Merck automatically provides you with company-paid short-term disability (STD) coverage and long-term disability (LTD) coverage (60% of base pay, before-tax). You have the option of choosing additional employee-paid LTD coverage or paying for your LTD coverage with after-tax dollars, so the benefit you receive is generally tax-free.
STD
Generally, Merck provides this benefit at no cost to you. However, you may be required to pay for short-term disability coverage in states with mandated STD coverage. For more information about STD, contact Sedgwick at 855-231-1038.
LTD
The company pays the full cost of LTD coverage for the 60% of base pay options (if you elect LTD coverage on an after-tax basis, the value of your coverage will be treated as taxable income). Changes to your coverage levels are subject to the plan’s evidence of insurability (EOI) and actively-at-work requirements. To understand your LTD costs, contact the Benefits Service Center at 800-666-3725 and netbenefits.com. To understand your LTD coverage, contact New York Life at 800-238-2125.
STD coverage provides income if you are unable to work due to a non-work related injury, illness or medical condition and the STD claims administrator certifies you as disabled. Generally, Merck provides this benefit at no cost to you. However, you may be required to pay for short-term disability coverage in states with mandated STD coverage. Employees who are subject to a collective bargaining agreement are eligible for benefits set forth in that agreement. For details about STD, click here to access the plan documents.
The following is a high-level summary of the benefits offered under the Merck LTD plan. For details about LTD, including any exclusions and limitations that may apply, click here to access the plan documents.
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Levels of coverage |
You may choose from three levels of LTD coverage for approved disability leaves beyond 26 weeks — income replacement of:
Changes to your coverage levels may be subject to the plan’s evidence of insurability (EOI) and actively-at-work requirements. |
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When disability coverage begins |
This coverage may pay benefits after your Merck STD benefits end. |
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How benefits are paid |
LTD benefits are determined by your base pay (excluding commissions, overtime, bonuses or any special or supplemental pay; for union employees, includes cost-of-living adjustment (COLA) where applicable), reflecting your scheduled hours, if part-time. In addition, benefits may be reduced by the amount of income you receive from other sources such as Social Security and Workers’ Compensation. |
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Should I choose before-tax or after-tax LTD coverage?
Many people are unsure about how to make this decision. The difference is a matter of the timing and amount of taxes you pay.
LTD before-tax vs. after-tax options
The chart below shows an example of the difference between before-tax and after-tax LTD options. The example assumes:
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Before-tax option |
After-tax option |
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Taxes on imputed income in current pay |
Tax-free Taxes: $0/year |
Taxable at 25% Taxes: $73/year |
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LTD benefit when paid |
Taxable at 25% Taxes: $15,000/year |
Tax-free Taxes: $0/year |
The bottom line: You need to decide whether you would prefer to choose the before-tax approach in exchange for a smaller LTD benefit as taxes will be withheld from your LTD payment, or if you would rather pay taxes now by choosing the after-tax approach and receive a larger LTD benefit, which is free of federal taxes.
Provides income if you are unable to work due to a non-work-related injury, illness or medical condition and the STD Claims Administrator certifies you as disabled.
Provides a percentage of your income if you become disabled and are unable to work, provided you are certified as disabled by the Claims Administrator.
STD benefits are managed through internal clinical resources for employees subject to a collective bargaining agreement (excluding the International Association of Mechanics and Aerospace, District 15 and Lodge 315).
The taxable value of your Long-Term Disability coverage is called “imputed income.” Even though you don’t receive cash, you are taxed as if you received cash in an amount equal to the value of this coverage.
