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LTD vs. LTC: Understanding the Differences
Group long term disability (LTD) and long term care insurance (LTCi) are two types of financial protection with similar names. Both are triggered by health-related causes, but they each serve different purposes.
LTD protects your future earnings by replacing a portion of your income when you’re not able to work due to a debilitating illness or disabling accident.
LTCi pays a daily or monthly benefit towards the costs of care services when you can no longer take care of yourself for the acts of daily living, such as bathing, dressing, or eating.
Compare the differences:
|Group Long Term Disability (LTD)||Long-Term Care Insurance (LTCi)|
|Who provides the coverage?||Mayo Clinic sponsors the Mayo LTD Plan for benefits-eligible employees.||You can purchase an individual policy through a broker, such as Legacy Services, an independent broker that specializes in LTCi and represents multiple brand name carriers.|
|How much does it cost?||No cost to you.||Your premiums vary based on your age, health, daily or monthly benefit, waiting period, etc.|
|What benefits are provided?||Generally, it provides income replacement in the event you are disabled from a non-work related illness or injury.||Generally, it covers costs of home health care, assisted living, nursing home, adult day care, hospice care, respite care, caregiver training, etc.
|Why is it important?||· Provides income so you can pay your living expenses.
· Helps protect your assets.
· Allows you and your family to maintain a higher standard of living than if you had to rely solely on your savings or government assistance.
|· Pays for care expenses over several years.
· You determine where you receive care and the quality of care.
· Protects your assets and retirement income.
· Health insurance does not pay for long term care services.
|When does coverage end?||When you leave employment or are no longer benefits eligible.||Your individual policy is fully portable and stays with you when you leave employment.|
A complete description of LTD benefits can be found in the Summary Plan Description.
Search HR Connect for more information about LTCi and Legacy Services.