Ive been off work and on Long term disability for the last 10+ years. My employer is a huge company. So I received a termination letter from my work yesterday stating that my employee agreement has become frustrated and they are ending my employment. They are telling me that I have to sign a release to get my severance of $25,000. Not sure if that legal either.

My question is since the $25,000 is going to be a lump sum payment that will be taxed:

1. will this money go directly to the LTD insurance company
2. Will it be the gross or net amount that the LTD insurance company will take?
3. Will the severance be used by the LTD insurance for reimburse past payments or towards future payments?

Whether your LTD insurer will be entitled to an offset/deduction for the severance depends on the terms of your specific LTD policy (as well as the terms of your severance release paperwork). Under some LTD policies, severance is deductible, but depending on how those terms are worded, there may (or may not) be a way to categorize the money in the severance release with your employer that protects it from the insurer (for example, categorizing the funds as "general damages" instead of "severance", may protect it from certain policies/terms - again, depending on the wording of the terms).

All of that said, if you're not in a union, you may want to speak to one of our employment lawyers about your severance claim. They may be able to help with the above, but they may also be able to help with getting you a better severance deal overall. I recommend using our free employment questions website (www.terminationquestions.com) as a starting point, but you could also contact our intake team directly.