Adding Disabilty Insurance for the 1st time

TBHRPRO · May 2004

We are currently adding company paid LTD and voluntary STD. I have received quotes and have a carrier possibly selected. I have the basics about the policy, but what other questions (more in depth) do I need to ask? Any little tricks with the policies that I need to know about? Does anyone have a checklist of questions that I need to ask? I have a meeting comeing up the first week of June. Thanks for any help anyone can give me.

lnelson · June 2004

Since the STD is voluntary can the ee sign up or cancel at any time.
Our STD is voluntary and the ee's can only enroll during the initial offering once rejected they can not enroll at a later date. They can cancel anytime.

Is it a portable plan? If ee leaves your employ can they continue the STD or LTD?

When does the STD take effect? Ours is after first 2 wks then covers to 90 days. If longer than 90 days goes into LTD.

Lisa

TBHRPRO · June 2004

Thanks, Lisa for your input. The portability option is a good one as well as the enrollment issue.

Don D · June 2004

I would want to know exactly what their approval process is, how tight is it, how loose is it. I'm experiencing right now an employee who was on 26 weeks (max) LTD in 2003 and is on it again now. All her doctor has 'certified' is that she needs to rest. I would demand that it be at least as tight as the FMLA certification process. Sometimes these programs are run like entitlements.

irenesmsaclaims · June 2004

I hope it's not too late, but if you are comparing quotes from insurance companies, LTD can be a bit of work. You would need to look at the following: the elimination periods, the benefit periods, (including those for mental disorders), the residual and return to work provisions, the definitions of disability and partial disability, all of the limitations and exclusions, the offsets for other benefits such as Social Security (including a cap on offsets) What is saved in premium (rate per $100 benefit) could be lost on an actual claim, and disappointment for the employee. STD is more simple because the benefit period is shorter and has fewer limitations. Let us know how this goes. Good luck!

TBHRPRO · June 2004

Ok I'm lost... on the "offsets for other benefits such as SS (including a cap on offsets)" .... "disappointment for the employee" part. And no you were not too late. I have a meeting with the carrier tomorrow. I really appreciate your input. Thanks again.

HRGuyMS · June 2004

Last year our company (120 employees) adopted a new disability plan. L/T and S/T Disability plus $50,000 life insurance for an extremely low monthly cost per person (rates guaranteed for 26 months). We were able to keep the cost low by making it mandatory for all employees - 100% paid by the company. S/T paid (60% of salary)after 7 days for illnesses and from day 1 for accidents and ran for 26 weeks, then L/T kicked in. You may want to look at the cost if all employees were to enroll, you'd be surprised at how inexpensive it may become.

irenesmsaclaims · June 2004

Ok, each LTD contract has many components, which need to be compared with each other from product to product. These will make a difference when a participant is "on claim" in terms how the contract will perform. Most, if not all, will offset its benefits with other disability benefits such as Social Security disability benefits (and many others). For example, say your LTD benefit is $500 per month, and the participant is awarded $100 in SS disability benefits. Then the benefit is $400 per month. The cap means that if the SS benefits are increased by inflation, then the offset is capped at a certain amount, so that the entire (growing) SS benefit does not offset the LTD benefit. These variations will definitely affect an ongoing claim, so you can't just compare rates with monthly benefits. This is why some LTD contracts are strong and others aren't. Some companies are strong with disability and others aren't. This shows up most clearly with a significant claim like, God forbid an HCE with a stroke. Also, the definition of disability is better with an "own occupation", so that HCE doesn't have to sell pencils on the street corner because he/she can do that. Hope this helps. If you haven't already, try an Excel spreadsheet with these properties from each quote.

lnelson · June 2004

TBHRPRO -

The best thing to do is first get all prospective quotes along with what each company offers for STD & LTD.

Make a spreadsheet to better see the information and try to compare apple to apples to get a better idea of cost involved.

Our STD & LTD are both voluntary and very simple to understand it depends greatly on communication with your representative.

GOOD LUCK!
Lisa

KAMINSKI · June 2004

I see that you received some valuable responses.
I would only add that you review your policy definition of "wages".

Our definition includes bonuses, deferred compensation, etc.

smaces_twin · June 2004

Make sure their definition of a workday, workweek matches yours.

E Wart · June 2004

It sounds as if you have received very good advice. However, the most important thing you need to ask about (espeically with LTD) is it OWN OCC or ANY OCC definition of disability. (Are they disabled if they can't do their own job or any job. Any job is what you want or other wise they would say they can flip hambergers at McDonalds and not be covered.) Also, find out, especially with STD, about if they return to work and after a day or so find out they can't handle it and go back out, do they have another elimination period. It is good to have this type of clause because you want to get them to try to come back as soon as possible. Also with LTD, if you offer it and employees elect it, you may want to have employees pay part of the premium because of the tax benefit. If you pay it all it will be taxable income, if they pay 50% only 50% of the benefit is taxable. (Normally with STD voluntary employee pays it any way.) Also find out who is responsible for the 1099 (or tax forms) at the end of the year and how is this handled.
Good luck and hope I am not too late.
E Wart

Adding Disabilty Insurance for the 1st time

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