LTD Benefit Calculation

Understanding how your Long-Term Disability (LTD) benefit is calculated helps you plan financially and verify that you're receiving the correct amount.

Overview (CBA Section 27.J.2, 27.J.6, 27.J.7)

Your LTD benefit is based on:

1. Your monthly earnings — calculated using the "best 12 of 36" rule, not your last paycheck
2. Benefit percentage — 60% for months 1-24, 50% for months 25+
3. IRS 401(a)(17) cap — $350,000 annual / $29,167 monthly for 2025-2026

Monthly Earnings Definition

The "Best 12 of 36" Rule (CBA 27.J.6)

Your monthly earnings are calculated as:

"The 12 highest consecutive months out of the 36 consecutive months preceding the disability period"

This is more favorable than using your last month's pay or a straight 36-month average.

Example:

Last 36 months included:
- Months 1-12:   Average $15,000/month (peak flying schedule)
- Months 13-24:  Average $13,500/month (training, less flying)
- Months 25-36:  Average $14,000/month (moderate schedule)

Your monthly earnings = $15,000 (best 12 consecutive months)
NOT $14,166 (average of all 36 months)

What's Included in "Monthly Earnings"

Included:

• Base pay
• Flight pay
• Override pay
• Premium pay
• Per diem

Excluded:

• One-time bonuses
• Reimbursements
• Non-regular compensation

Benefit Percentages

First 24 Months: 60% (CBA 27.J.2)

Monthly Benefit = Monthly Earnings × 60%

Example:

Monthly earnings: $15,000
Benefit: $15,000 × 60% = $9,000/month (before offsets)

After 24 Months: 50% (CBA 27.J.2)

Monthly Benefit = Monthly Earnings × 50%

Example:

Monthly earnings: $15,000
Benefit: $15,000 × 50% = $7,500/month (before offsets)

IRS 401(a)(17) Cap

Maximum Benefit Limits (CBA 27.J.7)

Maximum Monthly Benefits After Cap

Months 1-24 (60%):

Months 25+ (50%):

How the Cap Works

Your benefit is the lesser of:

1. Your calculated benefit (monthly earnings × percentage)
2. The IRS 401(a)(17) monthly cap

Example 1: Below the cap

Monthly earnings: $15,000
Percentage: 60% (first 24 months)
Calculated: $15,000 × 60% = $9,000
Cap: $17,500
Actual benefit: $9,000 (lower amount)

Example 2: Above the cap (senior captain)

Monthly earnings: $32,000
Percentage: 60% (first 24 months)
Calculated: $32,000 × 60% = $19,200
Cap: $17,500
Actual benefit: $17,500 (capped)

Complete Calculation Example

High-Earning Captain

Background:

• Best 12 consecutive months: Average $28,000/month
• Currently in month 10 of disability
• 2026 benefit year

Calculation:

Step 1: Monthly earnings = $28,000 (best 12 of 36)

Step 2: Apply percentage
        Month 10 = within first 24 months = 60%
        $28,000 × 60% = $16,800

Step 3: Check cap
        2026 cap (months 1-24) = $17,500
        $16,800 < $17,500 ✓ Not capped

Gross monthly benefit: $16,800

Note: This is BEFORE offsets (CA SDI, SSDI, outside income).

First Officer Example

Background:

• Best 12 consecutive months: Average $12,000/month
• Currently in month 30 of disability
• 2026 benefit year

Calculation:

Step 1: Monthly earnings = $12,000

Step 2: Apply percentage
        Month 30 = after 24 months = 50%
        $12,000 × 50% = $6,000

Step 3: Check cap
        2026 cap (months 25+) = $14,583
        $6,000 < $14,583 ✓ Not capped

Gross monthly benefit: $6,000

Verifying Your Benefit

Request Detailed Calculation

When you receive your first LTD payment, request in writing:

1. Which 12 months were used for your monthly earnings calculation
2. Full calculation breakdown — monthly earnings amount, percentage applied, cap applied, all offsets
3. Payroll source data — the earnings figures they pulled from FedEx payroll

Common Errors

• Wrong 12-month window — verify they used your highest consecutive 12 months, not calendar year or last 12
• Incorrect percentage — confirm 60% vs 50% based on your actual months-on-LTD count
• Wrong cap year — IRS limits adjust annually; verify they applied the limit for your benefit year
• Missing pay components — confirm flight pay, override pay, and per diem are included

How to Challenge

If you believe the calculation is wrong:

1. Pull your ADP payslips for the preceding 36 months
2. Calculate your own best 12-consecutive-month figure
3. Send a written dispute with your calculation and supporting payslips
4. Request recalculation from the administrator; cite CBA §27.J.6 explicitly
5. Escalate through the PBRB process if the administrator does not correct within 30 days

Impact of Returning to Work

Trial Work Period

If you return to work temporarily, coordinate with the administrator in writing before returning — an uncoordinated return can reset your benefit calculation window or affect your benefit percentage.

Partial Return

If you return part-time, earnings from part-time work may reduce your LTD benefit under the outside income offset rules. See Outside Income rules.

Adjustments Over Time

Annual Updates

The IRS 401(a)(17) cap adjusts annually. If your benefit is capped, a cap increase can increase your monthly benefit — verify each January whether the new cap raises your payment.

Recalculation Triggers

Your benefit may be recalculated if:

• You return to work and re-enter disability (new 36-month window applies)
• There's a correction to your FedEx payroll history
• CBA amendments change the calculation method

Tools and Resources

Getting Your Pay History

From ADP:

1. Log in to ADP
2. Navigate to Pay → Pay Statements
3. Download last 36 months of pay stubs
4. Identify your highest 12 consecutive months

From the Administrator:

• Request the earnings history they have on file
• Compare it against your ADP records and correct any discrepancies before claim approval — errors found after approval require a formal recalculation request

Next Steps

• Offset Rules — how SDI, SSDI, and outside income reduce your gross benefit
• Calculator — estimate your LTD and offset amounts with your actual pay figures
• LTD Duration — when and how benefits end