Long-term Disability (LTD) insurance benefits are typically reduced by any amounts received from government compulsory benefit plans, such as the VPDI in California, which replaces State Disability Insurance (SDI). If the LTD benefits are tax-free, the reduction by VPDI does not affect the net amount received. However, if LTD benefits are taxable, the overall after-tax income may slightly increase due to the combination of taxed LTD benefits and tax-free VPDI benefits, resulting in a mixed benefit scenario.