Why group LTD isn't enough

If you're an employed physician, you probably have some group long-term disability (LTD) coverage already, often bundled in as a standard benefit. That's a real asset. It's also, on its own, rarely enough for a high-income specialist. Three structural issues show up over and over:

1. It usually targets 50–60% of salary — before tax

Most group LTD plans target replacing 50–60% of pre-disability income, and that percentage is calculated on base salary, not total compensation — which can leave out bonuses, call pay, or partnership distributions entirely.

2. It's almost always capped

Group plans typically cap the monthly benefit somewhere in the $10,000–$20,000/month range, with some carrier plans capping as high as roughly $30,000/month for higher-income enrollees. For high-earning specialties, the effective replacement percentage after the cap can be far below the stated 50–60% — the cap, not the percentage, ends up setting your real benefit.

3. It's taxable if your employer paid the premium

If your employer pays the LTD premium and doesn't add it back to your taxable income, any benefit you receive is taxable. Between the cap and the tax treatment, independent physician-finance analyses commonly put real-world replacement closer to 30–40% of total compensation for higher earners — well short of the 50–60% headline figure, and right when your expenses haven't gone down.

Putting a live number on it

Here's what that looks like with real numbers, computed by the same engine that powers the calculator on this site — not a separate illustrative estimate. For a $350,000/year physician with a $12,000/month group LTD benefit:

The gap is specific to your own income, specialty, and existing coverage — run your own numbers in the coverage gap calculator rather than relying on this example. For most physicians, an individual policy layered on top of group LTD closes the gap and adds a stronger own-occupation definition at the same time — see the own-occupation guide for why that definition matters as much as the dollar amount.

Sources

Cap and replacement-percentage figures vary by employer plan and carrier; treat the ranges above as directional. Confirm your own plan's exact cap and definition in its summary plan description before relying on any number here.