Educating Employees About Disability Insurance? Ask Them 5 Questions

HR leader educating a group of employees.Employers are offering more and more voluntary benefits—and workers want these benefits. A 2017 study showed that nearly one third of eligible employees were signing up for voluntary offerings (that’s a higher participation rate than in earlier years). 

Amy Hollis is the national leader of voluntary benefits for HR consultancy Willis Towers Watson. She recently spoke to Workforce about their recent survey. It shows that 70 percent of employers claim voluntary benefits will be an important part of their value proposition in coming years. “Companies are using voluntary benefits to enrich their offerings without additional cost,” she said.

While there is a win-win element to this—it’s a good economic choice for both employers and employees—the story finishes with a stark warning. Rob Shestack, chairman and CEO of the Voluntary Benefits Association in Philadelphia says that HR teams need to be ready to educate. “The most frustrating thing is when HR makes the effort to provide these programs then does passive enrollment,” he says. “It’s like saying you don’t care if people use them or not.”

When it comes to disability insurance, education is that much more important. James Reid of CDA member company MetLife argues something similar in a story in Benefit News:While employees have a general idea of the benefits they use most often (medical, dental or vision), they don’t always grasp the value or need for some of the other benefits which may be available to them (disability or accident insurance, for example).”

Disability insurance is one of the most critical forms of coverage for working Americans—and one of most overlooked. Part of the problem is that people simply don’t understand how relevant it is for modern life

Here are five questions you can ask as a framework for understanding what disability insurance is: 

1. What does disability mean in this context?

Many people hear the word disability and assume it only means catastrophic health issues. In fact, disability can refer to a broken leg from a skiing accident, a pulled back while cleaning out your garage, a cancer diagnosis, or a pregnancy that can put an employee out of work for days, weeks, or months at a time.

Share the five most common reasons that keep people out of work for long periods: Pain in the back and neck, cancer, complications from pregnancy, and mental health issues all rank before accidental injuries, which many assume is the leading cause of disability. You can also share infographics.

2. What are the statistical chances of becoming disabled?

Eighty percent of us live with optimism bias. That’s to say we don’t have a realistic understanding of the risk of becoming ill or injured. This is particularly at work with the younger generations who have grown up with some of the most supportive parents in modern history.

These are the numbers: According to the Social Security Administration, more than one in four of today’s 20-year-olds will be out of work for a year or more for a variety of reasons before they reach normal retirement age. This includes common health conditions such as knee, shoulder, or back injuries, cancer, heart problems, or depression.

Add to that the fact that nearly six percent of workers every year will experience a short-term disability due to illness, injury, or pregnancy. Three quarters of these claims last up to two and a half months, and the rest can last for up to six months or a year.

3. How would you pay your bills?

Ask rhetorical questions as you educate: Will an employee be able to pay their mortgage, phone bill or contribute to their health insurance or retirement plans should a pregnancy, illness, or injury take them out of work for a few days, weeks, or more? This is about laying the foundations for their long-term financial stability.  

Data from the Federal Reserve shows that 40 percent of Americans do not have enough savings to pay for an unexpected $400 bill. Disability insurance pays a portion of someone’s salary when they need to miss work due to an illness, injury, or having a baby. For those who are single, disability insurance is the second most important insurance they can carry after health insurance. And if employees have a family that depends upon them, this insurance gives them an income stream if they need to leave work.

4. What does Workers’ Comp and SSDI cover?

Employees need a realistic understanding of the various safety nets that are in place should they become ill or injured—so they can make an informed decision:

  • Workers’ Compensation: Workers’ Comp only applies to accidents done on the worksite. Disabling illnesses or injuries are much more likely to be non-occupational in origin, which would rule out that coverage.
  • Social Security Disability Insurance (SSDI): The Social Security Administration provides Social Security disability benefits for eligible individuals who have a disability that lasts for one year or longer. Many applicants are denied due to a lack of work history, lack of medical evidence, the temporary nature of their condition, or the fact that people may still be able to work outside of their profession. There are three important things to bear in mind: 1) workers who become disabled off-the-job won’t always qualify for SSDI, 2) they can face average wait times of 600 days for a hearing (that’s nearly two years), and 3) if they do eventually get benefits, the monthly amount (averaging around $1,200, based on the most recent data) probably isn’t enough to help them keep up with their ongoing expenses.  

5. If you want to start a family—what is your financial plan for maternity leave?

If your company doesn’t offer paid maternity leave, this is an important point to raise with women in the workforce. Disability insurance is a critical benefit for many new mothers in the U.S. Indeed, pregnancy is the most common cause of short-term disability (STD) claims. Plans typically cover two weeks before and six weeks after a routine pregnancy. 

Here’s an important note: One of the major differences between pregnancy and other types of disability claims is predictability. For a healthy woman, purchasing coverage through their workplace in anticipation of a planned pregnancy can be a fairly easy transaction. The key is that they buy coverage before they become pregnant. This way there is little risk of underwriting issues or denial of their claim due to a pre-existing condition limitation. (Read more on this here.)

By asking these questions, you can broaden the minds of your employees and give them the larger context of how disability insurance works in real life. That way, it isn’t just vague words on a list in a company intranet.  

To learn more about disability insurance, or to offer your colleagues further reading, guide them to our new consumer microsite: RealityCheckup.org  




How Can I Get Disability Insurance?

Image of a man with the question: How can I get disability insurance?Disability insurance is one of the most important forms of insurance for working Americans. The financial expert Dave Ramsey calls it “a necessity.” It has been described as a valuable benefit by NPR while NBC News calls it “more important for singles than just about anyone.”

Having a form of income protection for when you’re injured, ill or pregnant is part of a solid financial plan. But how do you go about actually getting a policy? 

Here are your next steps:

1. Talk to your employer

If you have a full-time job, you may already have access to private disability insurance. According to the Bureau of Labor Statistics, at least half of U.S. non-government employees have disability insurance. So start by talking to your HR manager. 

Here are a few things you can ask:

  • If they offer disability insurance, is it employer-paid, employee-paid, or a combination of the two? The general rule is, if your employer pays some or all of the premium, then some or all of any benefits you collect will be taxable to you. Your employer may offer a voluntary plan where you will need to pay the entire premium. However, it grants you access to better rates — and any benefits you collect will not be taxed. Ask how much it costs and how you can sign up for it.
  • What is the benefit amount for the policy? It won’t be your full salary, as your employer wants some incentive for you to return to the job. Policies generally range from 40 to 70 percent of your salary.
  • How long will my payments last? A policy will indicate the maximum length of time that benefits will last. Long-term disability insurance may cover anywhere between two years through retirement age.
  • When will payments begin? This will depend on whether it’s short-term or long-term disability insurance. Both types of coverage include waiting periods. A waiting period is the time between when you leave work to have your baby or you are diagnosed with a condition that prevents you from working, and when payments begin.
  • What is the policy’s definition of disability? The definition of disability varies among policies and carriers. Some consider it related to you not being able to perform the duties of your specific job while others take into account your training and experience. You may carry a policy that pays you if you can’t perform your “own job,” “own occupation,” or “any occupation” that reasonably matches your knowledge, training and experience.
  • If you don’t have access to disability insurance at work: Ask why not. You could ask whether they would consider starting a voluntary policy for employees.

2. Talk to your financial advisor

If you aren’t currently offered disability insurance at work, or the amount they are offering won’t cover your basic living costs, consider purchasing individual insurance.

Your financial advisor or insurance agent will be able to help you identify the amount you need, the most suitable amount of time you’d want to receive payments, and which plan makes the most sense for your unique needs.

If you’re self-employed or a business owner, this is definitely something you should consider. (More on that here.)

3. Talk to associations

You can also access more affordable rates for disability insurance through a plan offered to members of a professional society — for example, the American Institute of Certified Public Accountants or the Freelancer’s Union — or a college alumni association. If you’re already a member of such an association, ask about their disability insurance offerings. 

4. Visit RealityCheckup.org

In the spring of 2018, The Council for Disability Awareness launched a new consumer microsite that unpacks what disability insurance is, why you need it, and how to get it. Visit the site to learn the language associated with various policies, and find useful links. You can also listen to CDA experts discussing the topic on radio talk shows.

5. Talk to our member companies

The member companies of The Council for Disability Awareness formed this nonprofit organization solely to educate consumers, employers, and financial advisors about working adults’ risk to be out of work for a period of time without a paycheck. View the member organizations here.

6. Lock in your coverage

The thing about accidents, illness and injury, is that you have no idea when they will happen. So this is the sort of policy you’ll want to lock in sooner rather than later. Bear in mind that like life insurance, your rates will also be cheaper the younger you are. By securing a policy now, you can relax knowing that a safety net is in place. 




Cancer and the Healing Power of Community (Video)

Portrait of Lisa Gohra and Dave BurkeIt started with what seemed to be a sinus infection. “But it just wouldn’t go away,” remembers Lisa Gohra. So she went to see her doctor.

He put her through a series of tests: ultrasounds, chest X-rays, CAT scans, needle biopsies. Then the diagnosis arrived: Advanced Papillary Thyroid Cancer with a tall cell variant. The variant made an otherwise treatable cancer very aggressive.

In a moving video that the American Cancer Society created this spring (watch below), Lisa Gohra discusses how she was able to move through her journey into cancer. She was diagnosed with a metastatic form of the disease, which meant it had spread to other parts of her body. And it was stage four.

She says her recovery — and coming to terms with living with an incurable form of cancer — came down to a decision to focus on the kindness of the community supporting her.

Gratitude as an anchor

Lisa underwent two lengthy surgeries to remove a nine centimeter tumor that had invaded her thyroid, as well as more than 70 cervical lymph nodes and tissues within her neck, trachea and vocal cords. She received inpatient care at Brigham Women’s Hospital with outpatient care at the Dana-Farber Cancer Institute in Boston. In the video, Lisa explains how she made a conscious decision to focus on gratitude for her team of doctors led by Dr. Tom Thomas — and that became her mental anchor.

Then came the kindness of the Hope Lodge in Boston. Following her surgeries, Lisa had to go through nine weeks of specialized care and radiation treatment, five days a week. Considering her home was 90 miles away in West Springfield, Western Massachusetts, the only way she and her husband Dave could have made it to the treatments would have been to move into a hotel in Boston.

The AstraZeneca Hope Lodge stepped in to help. Hope Lodge is run by the American Cancer Society and provides a free home away from home for cancer patients and caregivers who need to visit Boston area hospitals for their treatment. It’s one of more than 30 centers around the country that provide this remarkable form of support for free.

The key role of the caregiver

As Lisa moved through this disorienting and deeply painful time, her husband Dave Burke was the stable force, the caregiver, and chief cheerleader. He, of course, still needed to work a full time job. Both Lisa and Dave work for MassMutual, a founding and current member company of The Council for Disability Awareness, and this is where the next form of kindness appeared.

“My company was so supportive of us,” explains Dave. “When I told them, they came and sought me out in person and said, ‘Tell us what’s going on. What do you need, and what can we do to make your life easier?’

“I said, you know what? I’m going to need some flexibility with my work arrangement. I may need to work remote for a couple of months so I can be with Lisa and have time for our family,” Dave pauses and adds: “That was such a weight taken off my shoulders.”

The value of disability insurance

Dave spent more than two months working remotely in their room in Hope Lodge. He spends his days working at MassMutual supporting its disability income insurance business, and says he had a profound insight into just how powerful this form of insurance is when he and Lisa actually needed it themselves.

Lisa’s group disability insurance kicked in soon after she left work, and she also had an individual disability income insurance policy that supplemented her income. This meant she received a substantial amount of her income throughout her time off work. “Because we had the insurance in place, all Lisa had to do was focus on getting better,” explains Dave. “The bills got paid.”

According to data from the Integrated Benefits Institute, cancer is the second most common reason for long-term disability claims. Yet while staying at the Hope Lodge, Dave says he became aware of just how many families didn’t have disability income insurance coverage — and how the lack of such a financial safety net was creating considerable amounts of stress.

“About 90 percent of the families I talked to didn’t have it,” he says. “I would talk to people there and the biggest thing that I think hurt them in their recovery was when they had that financial stress. There were so many people saying things like, ‘I need to get better soon because I’m going to lose my house’, or ‘I’m going to lose my job with my health insurance.’”

Giving back

Lisa has now returned to work full time but she and Dave are continuing their practice of gratitude. Every few months, they load up their car with boxes of food and drink, and drive back to Boston’s Hope Lodge to bring donations to the families still living there.

“I don’t ever want to forget what I was given,” says Dave. “I never wanted to forget that there were people there for me in my toughest time.”

To make a donation to Boston’s Hope Lodge, you can click here. To learn more about disability insurance and how it works, visit RealityCheckup.org




How Does Disability Insurance Actually Work?

Picture of woman with words: How does disability insurance actually work?Disability insurance provides critical financial protection that is very different from other insurance products. Millions of working Americans don’t have it, and many don’t fully understand what it protects.

A 2017 report from LIMRA revealed that 65 percent of respondents thought that most people need disability insurance. Yet only 48 percent thought they personally needed it, and a mere 20 percent said they actually had it. Why the disconnect? 

According to the Social Security Administration, more than one in four of today’s 20-year-olds will be out of work for 12 months or more for a variety of reasons before they reach normal retirement age. None of us like to think about this risk, but it’s a very real one.  

What is disability insurance?

Disability insurance pays you a portion of your salary when you need to miss work due to an illness, injury, or having a baby. If you are single, disability insurance is the second most important insurance you can carry after health insurance. And if you have a family that depends upon you, this insurance gives you an income stream if you need to leave work.

Approximately half of U.S. workers in private industry have disability coverage included in their employee benefits, with at least part of the cost paid for by their employer. The other half can purchase coverage on an individual basis or through a voluntary benefits plan in the workplace. 

Here are the various types of disability insurance and how they work:

Short-term disability (STD)

Short-term plans usually protect your income for between three days and six months — although some policies offer coverage for up to two years. STD plans typically replace between 60 and 70 percent of your pay, depending on the policy.

When you choose a plan, be aware of the waiting period, also known as the elimination period. This is the time between you being diagnosed with an illness, injury or having a baby, and the payments kicking in.

Long-term disability (LTD)

Long-term disability insurance protects your income if you need to miss work for longer than three to six months. It usually covers 40 to 70 percent of your income. The time your coverage pays benefits will range depending on your policy. It can be for a specific period — ranging from two to five or ten years — or until your Social Security retirement age.

The waiting period for most LTD policies is three or six months — so you’ll need a plan to cover costs before the payments begin (usually this time is covered by your STD plan or your savings.) If your employer pays your STD or LTD premiums, your benefits are taxed.

Types of plans

STD and LTD are typically offered in three ways:

  1. Employer-paid plans: These are paid for entirely by your employer.
  2. Worksite or voluntary plans: As the employee, you pay the premium. However you can tap into more affordable rates this way. You can also take these policies with you when you change jobs.
  3. Individual plans: These are purchased to give you the best possible income insurance, or to a supplement a plan you already have through your job or via a membership organization such as the National Education Association (if you work in education). If you collect benefits under an individual plan, your income is tax-free so your monthly payments will be that much higher. To learn more about individual disability insurance, speak to your financial advisor, check out Policygenius.com* or talk to one of the member companies of The CDA.

Social security disability insurance (SSDI)

The Social Security Administration provides Social Security disability benefits for eligible individuals who have a disability that lasts for one year or longer. Many applicants are denied due to a lack of work history, lack of medical evidence, the temporary nature of their condition, or the fact that people may still be able to work outside of their profession.

The average SSDI benefit in January 2018 was $1,197 a month. It generally takes three to five months from time of application to get an initial decision. Approximately one third of claimants are approved: 20 to 25 percent at the initial application stage, and the remainder after a reconsideration or appeals process. In 2017, there was a backlog of more than a million appeals cases, and the associated processing time averaged 18 months.

How much protection do I need?

Start by assessing your income and expenses. How much cash would you need to cover your basic daily living costs like the mortgage, groceries, car payments, student loan debts, and so on? Most people are advised to cover 60 percent of their normal income. Next, how long you could go without a paycheck? Do you have enough savings to cover you for three months? Use our calculator to figure out your costs and use our Personal Financial Security Plan to build your strategy.

To learn more about disability insurance and the steps you can take to discuss it with HR at your workplace or find a plan as an individual, visit www.RealityCheckup.org. *The CDA is an affiliate of Policygenius.




3 Ways to Reduce Cancer Risks in the Office

Woman sitting at desk with plants around her.

If someone were to ask you about the level of pollutants in your daily environment, you’d probably think about your home, your city or town. But if you have a full-time job, what about the health of the workplace you spend most of your waking hours within?

One third of most people’s adult lives will be spent at work. Meanwhile, the National Cancer Institute estimates more than 1.7 million Americans will be diagnosed with some form of cancer in 2018. According to the most recent data from the US National Cancer Institute’s Surveillance Epidemiology and End Results (SEER) database, American adults have a one-in-three lifetime chance of being diagnosed with cancer.

If you have a full time job and spend a large portion of your days in an office, here are some areas to be aware of:

Be mindful of the indoor air quality.

The air we breathe every day directly impacts our health, even though we are often unaware of its influence. Poor air quality has been recognized as a carcinogen linked to lung cancer, heart disease, and other respiratory conditions. These health concerns develop from exposure to toxins in the air, including particulate matter and specific types of chemicals.

Air pollution issues are typically associated with being outside, but indoor air is often far more polluted than outdoor air. A person also typically spends about 90 percent of their time inside, so any toxins that are present have a tremendous impact due to the length of time a person is exposed. If there are pollution sources near a building, toxins from the outdoor environment may be pulled inside through the mechanical ventilation system. Other biological toxins, like bird droppings or insects, can enter a building if the ventilation system isn’t properly maintained.

The materials used during a building’s construction can also be sources of pollution, especially when those materials are disturbed during renovations. Older buildings may have been constructed using toxins like asbestos and lead, both of which can be broken down into microscopic particles and swept into the air. Inhaling asbestos is known to cause a devastating form of cancer while exposure to lead causes a variety of complications throughout the body, including impaired kidney function and behavioral changes.

Depending on the toxin, employees can take action to combat indoor air pollution. Ask for transparency from management and the facilities team about building maintenance or renovations. Smaller steps include introducing plants into the office — which may remove some pollutants from the air.

Make time for exercise.

Exercise has been shown to have numerous benefits in preventing cancer, including regulating hormones, lowering body fat, and reducing inflammation. If you work full-time, it can be a challenge to make it to the gym after a long day in the office, so look for ways to infuse exercise into the very fabric of your days.

Try going for a walk or attending a fitness class at a nearby gym during lunch. And why go it alone? Having a gym partner or workout buddy helps people maintain their motivation to keep working out over the long haul. You can also make changes to your desk itself, for example by bringing in an under the desk bike or yoga ball to strengthen cardio health and balance.

Don’t forget sunblock if you sit near a window.

Dermatologists recommend you apply sunscreen every day you’re outside, even during the winter. Sun exposure can even occur indoors or in a car since most glass windows do not offer full-spectrum protection from the sun’s radiation. There is evidence of a correlation between people who spend a lot of time in the car and incidences of skin cancer on the left side of the body, coinciding with the driver’s side of a vehicle.

The American Cancer Society notes the risk of UV radiation through windows would pose a problem only for those who “spend long periods of time close to a window that gets direct sunlight.” If that applies to you, use sunblock each day, reduce the direct sun coming through the blinds, and cover any exposed skin with extra clothing helps create a barrier between your skin and harmful UV rays. Skin cancer is one of the most common forms of cancer in the United States with one in five Americans expected to be diagnosed at some point in their lives.

Cancer is the second most common cause for long-term disability claims. Do you have a disability insurance plan in place at work? To learn more and the sorts of questions you can ask HR, visit RealityCheckup.org.

 




How Many Working American Households Lack Private Disability Coverage?

Image of a house with wording: 50 million households in the US do not have private disability insuranceBy Andrew Melnyk, Chief Economist and Vice President of Research, American Council of Life Insurers

Last week, Fred Schott of The Council for Disability Awareness outlined an approach to answering the following question: how many working Americans have (or don’t have) some form of private disability coverage?

It is an important question because, as we know, Social Security Disability Insurance (SSDI) does not provide sufficient protection for most families. The American Council of Life Insurers (ACLI) can provide another way of answering this question.

In September 2017, the ACLI issued a report titled Assessing Americans’ Financial and Retirement Security that was based on extensive survey data. The data was gathered with respect to households, and not individuals — the same approach the Federal Reserve takes in its periodic Survey of Consumer Finances. One of the questions asked (but not directly addressed in the report) was whether anyone in the surveyed household was covered by a private disability insurance policy, issued on either a group or individual basis.

What is the definition of ‘household’?

Here’s how ACLI (along with the Federal Reserve and other entities that track consumer data on this same basis) categorizes households:

Per Census Bureau data, there are a total of 125.8 million households in the U.S. Our data indicates about 31.4 million (25 percent) of those are “retired” and the remaining 94.4 million (75 percent) are “non-retired.”  

A handful of “retired” households may still have some kind of attachment to the labor force — for example, a two-person household where one partner works 20 hours per week in a post-career job and the other is fully retired.

Because entering retirement is increasingly a multi-stage process rather than a specific date (i.e. more people are easing into it, perhaps by working part-time), that handful is likely to get larger. But that said, let’s make a simplifying assumption that disability coverage is applicable only to the “not retired” households.

The answer: 51.3 million

Our survey data revealed that less than half (45.7 percent) of “not retired” households have some form of private disability insurance. So, 43.1 million households in that category have at least some coverage. But more than half, some 51.3 million, don’t have access to private disability insurance. The latter number is very much in the same ballpark as what Fred came up with in his post.

To learn more about disability insurance and how it protects your income, visit RealityCheckup.org 




The Top 5 Reasons Why People Go Out of Work and Stay Out of Work

At least 35 percent of working Americans don’t have private disability insurance. And what that means is approximately 50 million people won’t receive a paycheck if they leave work to have a baby, or are recovering from an injury or an illness.

Working adults need disability (or income protection) insurance because people regularly leave work for short — or even long — periods of time. About 70 percent of full-time employees have sick days or vacation time they can tap into for short absences, but you could become financially strapped if you need more than five or 10 days off.

Depending upon the type of industry where you work, six to 10 percent of people are out of work long enough that they file a short-term disability claim (insurance that covers the first three to six months of your time off). Seventy-five percent of these people are out of work up to 75 days, and the rest can be out for 180 days or a year.

Meanwhile, the Social Security Administration says that more than one in four of today’s 20-year-olds will be out of work for 12 months or more for a variety of reasons before they retire.

Here are the top five reasons why people are out of work for three months or longer (according to a database representing long-term disability claims from a large group of disability insurance carriers):

1. Pain in your back and joints (aka musculoskeletal disorders)

Knees battered by too much hard running, ligaments torn on the ski slopes or from chasing kids, and back pain from too much time spent sitting, lifting or gardening: These are all examples of musculoskeletal disorders that are responsible for a nearly third of all long-term disability claims.

These results are consistent with information from the 2016 Social Security Disability Insurance database. If you want to try to prevent these type of injuries, shore up your body’s strength by engaging in exercise, eating healthy, and being very aware of repetitive movements you undertake everyday. Repetitive motion can include activities like driving to work and playing tennis.

2. Cancer

American adults have a one-in-three lifetime chance of being diagnosed with cancer, according to the most recent data from the US National Cancer Institute’s Surveillance Epidemiology and End Results (SEER) database. We see this risk reflected in LTD claims where cancer is in the second leading reason why people are out of work for three months or longer (15 percent of all claims). It’s important to know that it’s treatment for cancer — not the condition itself — that causes people to leave work temporarily.

Cancer can arise from endless possibilities, from your genetic makeup, to the environment around you, to your lifestyle. The Mayo Clinic recommends seven key ways you can build up your body’s defenses against cancer: avoid tobacco, eat a healthy diet, maintain a healthy weight and be physically active, protect yourself from the sun, get immunized, avoid risky behaviors, and get regular medical care.

3. Complications of pregnancy

Many people are surprised to see pregnancy listed as a cause of disability claims. In fact, it’s the number one reason why people file a short term disability claim. Women are typically paid six to eight weeks of disability benefits after they give birth to a child.

There will be times when a woman’s physician will determine that, for her own health and that of her baby, she needs to stop working in advance of delivery. In most cases, that pre-delivery absence iscovered as well.

But why would pregnancies show up as a top reason for long-term disability?

“About 50 percent of LTD plans have a three-month waiting period (also known as an elimination period), while the other half of plans have a six-month period before benefits are payable,” explains Fred Schott, Director of Operations at The Council for Disability Awareness. “A STD plan, sick days, or paid-time-off bank often covers all or part of the long-term disability elimination period.”

Schott says that three-month waiting period plans are common in industries such as education or healthcare, where more women work. This results in more pregnancy claims being filed.

“If delivery complications cause a woman to be out of work for more than six to eight weeks — or if pregnancy complications lead to her leaving work several weeks before delivery,” Schott says, “It increases the likelihood she’ll go beyond the three-month waiting period and she will receive LTD benefits. But the length of LTD pregnancy claims is very short — a few months at most.”

4. Mental health challenges

Mental health is a critical issue in the United States and across the globe. Depression is now the leading cause of disability worldwide according to the World Health Organization. And the National Alliance on Mental Illness shares that 20 percent of American adults will experience a mental illness.

Mental health challenges — including depression and anxiety disorders — account for 9.1 percent of long-term disability claims. The numbers of those who are struggling could be much higher, however, as there is a tendency for depression to go untreated, or to be associated with a physical cause for disability that goes uncounted as a result.

One or two disability carriers measure their causes of disability in a different way than the majority of the industry. They often split up musculoskeletal disorders into a series of separate categories. While there is nothing essentially wrong with this approach, it often pushes mental health out of the top five drivers of absence and disability. This analytic technique further masks the importance of addressing mental health issues in and outside the workplace.

Non-profit organizations in the U.S. and the U.K. are trying to tackle mental health by encouraging people to talk openly about how they are feeling with people they trust. You will often see these efforts in social media attached to #oktosay or #okaytosay.

5. Accidental injuries

Finally, we come to accidental injuries, which ironically enough is what many people assume is the most common cause of disability claims. This category includes injuries such as fractures, sprains and strains of muscles and ligaments and ranks as the fifth most common cause of longer-term absences at nine percent. Preparing to avoid mishaps is difficult — that’s why they’re called accidents! — so it’s important to have disability insurance in place in the event that an accident occurs.

So what should you do with this information?

Disability insurance protects your income if you need to miss work in order to have a baby or recover from everything from back pain, to a broken leg, to treatment for cancer. By knowing the main reasons why people leave work for longer periods of time, it soon becomes clear that illness and injury is far more common than most people realize.

This begs the question: If your pregnancy became unexpectedly complicated, you needed to take time off work to heal from an injury or illness, how would you pay the bills while you recover?

Learn more about how to protect your income at www.RealityCheckup.org




How Many Working Americans Have Adequate Disability Coverage?

Map of the USHow many working Americans have private disability insurance coverage?

This is a crucially important question for us at The Council for Disability Awareness. We would like to see all working Americans have some form of private disability coverage to protect their income when they’re out of work for an extended period of time because of a disabling injury or health condition.

Many people assume they have a safety net with either Workers’ Compensation (WC) or Social Security Disability Insurance (SSDI). But disabling illnesses or injuries are much more likely to be non-occupational in origin, which would rule out coverage under WC. And workers who become disabled off-the-job won’t always qualify for SSDI; they can face average wait times of 600 days for a hearing; and if they do eventually get benefits, the monthly amount (averaging around $1,200, based on the most recent data) probably isn’t enough to help them keep up with their ongoing expenses.  

Private disability coverage helps fill the gaps in the safety net. But how many working Americans actually have this important form of income protection?

The answer requires a lot of math — and some assumptions.

It’s important to point out that this number is not readily available. This is due to a number of complex factors, one of which is that disability insurance has traditionally been offered through different channels: as an employee benefit, as a benefit through an association, or on an individual basis. The data therefore is siloed. At The CDA, we’ve gathered data from several industry and governmental sources and have worked with this data through a set of clarifying assumptions — you’ll see these unfold in my argument below.

So, just how large is this problem? 

Let’s start by understanding the three ways you can get private disability coverage: through an employer (and there are various ways this can occur, as we’ll explain below); through an association or affinity group; or on an individual basis.

1. Through an employer

This can be in two main ways:

  • Coverage is part of a benefits plan and the employer pays some or all of the cost
  • An employee voluntarily elects coverage and pays for the entire cost  — this includes both cafeteria-style benefits and worksite enrollment plans

a) Employer pays all or some: 

The Bureau of Labor Statistics (BLS) Employee Benefits Survey is the go-to source for data on number of working Americans covered by employer-provided disability insurance (where the employer pays for all or at least part of the cost of coverage). Unpublished BLS estimates from the most recent (March 2017) National Compensation Survey show 49.4 percent of all civilian workers as having some form of employer-paid disability insurance (short-term disability only, long-term disability only, or both STD and LTD).

If we apply this percentage to 139.9 million, which is the latest (2017) BLS estimate of civilian workers in the U.S. (excluding Federal Government employees, who are not included in the Employee Benefits Survey), we get approximately 69.1 million working Americans in this, the biggest category of working Americans with some form of private disability coverage.

But that leaves 70.8 million who either are covered in some other way or aren’t covered at all. And that’s why we next look at the alternate way people can get coverage through their employer.

b) Employee pays all (voluntary coverage)

A growing number of employers are offering disability coverage on a voluntary basis. Employees can sign up for disability coverage, and they pay the full cost, but usually at attractive group rates and with the advantage of payroll deduction for premiums. Because they pick up the tab for premiums, if they do wind up collecting benefits at some point, they’ll receive those benefits on a tax-free basis. (On the other hand, benefits are taxable under a disability plan where the employer has paid the premium.)

How many of the roughly 70.8 million working Americans not covered under employer-paid disability insurance are protected by some form of voluntary coverage? There are two keys needed to unlock the answer.

The first is to get an estimate of how many employers offer disability insurance as a voluntary benefit. I asked Ginger Bates, research director at Eastbridge Consulting Group, a widely respected consultancy specializing in the voluntary space. Bates shared the following highlight from Eastbridge’s latest MarketVision Employer Viewpoint survey:

The graph shows, with respect to short-term disability (STD) and long-term-disability (LTD) coverage, the percentage of employers reporting they offered it on a fully employer-paid basis (blue), shared-payment basis (red), or employee-paid basis (green). It also shows, indirectly (if you subtract the total of blue + red + green from 100 percent), the percentage of employers that don’t offer the coverage at all.

We can redraw the graph to include “no coverage” as a fourth option:

Here, we’ve drawn a box around the blue plus the red. That box corresponds to the scope of the BLS survey (remember, they’re only looking at coverage paid in whole or in part by the employer). And we’ve drawn another box around the green plus the yellow. That corresponds to what’s outside the scope of the BLS survey. Within that second box, the green (percentage of employers who offer disability coverage, but the employee has to pay the entire cost) accounts for about a third of that box.

Now, let’s get back to our 70.8 million (the estimated number of working Americans who don’t have employer-paid disability insurance). It’s not unreasonable to assume that a third of them could be eligible for voluntary disability coverage offered through their employer.

But remember, this is voluntary coverage. Only those employees who actually sign up for the coverage (and, of course, pay the premiums) can be counted as covered. That’s why getting a handle on what the industry calls the “participation rate” (percentage of eligible employees who actually get the coverage) is so important here.

We turned once more to the experts at Eastbridge. They periodically survey voluntary insurance carriers on participation rates by coverage and provide that information to their subscribers. Eastbridge research director Ginger Bates provided findings from their most recent (year-end  2017) survey:

  • Short-term disability: 29 percent
  • Long-term disability: 34 percent

Given the greater percentage of employers offering STD coverage (based on other Eastbridge research, and also consistent with what BLS has found with respect to employer-paid coverage), let’s use an overall participation rate of 30 percent — which also happens to be consistent with what I observed when I worked at two different carriers.

The way we estimate how many people are covered by voluntary (employee pays all) coverage is:

Number of workers without employer-paid coverage (70.8 million)

X

Percent where employer offers voluntary coverage (33%)

X

Participation rate (30%)

This works out to just over 7 million.

2. Association/ affinity business

Employer-provided disability insurance (including voluntary) covers the largest number of working Americans. But it’s not the only way workers can get covered on a group basis. Another way is through a plan offered to members of a professional society (for example, the American Institute of Certified Public Accountants) or an affinity group like a college alumni association.

Disability coverage is just a piece of the larger “association/affinity” market, which includes property/casualty coverages such as auto and homeowners as well as a variety of life-insurance offerings.

The Professional Insurance Marketing Association, more commonly known as PiMA, represents most of the insurance carriers that serve this market. In 2013, it conducted a market survey, results of which are highlighted here. Based on the data they share in the public-facing report, we applied a series of assumptions:

PiMA reports that its members account for close to $10 billion in premiums with a total of 26 million certificates (i.e., individuals covered — and yes, one person can have multiple certificates, but in the interests of simplicity we’ll assume certificates = individuals). It also reports that approximately 30 percent of members’ sales involved life and health products (most association/affinity business involves property/casualty products).

Based on those numbers, we can estimate:

  • Average premium per certificate = $385 ($10 billion in premium divided by 26 million certificates)
  • Estimated total life and health premium = $3 billion (30% of $10 billion total)
  • Total life and health certificates = 7.8 million ($3 billion estimated total premium divided by estimated $385 premium per certificate)

It’s unlikely that every life and health certificate will involve disability coverage — but let’s use the 7.8 million as an upper limit to the number of people covered through this channel.

3. Individual disability

Individuals can also purchase a disability policy on their own. This is usually organized through an agent or broker. As is the case with the voluntary and association/affinity markets, there’s no comprehensive, publicly available data that gives an indication of how many people have coverage through this channel.

However, individuals with considerable experience in this facet of the business can make informed, “back of the envelope” calculations that give us a starting point. One of our contacts estimates that approximately six million workers have disability insurance on an individual basis.

Of those six million, we don’t know how many rely only on their individual disability policy for coverage, as opposed to those who have bought an individual policy to supplement coverage they already have either through their employer or an association affinity group to which they belong. For now, let’s assume that individual coverage is all they have.

Putting it all together

  • 69.1 million working Americans receive disability insurance as part of their employee benefit plan, and their employer pays some or all of the cost of coverage
  • 7 million have chosen to purchase disability insurance through their employer, but are paying the entire cost out of their own pockets
  • As many as 7.8 million working Americans belong to some kind of group like a professional organization or alumni society that provides access to disability insurance, and that’s how they purchase coverage
  • 6 million have worked with their financial advisors to obtain their own individual disability insurance policy (which may or may not be the only one that provides them coverage)

Assuming there’s no double-counting for any of these categories (and there probably is, but let’s simplify for the sake of argument here), this adds up to as many as 89.9 million working Americans who are covered by some form of disability insurance other than WC or SSDI.

But remember, we’re looking at a base of 139.9 million workers (excluding Federal Government). That would leave up to 50 million uncovered. That’s more than one in three working Americans who are potentially uncovered.

Are you one of them? If you are, do yourself — and those close to you who depend on your income — a favor, and visit our new educational website to learn how disability insurance works.  

 

Join the conversation: As I mentioned earlier, a lot of “clarifying assumptions” have been applied in this article. I welcome a “sanity check” of those assumptions — and the numbers to which they’ve been applied — from readers who have experience in this area. Write to us at info@disabilitycouncil.org




Why Disability Insurance Should Be Part of Your Paid Leave Strategy

Benefits are becoming a key differentiator in the job market. A 2017 report by the Society for Human Resource Management (SHRM) reports that nearly one third of organizations increased their benefit offerings over the past 12 months. The leading reason? To remain competitive in the talent marketplace.

Amid all the benefits being offered today, from pet insurance to unlimited time off, disability insurance remains one of the most critical forms of protection that employers can offer. Disability insurance protects someone’s ability to earn an income should illness or injury arise. At a time when emergency savings are shrinking and medical costs are rising, that safety net is becoming vital to an employee’s financial wellness.

Here are five reasons to consider offering this benefit to your workforce:

It’s the foundation of your employees’ financial security.

Without income protection the effects of not having an income become very real, very fast. An employee may not be able to pay their mortgage, their phone bill or contribute to their health insurance or retirement plans should a pregnancy, illness, or injury take them out of work for a few weeks or more.

Without it, the effects can be devastating.

By offering disability insurance, employers can avoid having the heartbreaking conversation about what to do after paid leave or sick leave ends (if it is even available). A 2017 CareerBuilder survey showed that nearly eight out of ten Americans are living paycheck to paycheck. Data from the Federal Reserve in 2016 showed that nearly half of consumers said they couldn’t pay an unexpected $400 bill without having to take out a loan or sell something. 

It retains talent.

Not only does short- and long-term disability insurance help people feel more secure in their jobs, your employees are also more likely to return to work if they have this coverage. SHRM estimates that replacing an employee can cost 60 percent of their annual salary — so retention has a major impact on the bottom line.

It’s affordable.

Data from the Bureau of Labor Statistics shows the average cost of providing both long-term and short-term disability coverage in 2016 was approximately 10 cents per hours worked, or $205 per year. In contrast, the average employer contribution to health insurance averaged $2.86 per hour worked, or $5,725 per year. 

It’s a family-friendly benefit.

Short-term plans typically cover two weeks before and six weeks after a routine pregnancy. Unless you’re one of the few employers who offer paid family leave, disability insurance is a critical financial benefit for women in the workforce. 

To learn more about how disability insurance works, visit www.RealityCheckup.org




What is Ethical Investing?

What is Ethical Investing?

Ethical investing. Who, or what determines the ethics of an investment? And what does that even mean? Is it different than impact investing? Sustainable investing? Green investing? Socially responsible investing? Which investments are more ethical, or more sustainable, or more socially responsible? Which are better… for you?

For that matter, who is an investment supposed to be good (or better) for? And what does “better” mean when ethics, impact, sustainability or social responsibility factor in?

What is Ethical Investing?

In general, the gist of ethical investing is this: Making money while following your conscience. Because, really, why does saving for the future have to mean ignoring our personal ethics and social values?

More specifically, it “is an investment discipline that considers environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact,” (The Forum for Sustainable and Responsible Investment).

This seems clear on the surface (maybe). But it isn’t clear when we ask yardstick questions like “How do you measure societal impact?” (definitely). More on that later.

Questions We Should Be Asking About Our Investments

It is always a good idea to further your financial learning, so ethical investing aside, knowing the who, what, where, why, and how of your financial planning is important.

Who is helping you plan your finances, and how? Do they have a good reputation? What are you investing in and where? Certain funds? Commodities? 401k? Locally, abroad? Why are you investing in certain companies over others? To aggressively save? To ensure you have conservative growth?

Not everyone has answers to these questions, but once you open the proverbial can of worms, more and more considerations come to the fore.

Know What You’re Investing In

For example, how much does the average investor know about the companies in his or her portfolio? Are you going to make financial planning/investing decisions based on strategy alone, or are you going to incorporate personal values? Should you include a company that manufactures something considered morally reprehensible in your investment portfolio? Or, do you invest in organizations who focus solely on initiatives that benefit society and the environment? These aren’t easy questions to answer, but the answers to them will have an impact.

The Yardstick for Ethical Investing

Which brings us back to an earlier question: How do we measure societal, sustainable, responsible, or ethical impact in our investments?

On a personal level, our conscience is the best barometer for ethics.

But at a higher, more accountable level, investors use GIIRS (pronounced “gears”), the Global Impact Investing Rating System, which provides “investors with a comprehensive, comparable, and third party-verified assessment of companies’ and funds’ social and environmental impact,” (“Making Every Dollar Count: Investing for Impact and Return”, Forbes).

Does Ethical Investing Work?

Can ethics drive business growth? This is a concern many investors have with so-called ethical investing. Can you be conscientiously capitalistic?

Numerous studies have shown that you can do just as well, or even a little better by incorporating environmental, social, and governance issues into investment decision-making,” says Tim Nash, The Sustainable Economist. “It bears the question, ‘if you can make just as much money and feel good about your portfolio, why aren’t more people doing this?’”

Before Etsy, an online marketplace went public, there was legitimate concern that the company’s community focus wasn’t compatible with profitability.

“We understand the concern, but reject the premise,” Etsy’s CEO wrote in a blog post published the day of the company’s IPO in 2015. “Etsy’s strength as a business and community comes from its uniqueness in the world and we intend to preserve it. We don’t believe that people and profit are mutually exclusive.”

“Idealism is one of the company’s most important attributes,” says venture capitalist Charlie O’Donnell (“The Barbarians Are at Etsy’s Hand-Hewn, Responsibly Sourced Gates,” Bloomberg) “This is something a lot of investors miss and don’t understand is an asset,” he says. “It does translate into growth.”

Every Dollar Counts

There are two important lessons we should take from ethical investing: First, your investment decisions have an effect. And not only on your own financial growth.

The more people start to consider things like social and environmental impact in their investment choices, asset management firms, and the like will take note and address the need for sustainable, ethical investment products.

You Are an Investor

Secondly, it’s important to realize that we are all investors.

When we say investment, we usually think in terms of dollars and cents.

But we invest in our careers, our health, our children. As such, we need to ask the right questions. When it comes to a career, should we invest in training and more education?

When do we start thinking about retirement plans? What should we invest in? Why? How?

When it comes to saving in general, should we pay off student loans early, or put together an emergency fund for a rainy day?

And speaking of a rainy day, when it comes to our health, we need to start asking questions like disability insurance – yes or no?

As noted, many don’t consider themselves “investors,” but saving and financial planning are just that: An investment. An investment in yourself, your family and your future, but also in the future of our community, of our planet.

And it doesn’t just mean sustainability, societal, or responsible impact. It’s about redefining success, and how we can invest it in. As such, it’s not only important to invest, to save and plan for your financial future, but it’s also important to pay attention to the hows and whys around our investment activities, whatever they may be.