When a player has an injury of which they are expected to miss 10 games and 24 days, the team can place them on long term injured reserve (LTIR) to receive cap relief.

When a player is placed on LTIR, their cap hit technically remains on the teams cap payroll and it continues to count as it always did. It also does not provide the club with additional cap-space savings that can be banked for future use while the team operates below the salary cap. Instead, LTIR provides relief if the club's averaged club salary, or payroll, begins to exceed the upper limit. The amount of relief that the club receives is calculated on the day the player is placed on LTIR. There are two formulas that are used to determine the LTIR relief, the first formula, the basic formula, can be used during the season and during the off-season. The second formula, the training-camp formula, can be used during the off-season.
Basic Formula
This formula is used throughout the season and during the off-season
Amount team can exceed the cap = Cap hit of LTIR player - Amount of cap space available
Training-Camp Formula
This formula can only be used during the off-season
Amount team can exceed the cap = Team cap hit - season salary cap
Basic Formula Example
The league upper limit is $69M. A team has an averaged club salary of $68M and a player with a cap hit of $5M becomes injured and the team places him on LTIR. The team is now permitted to spend up to a new limit of $73M:
  1. Cap hit of LTIR player is $5M
  2. Amount of cap space available to team = $69M - $68M = $1M
  3. Amount team can exceed the cap = $5M - $1M = $4M
  4. New limit = $69M + $4M = $73M
To add to this example, if the team were to recall a player from the AHL, with a cap hit of $950k, the teams would instead be permitted to spend up to a new limit of $73.95M:
  1. Cap hit of LTIR player is $5M
  2. Amount of cap space available to team = $69M - $68.95M = $0.05M
  3. Amount team can exceed the cap = $5M - $0.05M = $4.95M
  4. New limit = $69M + $4.95M = $73.95M
For this reason, when a player is activated onto LTIR, one day recalls are relatively common as they can be used to maximize the cap relief from an LTIR player.
Training-Camp Formula Example
The league upper limit is $69M. A team has an averaged club salary of $71M and a player with a cap hit of $5M becomes injured and the team places him on LTIR. The team is now permitted to spend up to a new limit of $71M:
  1. Team cap hit = $71M
  2. Season salary cap = $69M
  3. Amount team can exceed the cap = $71 - $69M = $2M
  4. New limit = $69M + $2M = $71M
To add to this example, if the team were to recall two players from the AHL, one with a cap hit of $950k and the other $650k, the teams would instead be permitted to spend up to a new limit of $72.6M:
  1. Team cap hit = $72.6M
  2. Season salary cap = $69M
  3. Amount team can exceed the cap = $72.6 - $69M = $3.6M
  4. New limit = $69M + $4.95M = $72.6M
Again, for this reason, when a player is activated onto LTIR, one day recalls are relatively common as they can be used to maximize the cap relief from an LTIR player.