Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Monthly disability income gap
$3,096
Monthly income you'd need
$7,200
After-tax benefit you'd receive
$4,104
Annual income gap
$37,152
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How to use this
- 1Enter current gross monthly income ($).
- 2Enter % of income you'd need if disabled (%).
- 3Enter group ltd replacement percentage (%).
- 4Enter monthly benefit cap ($).
- 5Enter is the group benefit taxable?.
- 6Enter marginal tax rate (if taxable) (%).
- 7Read your monthly disability income gap on the right — it updates as you type.
- 8Hit Share to keep the scenario or send it to someone.
About this calculator
Most employer-provided group long-term disability plans replace only 60% of base salary, and that benefit is usually capped at a monthly maximum — often $10,000-$15,000 — regardless of how much you earn above that threshold. On top of that, employer-paid group disability benefits are taxable, while benefits from a policy you pay for yourself with after-tax dollars are not. This calculator computes your real monthly income need, compares it against your actual expected benefit after the cap and any tax hit, and shows the monthly gap you'd need to fill with an individual supplemental disability policy or savings.
Worked example
Using the values the calculator loads with:
Inputs
- Current gross monthly income: 9000 $
- % of income you'd need if disabled: 80 %
- Group LTD replacement percentage: 60 %
- Monthly benefit cap: 6000 $
- Is the group benefit taxable?: Yes — employer-paid premium
- Marginal tax rate (if taxable): 24 %
Results
- Monthly disability income gap: $3,096
- Monthly income you'd need: $7,200
- After-tax benefit you'd receive: $4,104
- Annual income gap: $37,152
What each field means
Inputs
- Current gross monthly income ($)
- The current gross monthly income used in the calculation, measured in $. Starts at 9000 $ so you have a working example on load.
- % of income you'd need if disabled (%)
- The % of income you'd need if disabled used in the calculation, measured in %. Starts at 80 % so you have a working example on load. Accepted range: 0–100 %.
- Group LTD replacement percentage (%)
- The group ltd replacement percentage used in the calculation, measured in %. Starts at 60 % so you have a working example on load. Accepted range: 0–100 %.
- Monthly benefit cap ($)
- The monthly benefit cap used in the calculation, measured in $. Starts at 6000 $ so you have a working example on load.
- Is the group benefit taxable?
- Pick the option that matches your situation — the maths changes per option. Choices: Yes — employer-paid premium, No — I pay premium after-tax.
- Marginal tax rate (if taxable) (%)
- The marginal tax rate (if taxable) used in the calculation, measured in %. Starts at 24 % so you have a working example on load. Accepted range: 0–50 %.
Results
- Monthly disability income gap
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly income you'd need
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- After-tax benefit you'd receive
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Annual income gap
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why is my group disability benefit taxable if it comes from a benefit plan?
The IRS treats disability benefits as taxable when the employer pays the premium (or pays with pre-tax payroll deduction), because you never paid tax on the premium dollars going in. If you pay the premium yourself with after-tax income, the resulting benefit is tax-free, which is a major reason some people choose to pay their own premium even when an employer offers a subsidized group plan.
Why do monthly benefit caps matter so much for higher earners?
A 60% replacement rate sounds fine until you hit the cap. Someone earning $15,000/month at a 60% group rate would expect a $9,000 benefit, but a $6,000 monthly cap limits them to $6,000 — a 40% shortfall from the stated replacement rate. Caps disproportionately hurt higher earners and are the main reason supplemental individual disability policies exist.
Should I count on Social Security Disability Insurance (SSDI) to close the gap?
Be cautious. SSDI has a strict definition of disability (unable to do any substantial gainful work, not just your own occupation), a 5-month waiting period, and roughly two-thirds of initial applications are denied nationally. It shouldn't be the primary plan for closing an income gap, though it can supplement other benefits once approved.
How much does an individual supplemental disability policy typically cost?
Individual long-term disability premiums commonly run 1-3% of covered annual income per year, varying with occupation class, age, and benefit period chosen. A desk-job professional pays much less per dollar of coverage than someone in a physically demanding occupation, and choosing 'own occupation' versus 'any occupation' definitions also changes price significantly.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Disability Insurance Benefit Gap Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/disability-benefit-gap
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/disability-benefit-gap" target="_blank" rel="noopener">Disability Insurance Benefit Gap Calculator — RevenueLab</a> (2026).</p>
Source: [Disability Insurance Benefit Gap Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/disability-benefit-gap) (2026).