It is all too often that I hear Federal Government employees speaking of how great their benefits are because they work for the Federal Government. In some ways they are correct - 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 cover 60% of a person's salary up to a maximum monthly benefit 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 think it is fair 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 drop to 40% of your income. Once again, I believe it is fair to state 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 take 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 obtain an individual policy to cover the gap in your coverage.
Your ability to work and earn an income is your most valuable financial asset. Most things you will need, desire and achieve in life revolve around your income you earn. As a Federal government employee, you have a gap in your Disability coverage and the only way to properly protect your income is by obtaining an individual policy to supplement your group coverage.
