Ding ding ding. Correct.

Own occupation means if you can’t fly, but can work as a Walmart greeter, doesn’t matter, you can’t fly, you get paid.

IF you have W2 or 1099 income while on LTD, your LTD will offset against your other earnings. So you don’t work on the books, otherwise it’s free.

And originally it was $5000 is taxable and the optional buy up was tax free, up to $10k. Recently we got the message saying that the buy up premiums increased, so the company has to pay a higher share, so now the buy up will start to become taxable by the percentage the premium increases every year. This is much more concerning than off setting income. With premiums increasing YoY, it won’t be long until a large percentage of the buy up is taxable, as well as the original $5,000 company provided.

The exact language from the Union was
“LTD Buy-up - The premiums for LTD Buy-up are increasing 5%. Actual increases are projected at 11%, but the contractual cap is 5%. Since the company is paying 6% of the LTD Buy-up premium, 6% of the LTD Buy-up benefit will become taxable in addition to the $5,000 benefit payable under the Core LTD plan.”

So now if you qualify for the $10k buy up and go out on LTD in 2020 it’s
$5,000 taxable
$600 taxable of the buy up
$9400 tax free.

And that will increase every year. Won’t take long for the tax benefits to be gone