hoping isn’t a strategy.
Predictability vs. The Waiting Game
One of the biggest advantages of offering LTD? You know what to expect. You choose the coverage terms. You can budget for it. You can explain it to your employees with confidence.
SSDI is a whole different ballgame. You can’t predict when—or if—an employee will qualify. Some claims get denied and appealed for a year or more. That means if you don’t have an LTD plan or your policy defers too quickly to SSDI, your employee could go without income for months. Not only is that a hardship for them, but it also puts your reputation as a supportive employer on shaky ground.
LTD is designed to provide steady support regardless of SSDI delays. It creates a smoother, less stressful experience for everyone.
Accounting for the SSDI Offset
Here’s where it can get a little tricky. Many LTD policies have something called an “offset” clause. That means if an employee eventually gets SSDI, the LTD benefit might shrink by that amount. It’s a way to avoid double-paying.
But the catch? SSDI doesn’t arrive right away. It involves paperwork, doctor statements, and often, a long approval process. If your LTD plan assumes SSDI will kick in or coordinates the two benefits too rigidly, that delay can cause serious gaps in income and trust.
The better option? A plan that pays LTD benefits upfront and only adjusts payments after SSDI kicks in. That way, your team isn’t left in the lurch. They’re taken care of from the start, and any necessary tweaks happen later, behind the scenes.
Don’t Assume SSDI Will Save the Day
Some employers figure, “Hey, the government’s got this.” So they skimp on LTD coverage and hope SSDI will pick up the slack. Unfortunately, that decision can backfire.
Your employee might not qualify. Or they might qualify eventually, but only after months (or years) of financial strain. Or the SSDI check might be smaller than anyone expected.
Your best bet is to offer LTD that assumes nothing. Design it to pay out regardless of SSDI and make sure your people know that. Be clear with employees: “This benefit starts quickly and keeps going, whether SSDI arrives next month or never.”
That clarity builds trust and avoids a whole lot of heartache.
Two Employees, Two Very Different Experiences
Picture this: An employee gets seriously sick and needs to take leave.
In Scenario A, your LTD policy starts paying 60% of their salary after a 90-day waiting period. SSDI shows up nine months later. When it does, the LTD payment adjusts to account for the new income source, but nothing ever stops. The employee stays financially stable and eventually returns to work.
In scenario B, the LTD policy won’t pay the full benefit until SSDI is approved. The employee waits, unpaid, for nine months while fighting through red tape. Meanwhile, they can’t pay their rent, their car is repossessed, and how they afford groceries is a mystery. They’re stressed, confused, and feeling abandoned. In the end, they leave the company and tell others why. Their employer claimed to have long-term disability insurance, but all they saw was stress and a quickly emptying bank account.
You can avoid the latter scenario by choosing policies that provide consistent support and coordinate with, rather than defer to, SSDI.
Same situation, different outcomes. The difference is in the plan design.
How to Build a Better LTD Strategy (It’s Not That Hard)
When you talk to your benefits broker about disability insurance for employees, come in with questions:
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- Will LTD pay before SSDI is approved?
- How long is the waiting period, and does it fit our absence policies?
- How do offsets work, and what kind of delays are typical?
- Does this plan cover mental health conditions or chronic illnesses that SSDI might reject?
Also, ask about extra services. The best LTD providers do more than cut checks. They offer help with recovery, return-to-work programs, and even coordination with your HR team.
Those extras can make a big difference in how employees experience disability and how quickly they come back.
Why This Matters for Your Employees and Your Culture
Offering a strong LTD plan can feel like a line item on a spreadsheet. But it’s so much more than that. It says something about who you are as an employer. It says, “We’ve got you. Even when life gets messy.”
It shows you’re thinking ahead, making sure your people aren’t left waiting on a government decision before they can pay bills or feed their family.
And from a practical angle, it protects your bottom line. You avoid drawn-out leaves, HR headaches, and potential legal messes tied to inconsistent leave management.
Good LTD coverage is good leadership.
Takeaways You Can Use Right Now
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- Think of SSDI as a backup plan, not your primary safety net.
- Choose LTD coverage that starts quickly and doesn’t stall while waiting for SSDI.
- Ask your employee benefits insurance broker to explain offsets, timelines, and mental health coverage in plain English.
- Look for insurers that offer hands-on support during the disability period.
Your team deserves more than just promises. They deserve real protection when the unexpected hits. Social Security might help eventually, but it’s your LTD coverage that carries them through the hard part.