What is Microsoft's New Supplemental Long-Term Disability Plan?

Have you ever wondered what would happen to your income if you were to become disabled due to a physical, mental, or emotional issue? It’s a terrifying thought! 

If you’re unable to perform your current job duties, you need to know that your future and your family are protected financially. Microsoft offers free long-term disability insurance to employees, but they’re also rolling out a new supplemental LTD plan.

If you’re a Microsoft employee, you might have received an email about this new plan. Is it a good deal?

Here’s what you need to know about the new Microsoft supplemental long-term disability plan and some considerations to decide if it’s right for you.

What is Microsoft’s New Supplemental LTD Plan? 

If you’re considering ways to protect your income if something renders you incapable of doing your job in the future, then you may want to consider Microsoft’s new supplemental LTD plan. 

The new MetLife option gives you a 35% discount on current corporate-sponsored premium rates, which might provide protection at an affordable price in tandem with your free LTD insurance through Microsoft.

The new plans offered by MetLife are designed to protect your compensation with coverage up to 70% of your eligible pay. Additionally, it includes your Microsoft stock income if you were to become disabled due to physical disabilities or mental and emotional ones. 

What are the Benefits?

Microsoft already offers a free long-term disability benefit to employees, but the standard has been on the low side for some time. It caps out at a monthly maximum of $15,000, which is lower than Amazon’s $25,000. In other words, Microsoft’s benefit is equal to a $180,000 annual salary. If you earn more than that, disability could mean a significant drop in monthly income.

Because disability is one of the leading causes of bankruptcy and home foreclosure, you may need supplemental LTD insurance to protect the remainder of your income.

It’s also worth noting that the new plan comes with federal tax-free benefits. We recommend consulting a tax advisor who can speak to your unique tax situation and any state taxes that might be applicable. 

Should I Enroll in the New Supplemental LTD Plan? 

With an understanding of what the new supplemental plan offers, you will have to decide whether you intend to enroll for the maximum benefit. Here are a couple of considerations you might make before enrollment ends. 

No Medical Exams and No Exclusions

For 2025, there’s a significant advantage if you enroll before May 2nd. 

One of the main draws for enrolling now is that you are guaranteed enrollment without medical exams and exclusions for pre-existing disabilities. 

That said, don’t let FOMO rush your decision. Enrolling in Microsoft’s supplemental LTD is not necessarily a one-time thing. You’ll have another opportunity next year, but it will be subject to the full underwriting and approval process. 

If you believe you may not qualify, now might be the best time to take advantage of the plan. For most people, this may not be a dealbreaker. Guaranteed enrollment is convenient but may not be a deciding factor.

Unprotected Income 

How much unprotected income would you have? If you stick with the free LTD coverage offered by Microsoft, its base coverage has a $15,000 monthly cap. You might be making far more than this right now, which could put your family in a bind if that income suddenly disappeared. 

About 44 percent of bankruptcy filings come from medical problems causing work loss. Disability causes up to sixteen times more foreclosures than death, accounting for up to 50 percent of the total annually. Those statistics are not meant to scare you, but to make you realize how being unable to work while bills are still coming in can be devastating. Supplemental LTD could help you avoid that risk. 

Plan Costs

As with most long-term disability coverage, your price tier will vary based on age and income. It might be insanely expensive for some people and not worth the investment. Take the time now to gather the numbers and compare them against other options to see if it makes financial sense for you. 

LTD plans are a financial investment, but they do not have to cause you to squeeze your budget too tightly. You do not want to leave your family financially strapped in the event of a future issue that may or may not ever come to pass. 

Check Your Contract

Not everyone requires supplemental long-term disability. Depending on your situation, you might have other protections in place.

For example, your vesting schedule may accelerate or continue even in certain cases, such as retirement (like Microsoft’s 55/15 plan), disability, or death. This is not a guarantee and instead depends on your specific plan agreement. 

Check your contract, as specifics may vary depending on these details or your level within the company. This is a good time to read through your initial paperwork with a keen eye for the specifics of what you can expect from the company if something were to render you disabled. 

Run the Numbers with Consilio

If you’re thinking about enrolling in the new Microsoft LTD plan through MetLife, you may need some guidance on whether it’s a good investment for you. Consilio Wealth Advisors can help you run the numbers based on your unique situation and decide whether or not the plan is best for you. We may find that a different LTD plan through another provider is a better fit for you. 

Our wealth planning experts are fiduciaries who specialize in working with tech professionals to make the most of their benefits and income. Reach out to us today if you are considering signing up for this new plan and let’s strategize on your next move.

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