Why isn't my employer's long-term disability enough, and how are the benefits taxed?

Group long-term disability has three common weaknesses: a low benefit cap, a weak definition, and unfavorable taxation. Most employer plans replace about 60% of income but stop at a monthly dollar ceiling, so high earners get a much smaller real percentage. Many use an any-occupation definition after two years, meaning benefits stop if you could do any job, not just your own profession. And the coverage isn't portable — change jobs and it's gone. The tax issue is the kicker: when your employer pays the premiums, the benefits you receive are taxable income, so a "60%" benefit might net closer to 45% after taxes. If you pay the premiums yourself with after-tax dollars, the benefits come tax-free. That's why high earners typically supplement group coverage with an individual policy that's portable, uses own-occupation language, and pays tax-free. Check your plan's exact terms before assuming you're covered.