How disability insurance can be part of your paid leave and absence management strategy

By Marjory Robertson, AVP & Senior Counsel and Abigail O’Connell, Senior Counsel, Sun Life Financial

When employees need to step away from work — whether to welcome a new child, care for a family member, or another life event — protecting their jobs and benefits, understanding their rights, knowing whether their employers will pay part or all of their absences, and meeting paperwork deadlines and other obligations is often overwhelming. If they work for an employer without a consolidated absence approach, they also will be required to contact separate entities for different benefits and entitlements. Workers may be calling their HR team to file their Family & Medical Leave Act requests, and contacting their insurance carriers to file claims for short-term disability benefits.

Absence can also be overwhelming for employers

Legal requirements regarding leaves of absence (paid and unpaid) and workplace accommodations are changing at breathtaking speed. Employers’ human resources staff do not have the time, personnel, or expertise to ensure they are complying with the various requirements of the FMLA, the Americans with Disabilities Act, and the increasing variety of federal, state, and local paid and unpaid leave laws.

Further, the consequences of noncompliance for employers are very serious, ranging from government investigations by the Equal Employment Opportunity Commission or the Department of Labor to individual lawsuits by employees.

More employers are choosing to outsource their leave management to their disability provider. In fact, according to DMEC’s (Disability Management Employers Coalition) 2017 leave management survey, 88 percent of employers who outsource their leave management do so with their disability insurers. They have expert legal and compliance personnel and systems who help employers ensure compliance with this myriad of changing leave and accommodation laws. Moreover, insurance companies want to partner with employers to evaluate and handle complex leave and accommodation issues and challenges. Their knowledge, skills, systems, and staff help employees receive the benefits they need quickly, and prevent FMLA and ADA abuse, including the challenging management of intermittent FMLA leave.

Using one vendor for absence and disability can simplify absence for employees and employers

To streamline the employee and employer experience, many companies select one vendor to administer paid and unpaid leave, absence, and disability benefits. A consolidated approach enables both employees and HR managers to contact one entity for information about their rights and obligations concerning multiple benefits and entitlements, like short-term disability, FMLA, and ADA/ADAAA accommodations.

In many situations, both the FMLA and the employer’s STD policy may cover an employee’s absence, enabling the disability carrier to make determinations based on a single employee claim form. Employers and managers receive consolidated reporting showing the status, dates, and timelines for employee absence to support workforce planning.

A vendor can promote company offerings in a targeted manner to drive usage

With one vendor, employers can incorporate and administer company paid (and unpaid) leave plans and programs alongside absence management programs and disability insurance. For example, the vendor may highlight an aspect of the employer’s employee assistance program based upon the employee’s particular absence reason, or remind the employee of a duty to report to his or her supervisor based on the employer’s usual and customary call-out requirements. More and more employers are offering paid paternal and/or family leaves. Insurers can administer these leaves along with the unpaid statutory leaves and also ensure that employer-sponsored paid leaves are coordinated with the increasing number of state paid family and medical leave laws.

Consolidated administration drives efficiency

Through their disability insurance provider, the employer may gain efficiency by setting up a single-file feed and vendor agreement. The employer’s staff may also become more efficient by outsourcing absence administration. Additionally, using an outside administrator limits risk of exposure to employee personal health information Employees will appreciate not having to provide sensitive medical information to their manager or HR. The provider can become a trusted partner to provide collaborative and consultative guidance on a range of complex compliance and administrative issues.

Help is available

Disability insurance carriers have decades of experience in managing absences, accommodations, and claims related to an employee’s own medical conditions, and for other leave reasons authorized by law or by an employer-sponsored leave plan.

Insurance carriers hire expert claims, vocational, and legal staff who can properly evaluate eligibility for leave and benefits, and administer the claims and accommodations in a seamless and integrated manner that best serves employers and employees alike.

Disability carriers offer client-friendly services, including timely processing of claims for leave and/or disability, integrated management of leave and disability claims, detailed reporting on leave and disability incidence rate, and timely and helpful communications with both the employer and affected employees.

Insurers have made – and will continue to make – substantial investments in legally-compliant claims and leave technology to meet evolving needs. They also maintain strict data privacy and cyber security standards.

Engage your disability provider for help with your absence and leave management policies. From providing support tools to navigating the nuances of leave protocols and maintaining compliance, your insurer can support you and your employees throughout their leave duration.




Selecting benefits and insurance products that make sense for you

By Carol Harnett, President, Council for Disability Awareness

Note: An earlier version of this post appeared in Carol Harnett’s employee benefits column for Human Resource Executive.

You don’t know me, but I’m someone people have come to trust when they want to have a conversation about employee benefits. I stand to neither gain nor lose anything based on the choices you will make during your annual benefits enrollment period. Except for this: Based upon my life experiences, I’d like to see you make the best choices you can.

It’s challenging for your employer to provide you with the types of suggestions I’m going to make. This is largely based on the fact your human resource leaders can’t give you direct advice.

There is one key assessment I believe is important to make when choosing your benefits, and that is how to understand risk.

I spent the first 10 years of my career training elite athletes who “sneer at risk.” They push themselves to the edge of what their bodies can do and return every day to do that again and again – even after experiencing major injuries. They, their significant others or their parents also go to considerable expense to make certain they receive the best training, medical care and rehabilitation available.

The rest of my career has revolved around how to get people to the best quality healthcare – both to treat and prevent injuries, illnesses, accidents, temporary and permanent disabilities, and more minor health conditions such as pregnancies, bad backs and torn-up knees. As a result, I’ve developed a contact list of medical specialists who make a difference in helping people recover in a way that, sometimes, makes a life-altering difference.

Here’s one of the things that’s been frustrating the heck out of me the last few years. I’ll receive a phone call from a friend or acquaintance seeking a referral to a physician or healthcare provider. Very often I know someone who could help them – and here’s where the “but” comes in. This person can’t see this individual because they selected a health plan that limited their provider and medical center choices. At the time, it seemed like a good call. Limited network –and high-deductible – plans are more affordable.

I’d suggest that the first question you need to answer when assessing your health plan benefit selection is, if you or your loved ones needed to see the best healthcare provider, would you want that choice available to you? There is no shame in saying “no.” You might have to travel to see this person or go to that center of excellence, and it’s simply something you know you couldn’t or wouldn’t do. Understand that part of yourself now, before you select your health plan.

The other thing that worries me when people are making their benefits choices is they don’t think about if they can afford to be out of work for a period of time. The reason? It comes down again to how we assess our risks. Most of us don’t think anything will happen to us, so we don’t worry that we won’t be able to work for a period of time. Or, we believe we’ll have enough vacation time to cover an unpaid absence. Or, we think our parents or friends will loan us money.

Let me give you a snippet from my own life. During my working years, I’ve had two mountain-biking accidents that placed me on the disabled list, plus two concussions, two stress fractures, two broken toes, three episodes of back pain and a torn MCL. You may call me unlucky; I will tell you I live life off the sidelines. And so do most of you – whether you realize it or not.

So, first, make certain you understand your employer’s paid-time-off or vacation/sick time policies. This will give you good information about how vulnerable you might be financially if you leave work to have a child, or to repair your bunions, or take care of a sprained back, knee or shoulder – never mind if something more complicated happens.

My recommendation to you will always be to take advantage of your employer’s short- and/or long-term disability insurance policies. They are inexpensive and cost-effective ways to make certain you can afford to be out of work (and help you pay for associated costs such as money toward your high-deductible, co-pay or co-insurance).

Once you’ve consciously checked the boxes on the two things people who work tell me are most important to them – their health and their income – take a serious look at other benefits associated with an income stream such as your retirement plan. Make certain you know if and when you are eligible to receive retirement income from your employer, and how you can contribute the most money possible toward retirement programs such as 401(k) and 403(b) programs. Just as none of us think we’ll ever become ill, injured or experience an accident, we also think retirement is a far-away concept. Make certain to at least make a start with contributions.

What about the rest of your employee benefits options? Trust me, there are some wonderful benefits out there. If you have children, dental and vision insurance may be high on your priority list. But, before making those selections before the ones described above, make certain you understand the benefits and limitations to these policies. You may find there is an annual or a lifetime cap on benefits that doesn’t make these choices a good investment for you.

The bottom line for me every year? I consciously make certain I have the best help available to me through my benefits selections if something were to happen to my health or my income. And then I make sure I can retire from this part of my working life at a point of my choosing. I wish you the same.




Beyond medical: How supplemental benefits help attract and retain talent

By Phil Bruen, Vice President, Group Life and Disability Products, MetLife

As the annual enrollment period takes place in workplaces around the United States, human resources teams and employees have benefits on their minds. During this time, it’s important for employers to educate their workforces on how the benefits they provide can help workers achieve their short- and long-term financial goals.

To do this, employees should use the information their company provides related to benefits and also seek guidance from those they trust most. Doing so, even more so than a major life event, can cause individuals to not just evaluate, but act on benefits that meet their needs.

Employers who are competing for the best talent find that providing benefits to support the financial well-being of their workforce is necessary. According to MetLife’s 16th Annual Employee Benefit Trends Study (EBTS), less than half of workers believe their employer understands their personal financial pressures.

The benefits offered to employees during their annual enrollment period go well beyond basic health insurance. Products such as dental and vision insurance, accident and critical illness coverage, and disability insurance provide additional financial support for costs beyond what medical insurance covers. Workers need to view all employee benefits as a critically important part of their health and financial wellbeing. Their benefits package is necessary to protect employees’ life goals, such as purchasing a home or sending children to college.

Why peace of mind matters

The recent MetLife study revealed that employees use their benefits to fulfill a need greater than a visit to the dentist or a more affordable way to get glasses. On the whole, today’s workforce relies on their benefits as a financial safety net—benefits give them peace of mind.

For example, 71 percent of employees say their benefits help them worry less about unexpected financial or health issues. Additionally, 65 percent say their non-medical benefits help limit their out of pocket medical expenses. Understanding these deeper advantages of benefits helps HR leaders serve employees better. It also pays off for companies as well as our research shows that benefits increase employee loyalty, engagement and even productivity.

But for many companies, the big question is how to offer more benefits without incurring outsized expenses. The answer rests in creating options for employees to customize their benefit offerings. The good news? Employees are ready to help, since 60 percent said they’d like their employer to offer a wider array of benefits that they can choose to purchase.

Getting beyond medical

When you think outside of the traditional health insurance box, some of the most important and sought after benefits fall into these three categories:

1. Disability insurance and income replacement. More than one in four adults who are currently 20-years-old can expect to be out of work for at least a year because of a disabling condition before they retire.[1] And yet less than half of Americans report they have enough savings to cover even three months of their living expenses.[2] Providing an option for short- and long-term disability insurance offers employees a simple way to keep unexpected events from turning into financial disasters.

2. Supplemental health benefits. Today’s employees want and need a solid health insurance plan. But for most individuals and families, that’s only a component of their overall healthcare. For example, 53 percent of employees consider dental insurance a “must-have,” and 37 percent say the same about vision care. Other key offerings that employers can consider include hospital indemnity, critical illness, and accident insurance, all of which supplement health plans, and provide employees with additional financial resources when they may need them most.

3. Retirement and financial wellness. Nearly three-quarters of employees report that saving for retirement is a priority—and nearly half say they’re already concerned about outliving their savings, according to the 2018 MetLife research. Traditional employer-sponsored retirement plans certainly provide the financial security and savings that employees want. But additional benefits such as lifetime income solutions, life insurance products and financial planning, and education services work to strengthen overall benefit plans and give workers additional ways to prepare for retirement.

In an increasingly competitive job market, employee benefits truly help elevate companies in the minds of their current employees—as well as the people businesses want to attract and retain. As HR executives find creative ways to build out their benefits, they also prepare their businesses and workforce for a better future.

[1] Disability Statistics, The Council for Disability Awareness, http://disabilitycanhappen.org/overview/ accessed September, 2018

[2] Chances of a Disability, Ibid, The Council for Disability Awareness, http://disabilitycanhappen.org/disability-statistic/ updated March 28, 2018

Looking for more information on supplemental benefits? Join Phil Bruen and Carol Harnett as they discuss consumer strategies this open enrollment season on the CDA’s BlogTalkRadio.




The basics of the Social Security Disability Income Program

By Ted Norwood, General Counsel and Director of Representation, Integrated Benefits, Inc.

The United States Social Security Administration offers two programs—confusingly named Social Security Disability Income and Supplemental Security Income—aimed at providing or supplementing the income of people who are unable to work.

SSDI (also called Title II benefits) provides disability coverage for individuals who have paid enough Social Security taxes. The second program, SSI or Title XVI, provides a smaller benefit for people who haven’t worked long enough to qualify for Title II benefits and established a financial need.

SSDI and SSI require the same medical requirements to receive benefits. However, SSI also requires claimants to pass a stringent means, or income, test that establishes the applicant’s need.

For the purposes of this post, I’m going to focus on the SSDI program. This benefit has greater relevance than SSI to the majority of employers and workers. In addition, this program frequently interacts with employee benefits, especially long-term disability policies.

But before I proceed, it’s important to remind you that I’m presenting basic information. If you have specific legal questions about SSDI, you should reach out to a lawyer. SSDI is a huge program with many regulations and significant administrative entities. My goal in this article is to focus on a few key elements that are important to employers and employees.

I find that most people know something about the SSDI program and many hold opinions on it already, but there is an abundance of misinformation. Before you can understand SSDI’s role in workplace absences, you must understand the program’s basics.

In many ways SSDI is like a private long-term disability policy that you have through the government. Like any insurance policy, the terms are important.

You must have worked to qualify

To receive SSDI benefits, you must have worked and paid the SSA’s taxes. If you are an independent contractor and don’t pay FICA taxes, you may not be covered. There are boring rules that you can access here if you want more information.

If you want to know if you are covered, you can simply contact SSA and they can tell you if you are insured and when your insured status would end if you stopped working.

You must qualify medically and vocationally

If you are covered, you may qualify medically for SSDI if you are:

  1. Not working
  2. Have limitations caused by medical conditions expected to last at least a year, and
  3. You are unable to sustain substantial gainful activity due to your limitations.

The SSA will deny benefits if they believe you can still perform a significant number of jobs that exist in the national economy or if you can perform past work (from the last 15 years).

Many Issues are surprisingly irrelevant to the SSA

Social Security does not consider income in its evaluation of disability. If a person who made a high salary can still perform lower income work, they are not disabled under SSDI. Likewise, a person who worked in labor, such as construction or manufacturing, may not be disabled if they are still capable of performing less demanding jobs.

SSDI also does not consider whether jobs are available or if an individual may or may not be hired for a job. The SSA only evaluates whether an individual could perform the functions of a job that exists.

The SSA considers problems finding employment to be addressed by unemployment insurance. But, to that end, applying for both unemployment and SSDI will usually have detrimental effects on the SSDI application. The SSA sees the receipt of both benefits as generally incompatible (with exceptions).

The SSDI Application Process

Individuals may apply for SSDI on the SSA’s website or at a Social Security office. A state agency will evaluate the application, review medical records and determine if the claimant is disabled under SSA’s rules. This usually takes three to six months with a 34 percent award rate.

If denied, a claimant can request reconsideration by the state agency. This essentially repeats the process, with a 13 percent approval rate.

If denied again, the claimant may request a hearing before an administrative law judge. There is a nine- to 27-month wait from hearing request to hearing with a national average wait of 17.3 months. The ALJ’s decision takes about another 60-90 days and ALJs awarded 47 percent of cases last year.

There is one more level of appeal within SSA – the Appeals Council – but the success rate is only 10 percent. After that, a claimant must file a civil case in federal court.

Obviously, it is a long process. This wait has a huge impact on the claimants. Waiting 30 months to get a payment is not uncommon. The SSA makes retroactive payments in a lump sum, but that is often cold comfort for claimants. The average wait time for all claimants is about 15 months before they receive a payment.

When Awarded SSDI

Disabled claimants receive an average monthly benefit of about $1300. There is a five-to-six month elimination period at the beginning of the period of disability.[The SSA provides annul adjustments for cost of living.

Two years after the end of the claimant’s elimination period, they will begin receiving Medicare.

There are some programs in place to support attempts to return to work, with mixed results. The SSA generally schedules continuing disability reviews (CDRs) every three to five years.

SSDI certainly has some warts, but overall American workers benefit tremendously from this program.

 




Why do some insurance policies still use pre-existing conditions?

 

By Larry Alkire, Senior Vice President, Chief Marketing Officer, American Fidelity Assurance Company

When Congress passed the Affordable Care Act (also known as Obamacare), the term—”pre-existing conditions”—became a household word. The ACA prevented health insurance carriers from denying you coverage, charging you more money, or refusing to pay for essential health benefits for any condition you had before your insurance coverage started. It also prohibited health insurers from denying you coverage or raising your rates once you’re enrolled in a plan based only on the health claims you filed.

No doubt, the ACA was a game changer for health care coverage. The legislated ban on healthcare “pre-ex” limitations opened the possibility for many people to get immediate coverage that they previously could not.

Health insurance, particularly employer-provided healthcare plans, typically have a larger enrollment of healthy people when compared to other employee-paid insurance. This is because employer-provided health insurance covers most employees and the company pays a portion of the insurance premiums. With high participation levels, the likelihood of anti-selection (a higher concentration of unhealthy participants) is reduced significantly—especially when compared to supplemental and voluntary insurance products.

Although pre-existing condition limitations are considered to be a negative for consumers, employee-paid supplemental coverage has a unique structure that features complex consumer/carrier tradeoffs.

Voluntary benefits that are commonly purchased by employees at work can include disability, life, long-term care, critical illness, and cancer coverage. Depending upon the type of insurance you select, the plan may ask no health questions when you apply (guarantee issue—typically for new hires and during open enrollment periods), limited health questions (sometimes referred to as simplified or express issue coverage), or a lot of health questions (full underwriting sometimes accompanied with verification).

The trend over the last few years is for applications for voluntary insurance to require less underwriting. However, with less underwriting comes a greater need for carriers to use pre-existing condition limitations. But is that a bad thing?

Actually, there’s a benefit to most consumers when insurers use pre-existing condition limitations. The “pre-ex” limitation allows carriers, particularly group insurance carriers, to bring insurance plans to many employers and their employees. It allows people to obtain coverage (on a guaranteed issue basis in many cases) by limiting insurance during the first year or two after they initially make the purchase to conditions that didn’t exist at the time of application, or people weren’t actively being treated for. This is usually true, even if you have serious pre-existing conditions.

Consider the alternative. Not having a “pre-ex” limitation could force insurance carriers to screen out people at a much more intensive level. Having less people in the plan makes the premiums more expensive.

Consider the following points when you’re thinking about “pre-ex:”

  1. Applicants usually know they have a condition that an insurance carrier would say makes them “uninsurable.”
  2. It is best to identify whether or not you have a pre-existing condition before you apply for insurance coverage. If you have a pre-ex condition, open enrollment is a golden opportunity to obtain coverage. You will not be covered for your pre-existing condition for the first year or two, but you will be for anything else that happens to you. (Keep in mind that you could be covered for your pre-ex condition one you are treatment-free for that condition for one to two years.)
  3. New applicants should always understand how the coverage works—and ask questions—before they buy it, and review their policy certificate again when they receive it.

The bottom line is that a pre-existing condition limitation often allows consumers with health issues to still buy supplemental and voluntary insurance. The limitation only applies to your specific condition and not all other conditions or injuries. And an open-enrollment-eligible plan is a great opportunity for an employee to take care of the needs they and their families have—even if they have serious health issues.




7 ways to keep employee benefits top of mind

HR works hard to find the best benefits program for employees and then communicate the “benefits of the benefits,” so to speak. But sometimes, even with the best of intentions, the information falls on deaf ears – or blind eyes. In fact, one recent study found that less than half of employees know what benefits are available to them, and yet nearly the same percentage said they would consider leaving their current job because the benefits are inadequate.

That means that HR has a job to do to keep their benefit offerings fresh in employees’ minds.

Follow up shortly after onboarding.

The first day can be a whirlwind for employees who are meeting new faces and receiving a barrage of information from everyone from their manager to, yes, the HR team. But think about it – new people who don’t even yet know where the copy machine is probably aren’t paying as much attention as they should to the benefits package, especially lesser-known programs like disability insurance. Naturally there is some paperwork they have to sign right away, but after that, give them a couple of weeks to settle in and then resume the benefits discussion. They might be much more tuned in once they’ve figured out the basics of their job.

Upgrade your website.

No longer do you have to depend on explaining your benefits program via a sheaf of papers that employees stow in their desks, never to see again. Chances are good your website probably already has the information, but is it easy to access and intuitive? The interface should be easy to read so that employees can visit and find what they need without endless scrolling or clicking. Consider talking to a web designer – either in-house or a contractor – who can help you design your website with marketing best practices in mind. After all, marketing your benefits (and by extension, your company) is exactly what you’re doing.

Present information in different ways.

Some of us love to read. Some of us love in-person presentations. Younger generations like millennials are all about the visuals. So even though it might entail a little extra work, commit to creating your materials in several different formats so you are bound to reach employees in the way that works for them. This strategy even has a great name – COPE (Create Once, Publish Everywhere).

Use multi-channel options.

In addition to different formats, you’ll want to distribute the information using different channels. A short text might remind employees that open enrollment is coming up. An email can provide detailed links to a wide variety of benefits. Your social media platforms can show some of your more “fun” benefits being used, such as employees taking a noontime walk as part of your wellness initiative or a group enjoying a team-building activity. Not only will social media remind employees of what’s available, but it also paints your company positively to others who are following your channels.

Ask for feedback.

Wondering what employees think of your benefits? A survey is an ideal way to get feedback with suggestions that can help you fine-tune your offerings, and it can identify what benefits employees don’t know about yet so you can determine where more communication is needed. It also allows you to raise awareness of some lesser-known programs; employees might not even realize how many programs you offer until they read about them on the survey.

Set up a hotline.

Have a dedicated number that employees can call if they have questions (and make sure someone returns the calls diligently if they leave a message). Call attention to the number by playing a game and awarding a $5 coffee card to any employee who knows the number when you ask them.

Pay them to learn more.

What? Why would you do that? Well, because it works, found Pierre-Renaud Tremblay, director of human resources for steam cleaning products company Dupray. Dismayed by a dismal 12 percent open rate on his emails, he upped the ante by developing online quizzes covering the material from the emails, offering gift certificates for employees who scored well, Forbes reports. He found his email open rate skyrocket to up to 95 percent.

And if more information about benefits helps satisfy employees, which contributes to retention, it will be money well spent.




Relocation and your social security disability insurance: Your questions answered

Part of the American dream is being footloose and fancy free…and whether you are relocating to be nearer family, to find a place with a lower cost of living or just to see some new scenery, you probably will move at some point in your lifetime.

But in the midst of the goodbye parties, the packing and the moving, don’t neglect important tasks that are necessary for your financial well-being. And chief among them should be making sure that you have taken care of your Social Security Disability Insurance (SSDI) or SSI (Supplemental Security Income) benefits before you relocate.

Here’s everything you need to know for a smooth move.

What is the difference between SSDI and SSI?

First, it’s important to know which of these programs you use. SSDI is the program that provides payments to those who are disabled or blind who qualify due to their work history – they have worked in jobs where they have paid FICA benefits.

SSI is a need-based program that makes payments to the elderly, blind and disabled who have limited incomes.

Will I have to reapply for SSDI and SSI if I move?

The good news is that it doesn’t matter if you move across town or to another state: You won’t have to for reapply these programs, which are overseen by the federal government, rather than individual states. That makes it easy for you to carry it over even if you move across the country.

However, whether you receive SSDI or SSI, you do need to make sure that you have changed your address so they know how to reach you should there changes to your benefits or other paperwork you need to file to remain eligible.

If you receive SSI, there’s another factor to consider — there could be a change to your payment based on what state you live in. That’s because most beneficiaries (except those who live in Arizona, Mississippi, North Dakota or West Virginia) also receive a state supplement. The amount varies by state, so when you move, you then qualify for your new state’s supplement, rather than your previous one. (You can find more details here.)

Also, some states disburse their own state supplements while others are handled by the Social Security Administration. If your old state and new state are both administered by the SSA, then there should be no lapse. But if you are moving to a state that administers its own supplemental program, you’ll need to apply in that state.

There also may be changes based on your living situation; i.e. if you are moving in with additional housemates who are covering part of your food and housing, your benefits may be reduced.

When should I contact the government about my change of address?

Don’t delay…you’ll want to put this on your “to do list” right away. If you are receiving SSI, you need to report the new address within 10 days after the month the change occurs so they can adjust your state supplement. Otherwise you might receive less than you are owed or too much – in which case you will have to refund the money — and you also might be charged a penalty.

The good news is you can handle it with a simple phone call to the Social Security office at 800-772-1213 or online here.

What other disability insurance might I qualify for?

Most people find that the amount they would receive from the SSDI or SSI benefits is not adequate to cover all their financial needs. That’s why it’s important to sign up for a group or individual disability policy that will protect your income and provide financial security if you should become disabled.

While it’s not fun to think about, the truth is that disability is far more common than one might think…in fact, nearly 25 percent of those who are 20 years old today will be out of work for at least a year due to a health condition before they reach retirement age.

If you have to stop working temporarily or permanently, disability insurance will kick in – providing the paycheck protection you need to ensure that your bills remain covered.




What’s considered a disability? 10 causes every HR leader should know

When most people consider disability, they picture something catastrophic happening—an ill-timed dive off a high rock, or a speeding car hurtling into theirs—and, for the most part assume it can never happen to them.

That’s why human resources experts often find it challenging to convince their employees of the importance of disability insurance even though you know it’s a wise investment and more commonly used than most people assume. In fact, if you were to keep track of the 20-year-olds in today’s workforce, you’d find out that nearly 25 percent of them will be out of work for at least a year due to a health condition before they reach retirement age.

The statistic isn’t meant to alarm anyone, but rather to underscore the importance of making sure that your team members realize that disability insurance is for everyone. It can be the lifeline they need in the case of an unexpected condition—and yet at least 51 million working adults go without disability coverage, except for the basic coverage offered through Social Security.

That can be downright scary considering the precarious financial position of many Americans—and the skyrocketing cost of medical treatment. Any of these conditions can rob workers of the opportunity to earn enough to pay their bills, and just when they need the extra income the most.

Wondering what the top causes of long-term disability are? Your employees might be surprised to learn that they are relatively common occurrences.

  1. Muscoskeletal. This is a fancy way of saying “back pain,” something weekend warriors—or even just good Samaritans helping a friend move—can probably see themselves experiencing. It also covers other muscle, back, and joint disorders, such as arthritis. Together, these conditions account for nearly 30 percent of all long-term disabilities.
  2. Cancer. Yes, we can put this in the “catastrophic” category, but it’s actually more prevalent than you might imagine. In fact, more than 70,000 people in their 20s and 30s—the prime of their life—are diagnosed with cancers, including lymphoma, leukemia, testicular, melanoma, and breast cancer. Even if they are eventually cured, cancer treatment can decimate a family’s finances as they miss work to undergo treatment.
  3. Pregnancy. It’s hard to consider pregnancy as a “long-term” disability, but the bottom line is that pregnancy (think bed rest) and childbirth can infringe on work, especially if there are complications. In fact, about 1/10 of all claims involve a pregnancy-related issue, but by tapping long-term disability insurance, your employee and their little bundle of joy can be covered.
  4. Mental health issues. From anxiety to depression, mental health problems can take a toll, and fortunately, people are realizing that mental health is just as vital to treat as physical health. Since over a quarter of the population is diagnosed with one or more mental disorders each year, it’s easy to see how they can be a leading cause of long-term disability.
  5. Injuries. Nine percent of long-term disability claims come from the “injury” category, which covers everything from accident recovery to surgery, broken bones, and even poisoning.
  6. Cardiovascular issues. From heart attack to stroke, cardiovascular events strike unexpectedly and can prevent employees from coming to work for an indefinite period of time as they build their strength back up.
  7. Nervous system. This category encompasses a wide range of potential issues that include multiple sclerosis, Lou Gehrig’s disease, Parkinson’s disease, and epilepsy, plus a range of additional eye and ear disorders. Even conditions that are often considered an older person’s disease, such as Alzheimer’s, can strike during peak earning years. In fact about 200,000 people contract the early-onset form of Alzheimer’s, which typically develops in their 40s and 50s.
  8. Infectious diseases. While headlines trumpet new types of infectious diseases, from zika to MRSA, this category also encompasses far less-exotic strains, such as bacteria that causes strep throat and viruses that bring on the flu. As more conditions become resistant to today’s hardest-working antibiotics, the threat of losing work due to infectious disease grows more prevalent.
  9. Digestive system. Celiac disease, Crohn’s disease, and irritable bowel syndrome (IBS) are just three of the better-known conditions in the digestive diseases category. Altogether there are 40 digestive conditions that plague more than 34 million Americans, causing them to miss work as they wrestle with treatment and prevention.
  10. Respiratory diseases. Asthma is one of the most common chronic respiratory conditions, which also include a wide variety of other lung-related ailments. It’s not a leap to assume that difficulty in breathing would lead to difficulty in working…illuminating the need for long-term disability insurance.

No one wants to sit down with employees to go over a list of illnesses or conditions they may eventually have, but the good news is that human resources professionals have the opportunity to expose their colleagues to one of the best-kept secrets in the benefit world—how disability insurance can help prevent them from losing a paycheck just when they need it most.




Why Waiting to Buy Income Protection Can Cost You Big Time

Couple sitting at a laptop.Like many others in their 20s, I remember not being thrilled about the chunk of income that was taken every month by insurance. It always seemed like money that was going out and would never come back in and felt especially significant at a time when my income was low.

The temptation was always to either skimp on insurance, wait until my income increased, or bypass it altogether. The same holds true for many people today when it comes to income protection, an insurance policy that replaces your income if you are unable to work due to an accident or sickness. While the reluctance to spend more on insurable is understandable, it’s important to take the time to discuss the cost of waiting to purchase this important coverage.

Here are the three major costs to be aware of:

Cost 1: You’re most insurable when you’re young

When you are young, you are generally in the best health of your life. As you get older, nagging injuries and health issues tend to pop up. This can affect the policy terms of your disability insurance (DI) policy. The older you get when applying for DI coverage, the more likely it is that your policy will include restrictions like exclusions, ratings, and even being declined altogether.

For example, if you have a serious back issue, the insurance company may offer a policy with a back exclusion meaning that they would not pay out benefits if you were unable to work due to an issue with your back. Or, if you have a history of heart issues, the insurance company may include a modification like adding extra premium to cover their extra risk. Of our office’s current issued policies that were issued medically as applied for (no medical exclusions or modifications), 67 percent were under the age of 40! The time to get coverage is when you are young and at your most insurable. Many carriers will also allow you to purchase increase options which means you will be able to increase your coverage in the future to keep pace with your income but not have to complete any medical underwriting.

Cost 2: Premiums increase

The premium cost for coverage goes up as you get older. In addition to health considerations that may increase your premium, the cost for coverage is also based on age.

The chart below shows premiums of different occupations at age 25 and age 40—note there’s up to a 70 percent increase in premium from age 25 to age 40. If the 40 year old dentist purchases coverage and keeps it inforce until age 66, he will still end up paying out more total in premium than if he purchased coverage at age 25. He also misses out on 15 years of income protection.

Male Rates  Dentist College Professor Pediatrician Executive
Annual premium at age 25* $1,198.40 $1,000.30 $880.95 $704.55
Annual premium at age 40* $2,013.20 $1,704.50 $1,477.35 $1,181.60
Percentage Increase 68% 70% 67% 68%

 

Female Rates  Dentist College Professor Pediatrician Executive
Annual premium at age 25* $2,053.45 $1,637.65 $1,399.30 $1,119.65
Annual premium at age 40* $3,326.05 $2,789.85 $2,382.45 $1,906.10
Percentage Increase 62% 70% 70% 70%

*Premiums shown are for illustrations done for $3500/mo of benefit, with typical options including noncancellable (premiums cannot be changed), residual (return to work benefits), 3% COLA (inflation protection), 90 day wait, benefits paid to age 65, KS resident.

Cost 3: Peace of mind

While we tend to think we are invincible while we are young, the truth is that disabilities can happen to anyone at any age. The Council for Disability Report in 2014 shows that ages 40 and under filed 21 percent of all disability claims in 2013.

Know that there are ways to address the very real concerns about fitting the cost of income protection into your budget. There are a lot of options to keep the coverage affordable including multi-life discounts, business owner discounts, or simply making changes to the amount of monthly benefit or benefit duration. Many people start with a minimal benefit amount and include a rider called an increase option so they can increase their benefits as their income grows regardless of their medical insurability.

For more information about the importance of income protection and the risk of disability, visit www.RealityCheckup.org.




Why Disability Insurance Matters

Person with broken arm typing on laptop.This article originally appeared in Human Resource Executive. 

Throughout my career, I have usually been the interviewer, but occasionally I’ve also been the interviewee. Whichever side of the table I have sat on over the past three decades, my least favorite question is always: What keeps you up at night?

I spent the early part of my career in healthcare, first working with Olympic and elite athletes, obese children, pregnant and post-natal women and the apparently well general community; and then running industrial medicine programs. The only thing that keeps me up at night from either a work or personal standpoint is if someone is hurt, suffering or dead on my watch. That’s the gift working in healthcare gives you—lifelong perspective.

So, for me, the sleepless night query is a lazy question. It’s generally code for something along the lines of: “What big problem are you working on?” or “What do you believe is the most challenging issue for employers today?”

Neither of those questions, however, stimulates me to give the interesting answer the person is seeking. But this one does: What distracts you during the day?

When I am trying to solve a problem for which there is no easy solution, almost everything I read or hear causes me to consider how that information might relate to my problem.

Whether working in healthcare, for an insurance company, consulting with employers or running a nonprofit, the basic and vexing problem I’m trying to solve is behavior change and how, ultimately, human beings evaluate and respond to risk.

Here’s what I’ve learned. Essentially, we’re baked and done at approximately 18 years of age. Around that time, your body executes an efficiency review. Any neural pathways your brain hasn’t used are trimmed away. (Note: We have also learned, however, that if you need a pathway back after something traumatic such as a stroke happens, it can regrow with dedicated rehabilitation.)

What is the impact of this spring cleaning of the brain? The person you were as an 18-year-old is, in some ways, your setpoint. If you exercised, ate seven to 10 fruits and vegetables a day, were the right weight for your height, didn’t smoke, didn’t drink more than one alcoholic beverage a day, always wore a seatbelt, saved money for a rainy day, did the healthcare and dental visits recommended for someone your age, etc., you’re set up for a reasonably good physical and fiscal life. Even if you stray from these behaviors due to changing life circumstances, it is easier to get back to these habits because the neural framework is there to support you.

But if your 18-year-old self had some room for improvement, you can undergo changes as you become older and wiser. It will be simply more difficult for you to execute, since you will be working against your neural wiring.

So what does this background have to do with employee benefits?

The longer I work in and around employee benefits, the more I’ve come to appreciate that there are enormous advantages to health- and financial-benefit programs that either a nation or an employer selected and paid for.

Unfortunately, most adults evaluate hazards differently than risk-considering people like me, HR executives or actuaries.

When Texas cattle producers sued Oprah Winfrey for creating “a lynch-mob mentality” among viewers during a 1998 episode on beef safety at the time of the mad-cow-disease scare, a risk-communications consultant named Peter Sandman described a formula for how people evaluate risk: Risk = Hazard + Outrage. Sandman wrote (bracketed words are mine):

“To the experts, risk means expected annual mortality [or financial ruin]. But to the public (and even the experts when they go home at night), risk means much more than that. Let’s redefine terms. Call the death rate (what [many] experts mean by risk) “hazard.” Call all the other factors, collectively, “outrage.” Risk, then, is the sum of hazard and outrage. The public pays too little attention to hazard; the experts pay absolutely no attention to outrage. Not surprisingly, they rank risks differently.”

During and following World War II, when most developed nations chose to provide its residents with healthcare and financial benefits, they unconsciously acknowledged our frailty as humans in evaluating risk.

On Jan. 11, 1944, President Franklin Delano Roosevelt attempted to persuade Congress and the nation of the value of a “second bill of rights” (also known as an economic bill of rights) during his State of the Union address. Included on the list were the right to adequate medical care—and the opportunity to achieve and enjoy good health—and the right to adequate protection from the economic fears of old age, sickness, accident and unemployment. Several of FDR’s rights were addressed in programs such as Social Security. But employers continued to bear some of the onus they picked up during World War II by not abandoning employee benefits such as healthcare coverage.

As employee-benefits costs—led by healthcare expenses and poor pension investments—began to incur precipitous financial consequences for businesses during the 20th century, employers began the shift to cost-sharing with employees. (It’s a trend that continues today.) The advent of this change, coupled with the rise of cafeteria plans, put workers in the risk-assessment driver’s seat. They often made selections that make me shudder.

The latest information that has me losing some proverbial sleep at night is this: An analysis of economic research by a New York Times reporter that showed a trip to the hospital can mean a permanent reduction in income for a substantial fraction of Americans. Some people bounce right back, but many never work as much again.

To read the rest of this post, please click here.