12 ways to mitigate stress during the holidays

The holidays can be stressful — whether it’s gift buying, balancing party commitments or entertaining family, this time of year can put a strain on your mental health. In addition, the holidays can sometimes be a time of increased depression and anxiety. However, there are a few practical steps people can take to reduce stress during this time of the year, according to Jeffrey Borenstein, M.D., a Manhattan-based psychiatrist and President and CEO of the Brain & Behavior Research Foundation.

“We can learn to recognize holiday triggers, such as financial pressures or personal demands, and combat them before they lead to a meltdown,” says Dr. Borenstein. “With a little planning and some positive actions, you can find ways to enjoy the holidays.”

Here are 12 ways to reduce your stress during the holidays:

  1. Know the holidays don’t have to be perfect. As families change and grow, traditions and rituals often change as well. Choose a few to hold on to, and be open to creating new ones. If, for example, your adult children can’t visit, celebrate together in other ways, such as sharing pictures, emails or videos.
  2. Acknowledge your feelings.If someone close to you has recently died or you can’t be with loved ones, realize that it’s normal to feel sadness and grief. “It’s OK to take time to cry or express your feelings. You can’t force yourself to be happy just because it’s the holiday season,” Dr. Borenstein explains.
  3. Connect with people you trust.If you feel lonely, seek out trusted friends, if possible, or attend community, religious or other social events that offer support and companionship. Volunteering your time to help others is another good way to lift your spirits.
  4. Try simple activities that make you feel better. “Exercise, for example, is a natural antidepressant that can lift your mood by boosting endorphins—natural chemicals in the body,” says Dr. Borenstein. Exercises like running and aerobics also boost norepinephrine, a neurotransmitter that plays a role in mood. “Even a casual walk can help a great deal to reset yourself,” he says.
  5. Take a breather.Make some time for yourself. Spending just 15 minutes alone, without distractions, may refresh you enough to handle everything you need to do. Find something that clears your mind, slows your breathing and restores inner calm.  Examples: step outside to look at the stars; listen to soothing music; or read a book you’re interested in.
  6. Set aside family differences.Try to accept family members and friends as they are, even if they don’t live up to all your expectations. Set aside grievances until a more appropriate time for discussion. And be understanding if others get upset or distressed when something goes awry. Chances are they’re feeling the effects of holiday stress and depression, too.
  7. Stick to a budget.Before you go gift and food shopping, decide how much money you can afford to spend. Then stick to your budget. Don’t try to buy happiness with an avalanche of gifts.  Also, try alternatives, like donating to a charity in someone’s name, giving homemade gifts or starting a family gift exchange.
  8. Learn to say no.By saying yes when you should say no, you can feel resentful and overwhelmed. Friends and colleagues will understand if you can’t participate in every project or activity. And if your work is unyielding during the season, try to remove something else from your agenda to give you more time for yourself.
  9. Plan ahead.Set aside specific days for shopping, baking, visiting friends and other activities. And make lists. That’ll help prevent last-minute scrambling. And ask family or friends ahead of time to help with party preparation and cleanup.
  10. Stick with healthy habits. The temptation to cope by self-medicating, binge eating or excessive drinking coincides with the party spirit of the holidays, which can exacerbate negative feelings. So try not to over-indulge. “Alcohol, for example, is a depressant and can actually increase feelings of depression, stress, anxiety, and guilt,” says Dr. Borenstein.
  11. Make realistic New Year’s resolutions.  Most people don’t keep the resolutions they’ve made the year before.  “If you make a resolution, pick something realistic and short term ­– maybe something you can handle in the month of January – a simple goal you can achieve without adding more stress to your life,” suggests Dr. Borenstein. “Life is stressful enough without contributing to it unnecessarily.”
  12. Seek professional help if you need it.Despite your best efforts, you may find yourself feeling persistently sad, anxious, irritable and hopeless, unable to sleep or face routine chores. “If these feelings last for a while, talk to your doctor or a mental health professional who know how to help you,” says Dr. Borenstein.



Survey reveals Baby Boomers’ need for strategic retirement planning

A report recently released by BMOW Wealth Management showed aging Americans have concerns with regard to retirement planning and the effects on their family and wealth.

The report, called The Aging Economy: Improving with Age, surveyed more than 500 Americans 55 and older and reviewed the benefits of an in-depth wealth plan to help manage the stressors many seniors feel throughout retirement.

“While Americans are fortunate to be living longer, extended retirement brings additional costs and challenges,” said Tania Slade, National Head of Wealth Planning, BMO Wealth Management (U.S.).

“It’s crucial that people approaching retirement work closely with financial planners, spouses, and family members to come up with a viable, long-term strategy that supports them throughout their elder years and enables them to leave the legacy they desire.”

As a result of the increased life expectancy among Americans, the average retirement period is now 18 years, and many boomers are remaining in the workforce longer to grow their retirement next egg, meet retirement and estate planning goals and stay active. In addition, more Boomers are thinking now more than ever about how they will live comfortably in the future.

According to the survey, Boomer’s top concerns about a prolonged retirement include quality of life and healthcare costs, followed by being a burden on family members and running out of money during retirement.

Additionally, spouses and partners can have differing opinions about their long-term financial goals. The biggest discrepancy most couples noted was when and how much to save for the future, followed by retirement goals and how personal assets and possessions should be distributed to heirs.

Lastly, respondents identified their most significant investment and retirement issues as a desire to maximize retirement income, fear of outliving their savings in retirement, and the impact of long-term care costs on personal finances.

 

 

 




Time to Invest in You: Ways to Make Your Retirement a Reality

By Rachel Barrow, AVP Marketing, Individual Markets, Guardian Life Insurance Co. of America®

Dreaming about retirement may bring to mind relaxation, travel, and leisure time. Many people find, though, that planning for it can be stressful – but it doesn’t have to be that way. If open enrollment time has you thinking about how you’ll fund your retirement, you’re not alone. A recent survey by the Employment Benefit Research Institute1 shows that retirees are less confident than they were last year that they will have enough money saved for basic expenses, health care, or long-term care.

How can you face the future with more confidence? Look for resources to help you chart this path. Turn to your current employer for help; Guardian’s 5th Annual Workplace Benefits Study,2 Small Business, Big Benefits, states that over 44 percent of small businesses are increasing employee financial education over the next five years to help employees make better benefits decisions. Or, make a plan that’s focused on what you feel will matter most to you in retirement (family, lifestyle, relationships, health, etc.), seek out the best retirement strategies and products and, most of all, invest in yourself. It can help you go a long way toward making your second act (retirement) a reality.

Plan with care

As you start considering your retirement plan, it helps to look at how certain financial products can help you reach your goals. Whether those products protect future income, help cover future care, protect your earning ability from the possibility of premature death, accidents, or long-term illness, or provide for market-related growth opportunities, having a well-rounded package of products may make a difference.

To create the best retirement strategy, you need to balance having the right products in place, while recognizing some of the issues you may encounter along the way. Keep these ideas in mind while you are planning your future:

  • Keep up with your defined contribution (DC) plan: Open enrollment is an excellent time to increase how much money you’re saving, but you can ordinarily do it anytime throughout the year (based on your plan’s provisions). Many retirement planners underestimate the amount they will need to maintain the standard of living they want. Remember to account for inflation, health care costs, and unexpected expenses you may encounter.
  • Keep a diversified investment portfolio: As you examine your investment choices during open enrollment, remember the benefits of a diversified selection of investments. Even if your investment choices get more conservative as retirement approaches, you may not want to avoid stocks entirely. After all, keeping pace with inflation can help your nest egg retain its purchasing power. See your financial advisor to discuss how you feel about risk and your retirement income goals.
  • Have realistic retirement income goals: The old rule of thumb is that you will need 80 percent of your annual pre-retirement income, because of the (assumed) reduced cost of living in retirement, including the possible elimination of mortgage payments. But when you factor in health care costs, dining out, travel, and pursuing other passions, this amount may not be enough for you. Take the time to do the math and don’t be shy to get help from a financial professional.

Explore your options and mind any gaps

After you do your calculations, if you find your projections mean you may be falling short of your retirement income goals, don’t despair. Whether you feel you’ll have a shortfall in your retirement budget or are just trying to find solid, reliable sources to pay future expenses, focusing on guaranteed monthly income can help.

Many experts agree. For instance, Robert Merton (MIT professor and co-recipient of the 1997 Nobel Memorial Prize in Economic Sciences) wrote in Harvard Business Review3 that people should focus their retirement planning on monthly income instead of trying to find a magic number of how much they’ll need in total retirement savings.

What are the sources of guaranteed income that can help you produce the monthly retirement income you’ll need? Some will be familiar to you; others may not be. But it’s worth taking a close look at guaranteed income, the products that provide it, and how they can be an essential source of monthly retirement income:

  • Social Security: Just about everyone knows about Social Security, but how much do you think you’ll receive? Visit the Social Security Administration’s Retirement Estimator4 to find out. When you see your estimated future benefit, keep in mind that Social Security generally only accounts for part of most people’s retirement income – and that your future benefits are not (at this point in time) guaranteed.
  • Company Pensions: If you’re lucky enough to work for an employer that offers a pension plan, be grateful. Once a major source of guaranteed retirement income, employer-sponsored pensions are not a common benefit offering today.
  • Bonds and CDs: These investments give predictable (if not absolutely guaranteed) returns, with possible tax advantages, and can help round out your investment portfolio. Their rates of return can be somewhat limited, however.
  • Annuities: By paying an insurance company a specified amount of money, you can receive regular payments for a set amount of time, or for life. There are many different types of annuities that can establish cash flow now (immediate annuities) or later (deferred annuities) – at fixed or variable interest rates.

Invest in yourself

Budgeting for your retirement can seem like a daunting task, but making a plan is the first step. Pause, build a checklist of tasks for yourself, and check off each one as you complete it. It also helps to consult a financial professional, who can help you identify your unique retirement vision – and the steps you can take to help yourself achieve it.

Each person’s plan will be different. The important thing is that you take the time to invest in your own future. You may find that it not only alleviates stress, but also helps you take the first step toward achieving the retirement of your dreams.

Rachel Barrow leads the Product Marketing team for Individual Markets at The Guardian Life Insurance Company of America®. She has been with Guardian since 2009 and in the insurance business for over 20 years. Her team produces educational tools and resources focused on strategies to help individuals, families and small business owners achieve financial security.

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1 Employee Benefit Research Institute (2018, April 24). 2018 Retirement Confidence Survey. Retrieved from: https://www.ebri.org/docs/default-source/rcs/1_2018rcs_report_v5mgachecked.pdf?sfvrsn=e2e9302f_2

2 5th Annual Workplace Benefits Study (2018, October 15), Small Business, Big Benefits. https://www.guardiananytime.com/gafd/wps/portal/fdhome/insights-perspectives/emerging-trends/small-business-benefits-study

3 Merton, Robert C. (2014, July-August). The Crisis in Retirement Planning. Retrieved from https://hbr.org/2014/07/the-crisis-in-retirement-planning

4 Social Security Administration. How the Retirement Estimator Works. Retrieved from https://www.ssa.gov/benefits/retirement/estimator.html




“I’ll take a 50% cut in pay, and I’m cool with downsizing my retirement” – Said No Employee, Ever

By Tom Charla, Director and Tara Reynolds, Corporate Vice President, MassMutual

Most employees have figured out that the safety nets previous generations enjoyed — job security, pensions, even Social Security – can’t be relied on the way they have been in the past. They know that when it comes to reaching their financial goals, especially the goal of a comfortable retirement, they are pretty much on their own.

At the same time though, employees are expecting, even requiring, that their employer — the same one that no longer provides much of yesterday’s safety nets – make available the benefits, financial planning and educational opportunities needed to make informed choices about their future. Your employees and colleagues are counting on you to help them understand what action they most need to take next, especially during open enrollment season.

How do employees define “financial well-being?”

As an employer, you can distinguish your company and provide peace of mind by offering benefit options that closely align with your employees’ overall financial well-being. Today, financial well-being (aka ‘financial literacy’ or ‘financial wellness’) is a bit of a buzzword, so it helps to define what it means. According to the Consumer Financial Protection Bureau, financial well-being is achieved when an employee is able to:

  • Manage day-to-day and month-to-month expenses
  • Absorb a financial shock
  • Stay on track to meet their financial goals, and
  • Make financial choices that let them enjoy life

Now vs Later… and Everything In-Between

The CFPB definition calls clear attention to both the short and long-term considerations to achieving financial well-being. At the same time, with 78 percent of all workers living paycheck-to-paycheck1, longer-term plans often fall by the wayside. Without having a long-term financial view, employees may make money mistakes with long-term consequences — such as making withdrawals from their retirement accounts — to address a short-term concern.

As hard as it is to balance priorities, it’s even more devastating for individuals and their families when they get caught short by overlooking the financial and emotional damage that a potential disability can cause when adequate disability income insurance (DI) coverage is not in place. A disability of any significant duration can result in immediate lost income, as well as the inability to continue to save for retirement.

For the employer, having an adequately protected employee can be very beneficial for the business as well, especially if that disabled employee comes back to work. A recent survey conducted by MassMutual found that business owners believed that over 40 percent of their employees would not be able to retire on time (traditional retirement age) because of inadequate savings. The inability of employees (including those who returned to work after a disability) to retire on time can have long term impacts on the business itself. Increased future payroll and benefit costs, delayed succession plan implementation, and even a potentially lower perceived value of a small business when it’s time to sell, can all be the result of employees having to work past retirement age.

 What are the chances?

For many people in the workforce, and for their employers, it’s hard to predict when and how a disability will strike. Yet with today’s 20-year olds facing a 1 in 4 chance2 of becoming too sick or hurt to work before they reach age 67, a disability that could keep them out of work for an extended period can happen at any time. As employees age, the risk of a disability naturally increases. That’s because most long term disabilities, about 90 percent, are caused by a sickness, not a catastrophic injury3. As employees age, so do their chances of a prolonged illness due to cancer, musculoskeletal or nervous system disorders.

When you review your benefits package and align it with the CFBP definition, you’ll quickly see that DI is one of only a few benefits that can have a direct impact on all four parts of an employee’s financial well-being. And it’s in this analysis that we start to uncover how devastating a disability can be, even for an employee who may have dutifully saved for retirement up until the time of their disability.

A comfortable retirement is most everyone’s long-term financial goal

When an employee becomes disabled and can’t work for an extended period of time, managing for the short-term is critical. Retirement balances can get tapped for more pressing day-to-day necessities, or to cover increased medical costs, hiring additional help, home safety accommodations, etc.

However, managing for the long-term is equally important. It’s hard enough to deliver the news to an employee that their group long term disability coverage may replace only roughly half their paycheck (after taxes) at a time when their expenses likely will skyrocket. You will have to help them understand that their ability to contribute to the employer sponsored tax-advantaged retirement savings account – including any company matches – will no longer be available to them. And this realization may occur just at the time they are tapping into their retirement balances to help make ends meet. Do you relish breaking the news of a big pay cut and a major hit to your employee’s retirement account?

Individual DI policies, such as those from MassMutual, have an option for an employee to continue saving for retirement in addition to protecting a larger portion of their income. This allows an employee whose life has been interrupted by a disability to be confident that they can continue to fund some aspect of their future retirement, especially knowing that their disability income payments cease at the end of the disability benefit period (and certainly no later than at their normal retirement date.)

DI can set you apart

You know the right benefits package can help you attract and retain the best talent for your company. So it makes sense to offer benefits that employees want. According to 2018 MassMutual Workplace Benefits study, 78 percent of employees identified DI as a benefit they would be interested in, and almost as many – 74 percent – would like to have a benefit that provides continued retirement savings protection while the employee is disabled.4

But benefits packages are more than just employee retention tools; they reflect who you are and what you believe. When you offer your employees DI, you demonstrate that you want them to be financially well for the short and long-term. This approach to benefit planning also helps you position your company as one that cares about its employees, and is actively seeking to offer tools and programs that are in the employees’ best interest. That’s a message all of us can get behind!

1Career Builder / Harris online poll conducted June 2017

2 US Social Security Administration, Fact Sheet 2018

3 The 2014 Council for Disability Awareness Long Term Disability Claims Review

4 Survey conducted for MassMutual by Greenwald & Associates in 2017




SSDI lacks rehabilitation resources

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

SSDI has poor resources for vocational rehabilitation or job placement, and no resources at all for claimants during the wait for a decision. This makes it harder for people to recover and get back to work.

Because of the long wait, many claimants miss out on vital windows to improve their chances of recovery and return to work. By the time the SSA awards disability payments, many claims are permanent due to the effects of such a long layoff and the lack of rehabilitation resources.

Certainly, SSDI can provide income to your disabled employees, but relying on it leaves them with a long wait and long odds, making it less likely they will be able to rejoin your team or find alternative work.

SSDI is not all bad news for employers

Although SSDI does not do much for employers on its own, it is certainly better than nothing. It does eventually provide Medicare and annual cost of living adjustments (COLAs) for disabled claimants.

Those are important benefits, as many employees lose their health insurance during the wait for SSDI. Annual COLAs help people with disabilities keep up with the economy. Every bit matters once workers are on a fixed income.

Despite its problems, the SSDI program is a successful program designed to help protect American workers. Still, there is one more major advantage SSDI provides to employers.

SSDI acts like a subsidy to group long-term disability insurance, making disability policies affordable and an excellent value.

Group long-term disability policies protect employees from the disadvantages of SSDI.[1]

  • These LTD policies usually start with an own-occupation period of two years, allowing the employee to receive benefits immediately.
  • Group LTD policies can be structured to pay higher benefits than SSDI does.
  • Group LTD policies have better opportunities to provide vocational rehabilitation and return to work services.
  • Plus, most insurers will provide a lawyer for claimants to assist with their SSDI applications.

Although claimants often cannot double dip LTD and SSDI, SSDI still provides them with health insurance and cost-of-living adjustments. These benefits are the real opportunity SSDI provides for employers.

[1] https://www.consumerslife.com/EmployersCLIC/Products-for-Employers/Group-Long-Term-Disability-Insurance.aspx ; https://www.policygenius.com/disability-insurance/learn/long-term-disability-insurance-faqs/




Why relying on SSDI is better than nothing, but far from optimal

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

According to the Council for Disability Awareness, half of those who don’t work for the government have some form of employer-paid disability insurance (short-term disability only, long-term disability only, or both STD and LTD). These benefits are important because 25 percent of today’s 20-year-olds will at some point miss a year or more of work due to medical problems.

For businesses, as companies become leaner, individual employees become more vital and more difficult to replace. Replacing an experienced employee is very expensive, and long term, losing employees is difficult.

Given that, an increasing number of employers recognize the value of employee well-being. In fact, many companies now recognize the value of caring for employees as people, not just assets.[1]

Providing private disability insurance benefits in the workplace is an important way to care for employee financial health. But, about half of workers in the private sector do not have these benefits. Instead, if they are unable to work for an extended period of time, they often must rely on the Social Security Administration’s Disability Income (SSDI) program—if they qualify—for income.

In this article, we will look at the advantages and disadvantages of the SSA’s disability program from an employer perspective. Since you have to eat your veggies before dessert, let’s start with the disadvantages of the SSDI program and then end on a high note.

Three Disadvantages of Relying on SSDI for Employee Disability Coverage

The three main disadvantages to relying on SSDI to provide disability insurance to your employees are the wait, the challenges, and the lack of good recovery resources.

The Wait

The wait time to receive Social Security disability payments is almost unconscionable. The average wait before your employee receives the first payment is 15 months. Many applicants wait two years or more.

During this long wait, employees relying on SSDI often have no income. Spouses may work, but even in the best cases, the lost income is often devastating. They may get food stamps or Medicaid in some places, but in others they may not. Even though the SSA does provide retroactive payments on its disability awards, the wait is so long that many claimants have lost their savings, liquidated retirement accounts, and have seen their personal relationships deteriorate.[2]

SSDI does help people, but the long wait creates problems for claimants. It is certainly not what a conscientious employer wants to see for their dedicated workers.

SSDI is Hard to Get

Qualification for SSDI is hard. Social Security does not offer an own-occupation definition of disability nor does it consider prior income.[3] For skilled workers, this makes qualification very difficult. In fact, most claimants need a lawyer to represent them during the application process. Without representation, the odds of receiving benefits are much lower.

The application process is often difficult to navigate and confusing. The SSA repeatedly requests the same information and requires completion of long forms. Given the high standard of disability, a misplaced word can hurt a claimant’s application, which already only has a one in three chance of receiving an award at the initial level.[4]

Not only does it take an incredibly long time to get benefits, it is also very difficult to qualify. Leaving your employees to rely on this Byzantine system is certainly not an advantage to a compassionate employer.

SSDI Lacks Rehabilitation Resources

SSDI has poor resources for vocational rehabilitation or job placement, and no resources at all for claimants during the wait for a decision. This makes it harder for people to recover and get back to work.

Because of the long wait, many claimants miss out on vital windows to improve their chances of recovery and return to work. By the time the SSA awards disability payments, many claims are permanent due to the effects of such a long layoff and the lack of rehabilitation resources.

Certainly, SSDI can provide income to your disabled employees, but relying on it leaves them with a long wait and long odds, making it less likely they will be able to rejoin your team or find alternative work.

SSDI is Not All Bad News for Employers

Although SSDI does not do much for employers on its own, it is certainly better than nothing. It does eventually provide Medicare and annual cost of living adjustments (COLAs) for disabled claimants.

Those are important benefits, as many employees lose their health insurance during the wait for SSDI. Annual COLAs help people with disabilities keep up with the economy. Every bit matters once workers are on a fixed income.

Despite its problems, the SSDI program is a successful program designed to help protect American workers. Still, there is one more major advantage SSDI provides to employers.

SSDI acts like a subsidy to group long-term disability insurance, making disability policies affordable and an excellent value.

Group long-term disability policies protect employees from the disadvantages of SSDI.[5]

  • These LTD policies usually start with an own-occupation period of two years, allowing the employee to receive benefits immediately.
  • Group LTD policies can be structured to pay higher benefits than SSDI does.
  • Group LTD policies have better opportunities to provide vocational rehabilitation and return to work services.
  • Plus, most insurers will provide a lawyer for claimants to assist with their SSDI applications.

Although claimants often cannot double dip LTD and SSDI, SSDI still provides them with health insurance and cost-of-living adjustments. These benefits are the real opportunity SSDI provides for employers.

[1] https://www.youtube.com/watch?v=or6YoXfHWSE

[2] https://www.nadr.org/news/377122/Four-Personal-Stories-Show-the-Effects-the-SSDI-Backlog-has-on-Peoples-Finances-and-Futures.htm

[3] https://www.ssa.gov/redbook/eng/definedisability.htm

[4] https://www.disabilitysecrets.com/advice.html

[5] https://www.consumerslife.com/EmployersCLIC/Products-for-Employers/Group-Long-Term-Disability-Insurance.aspx ; https://www.policygenius.com/disability-insurance/learn/long-term-disability-insurance-faqs/




When you hear the term ‘underinsurance,’ do you understand what it means?

By Bob Herum, Second Vice President, DI & GSI Sales, Ameritas

I picture the millions of working Americans who are employed, receive benefits through their employers, and yet, go about their daily activities without realizing the potential financial risk to their way of life. Specifically, I’m thinking of their income and what insurance they may have in place if they were hurt or became too sick to work—even for a few months.

Most working Americans depend on their income to pay their bills, yet few prepare for the devastating financial impact caused by temporary (or longer-term) illnesses and injuries. A third of employers in the U.S.—particularly large ones—provide a group long-term disability plan, however, few employees could describe the group plan they have through work or what it covers. Many workers assume the insurance they have through work or from social programs, like Social Security Disability Income insurance or worker’s compensation, will be sufficient if the need arises. Unfortunately, reality is likely much different.

Let’s consider an employee with traditional group long-term disability coverage through work. The employer usually pays some or all of the premium cost, which makes the benefit taxable and results in you receiving less money. We’ll also assume the plan design covers 60 percent of your “base earnings.” Base earnings typically don’t include variable compensation like bonuses, over-time, commissions or other employer-provided perks—leaving your additional income uninsured.

Here’s an example:

Base earnings $75,000 annually, or $6,250 per month.

60 percent of base earnings is $45,000, or $3,750 per month.

Assuming a 10 percent effective tax rate for federal and 4 percent for the state means that the $45,000 annual disability benefit is reduced to approximately $38,700, or $3,225 per month. I think it’s safe to say few people are aware of the impact of taxes on their disability insurance payments. The effects on an individual’s or family’s finances could be devastating if you needed to access your benefits.

This impact is even more of an issue when you have significant variable income not covered under the definition of the group LTD contract. Business owners, sales people and employees who are eligible for bonuses and/or commissions may find the group plan even more inadequate since many group LTD contracts do not include that additional income in the calculation of benefits.

Another issue that may affect the more highly-compensated individuals is the group plan “LTD cap,”which is the maximum amount of benefit payable under the plan. Smaller employers usually have caps of $10,000 a month or less. It’s important to know that a 60 percent plan is by its design is going to limit the covered incomes as follows:

Cap                               Salary Covered 

$10,000/month                  $200,000

$7,500/month                    $150,000

$6,000/month                    $120,000

$4,000/month                    $100,000

When employees rely solely on their group LTD coverage, the percentage of income replaced can be inadequate. A better strategy you may want to consider is to add individual supplemental disability insurance coverage because the combination of the two protects a larger percentage of your income by filling in the gaps left by your group LTD coverage.

In addition to understanding how your group LTD plan works (if you have one), it is important to also know about how income protection options available from other sources work. Two other common sources of income when you cannot work are Social Security Disability Insurance and worker’s compensation. These programs do not pay you benefits in all situations and the process to qualify for SSDI can be lengthy. While each is important and should not be ignored, the reality is neither program will most likely allow you to continue your current lifestyle if you need to tap into these programs.

The SSDI program provides disability benefits to those with significant impairments and uses the following criteria to determine if you are eligible for benefits.

The definition of disability under Social Security is different than other programs. Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability.

We consider you disabled under Social Security rules if:

  • You cannot do work that you did before;
  • We decide that you cannot adjust to other work because of your medical condition(s); and
  • Your disability has lasted or is expected to last for at least one year or to result in death.

If you are denied SSDI benefits you may file an appeal. This process can take several months to several years before a determination is made.

If you qualify for SSDI benefits, it’s important to know that your payments start after five full months of total disability. This is far less comprehensive than found in most group LTD plans, which normally provide an elimination or waiting period that normally includes partial disability and includes an “own occupation” definition of disability, followed by an “any occupation” definition, based upon your background, training or prior income.

In addition, SSDI provides a bare-bones level of protection. For example, someone meeting the annual income maximum for withholdings ($128,400 for 2018) would qualify for a $2,886/month, or $34,632 annually, which is 27 percent of their pre-disability income. As your income rises above the withholding amount, that percentage continues to reduce.

And, one final note: 85 percent of your SSDI benefit is also subject to federal income tax withholdings.

Worker’s compensation is another social program employees often think they can rely upon. It’s difficult to generalize about WC because each state program is unique. The primary purpose of WC is to provide benefits to workers who are injured or become ill on the job. These benefits may include income payments, medical assistance and vocational rehabilitation support.

Here’s the bottom line: Most employees would be well served by taking time to understand their income protection options and develop a plan from there. For employees who have short- and long-term disability insurance through work, I recommend asking your HR department for additional information about how the program works. A good first step is to ask for and review the group LTD booklet. This is usually available on your employer’s intranet site. If supplemental disability insurance is available through your employer’s benefit plan, strongly considered adding this coverage. You may be able to also take your supplemental coverage with you if you move on to another employer. Group LTD plans seldom are portable, and even if they are, they usually only continue for 12 or 24 months.

Having your own individual long-term disability plan may be the best investment in maintaining your lifestyle if you become injured or ill.




Employees look to their benefits package for additional income protection: The case for supplemental individual disability income insurance

By Shelly Mushinski, Director, Enrollment & Implementation, Guardian Life Insurance Company of America®

It’s not just about life and health insurance. Employees also look to their employer for benefits that matter, such as the need for additional income protection. Your benefits strategy carries a lot of weight with key employees and prospects, and there’s no question having a strong benefits strategy is fundamental to the way employers compete for top talent — and disability income coverage is an important consideration.

Group Long Term Disability (LTD) coverage can be a great and essential foundation for your employees. But Group LTD coverage offered through an employer may not provide enough income replacement in the event of a disability or prolonged illness that prevents an employee from working. A disabling injury or illness can be devastating, impacting your employees’ ability to pay their mortgage, support their families and maintain their lifestyle.

Potential for underinsurance: The income gap

The threat of underinsurance for employees and key executives is real. Consider the facts:

  • Three out of five people say their savings would last only six months if they became unable to work due to illness or injury.1
  • The duration of an average group long-term disability claims is 34.6 months2
  • 90 percent of long-term disabilities are caused by illnesses not injury3

As compensation increases for your employees, coverage caps can occur, and the result can be underinsurance that impacts an individual’s ability to replace an adequate amount of income. This is known as an income gap. Coverage gaps can occur for several reasons, including the fact that Group coverage typically replaces only 40 percent to 60 percent of before-tax salary; benefit caps may leave higher-earning employees with the lowest income replacement ratio; and taxes on employer-paid coverage can reduce benefits significantly. This leads to possible “reverse discrimination” or “benefit portfolio inequity” for your higher earning employees.

Incentive and bonus compensation are usually not covered by Group insurance. In addition, Group LTD may not include protection for retirement contributions or student loans and is not portable. Meaning, if the employee were to leave his or her job, the existing Group LTD policy would no longer provide disability income protection for the employee. These contributing factors increase the threat of underinsurance for your employees. But, luckily, there are ways to help solve for benefit inequity and inconsistencies in coverage.

The solution: Supplemental income protection

Although your employees can’t predict the future, you can help them better prepare for it. Supplemental income protection (or multi-life individual disability income insurance), provided through an employer, is an additional way to help protect employees by helping to close the income gap. It lets your employee focus on recovery instead of worrying about finances. The benefit is two-fold: the additional coverage benefits the employee from a protection perspective, and it also benefits your company in terms of recruiting and retention.

By offering supplemental income protection, employees obtain coverage through a simplified process known as Guaranteed Standard Issue. This often requires the employee to answer a few basic questions, but medical or financial underwriting is not required. The process is convenient and often easier than an employee purchasing a policy on their own — where an individual applying for a fully-underwritten policy may go through a lengthy process to obtain coverage. And although it’s a benefit received through the employer, the policy will be personally owned by the employee — so he or she can take it with them should they leave the company. In addition, some providers offer the ability to enable coverage to grow with the employee’s income during the annual review process, which is a valuable retention benefit for employers.

When considering insurance providers to offer this supplemental benefit, consider a provider that can design a benefits package with flexibility to offer a breadth of options that can accommodate: specialized executive benefits for your high income, high value employees, and supplemental benefits for other employee segments that speak to the demographics of your organization. In addition, look for multiple funding options to meet your objectives (voluntary, employer-paid, and cost sharing options/executive carve-out). Custom benefit strategies allow you to tailor funding options such as employer-paid for the executive population and employee-paid for other segments. Look also for an array of billing options to fit your administrative needs.

Enrollment Fundamentals

Employees are most satisfied with a new benefit offering when they clearly understand its value and how it applies to their situation. Insurance can be complicated, and employees may not understand the value of the product. To overcome this challenge, work with a provider on a strong educational approach, tailored to the demographics and culture of your company, so employees can feel confident in their decision. Personalized education is critical and educating employees on how their Group LTD plan works for them is essential. Working with a provider that offers a strong educational component is often perceived by employers as a major value-add service.

In addition, look for online enrollment strategies that provide educational tools to help employees calculate their lifestyle-related expenses to make an informed decision on the need for additional coverage. Look for a carrier that has flexible enrollment strategies that align with your benefit culture (they should seem like an extension of you). You should also look for a carrier that provides flexible strategies that “move with” enrollment activity – these are designed to engage and drive the employee to action. For insurance providers that offer online enrollment, enrollment and policy issue can take place in a matter of minutes, offering a seamless application process. Make sure to work with a provider that provides first-class implementation and enrollment support that always puts you and your employees first.

Supplemental income protection is a win/win

The bottom line is this: employees look to their employer to offer a benefits package that can provide added protection in the event of a disability or illness. By offering supplemental income protection, you can add value to your benefits portfolio – and also provide a competitive advantage for your company.

Shelly Mushinski leads the Multi-Life Disability Enrollment and Implementation Team at The Guardian Life Insurance Company of America®. She has been with Guardian since 2007 and in the insurance business for over 20 years. Her team helps employers to define enrollment, implementation and communication strategies that aligns with the company’s benefit culture and demographics.

1 Mind, Body, and Wallet” Guardian 4th Annual Workplace Benefit Study, 2016
2 Council for Disability Awareness, Chances of Disability, http://disabilitycanhappen.org/overview/, accessed October 2018
3 Council for Disability Awareness, Long-Term Disability Claims Review, 2014

 

 

 

2018-68302




Do your benefit priorities match your employers’?

By Diane Russell, Lincoln Financial

Your company’s benefit package is sending you a message about their priorities — and whether they are the same as yours. When companies get it right, it pays off in terms of your job satisfaction and desire to continue to work there. That’s because your employer is making it clear they are listening — and responding — to what you and your colleagues are saying you want and need the most.

What employees are concerned about

How can you effectively prioritize the value of your various benefits? The first step is to consider your own financial needs and goals, as well as your stage of life. Do you have a family? Are you their main source of income? Are you prepared if an illness or injury keeps you out of work for a period of time? When do you plan to retire?

In addition to your own specific needs, also consider the overall issues faced by today’s employees and how those issues may affect your benefit choices and work performance. We live in a time when financial stress is increasing, and health care is a significant contributor to that stress. In fact, 46 percent of employees fear unforeseen health expenses more than any other concern.1 And that financial stress can impact employees’ health care decisions: In a 2016 study, nearly 80 percent of emergency room physicians reported treating patients who have health insurance but nevertheless chose to delay or even forgo medical care due to costs.2 When employees do decide to seek the medical care they need, many may have to make difficult decisions about where that money will come from.

One notable trend shows that many Americans are funding everyday expenses by dipping into their retirement savings. In fact, 44 percent of workers surveyed said they’d most likely use money from their retirement accounts for expenses other than retirement, with 30 percent having already made one such withdrawal. 3 The top reason workers withdraw money from their retirement account is out-of-pocket medical expenses, with 28 percent of those surveyed withdrawing money for that reason. 4

 Not surprisingly, 42 percent of American workers are concerned about running out of money in retirement.5

Benefits make a difference

Employee benefits can help relieve financial stress. They are an important part of your total compensation package and can significantly influence the decision to stay at your current job or seek a new position.

Benefits attract6

57 percent of job candidates report benefits and perks are among their top considerations before accepting a job.

Benefits retain7

Nearly 80 percent of workers would prefer new or additional benefits to a pay increase.

What employees value

What benefits do your colleagues value and prioritize when it comes to choosing or staying with an employer? A recent Glassdoor Economic Research employee study shows there’s a clearly defined hierarchy. The study ranked 54 benefits by how much correlation they had with overall satisfaction with benefit packages — and the core benefits of health insurance, paid leave and retirement (including pensions and 401K plans) were all in the top five. These benefits, along with disability coverage, are the ones that can really make a difference to your financial security and future.

That’s because health benefits can be a prime protection against financial pitfalls such as high deductibles and coinsurance, as well as the loss of income that often comes with a prolonged recovery. Employees agree that this kind of protection can strongly contribute to a feeling of financial control and well-being, and view health insurance (97 percent) and disability insurance (93 percent) as important sources of protection and security for their families. They not only value this coverage, they expect employers to offer it, with two out of three employees expecting employers to provide disability insurance.8

Interconnected benefit solutions

These three key benefit areas — health insurance, retirement, and disability — are interconnected. They serve as the legs of a three-legged stool when it comes to financial wellness. If one leg is taken away, or is inadequate, the whole stool may collapse.

As we’ve noted, many workers will turn to their retirement accounts to pay for out-of-pocket medical expenses. Another reason for withdrawals is when they are out of work for a prolonged period due to a serious illness or injury. Your most important financial resource, after all, is your ability to earn an income. If your health insurance or disability coverages are inadequate, and you need to take out a 401K loan to pay medical expenses, the impact won’t just be on today’s finances, but also your long-term financial outlook.

How can your employer help?

Employers need to reach out to their employees — and truly listen to and incorporate their responses when choosing the tactics and tools that will become part of their financial wellness offerings. They need to recognize the importance employees place on the three-legged stool of health insurance, retirement and disability, and provide you with the information you need to thoroughly weigh your benefit options and make informed decisions.

Optimally, this could include providing concrete examples of how everyday health occurrences can affect your current and future financial picture, and how the benefits you are offered can help you reach your financial goals. Here are some questions you might want to consider and talk to your employer about:

1. Are you signing up for the same benefits every year because they are the best options — or because it’s what you’re used to?

When it comes to benefits through work, 87 percent of employees say they are more likely to enroll in benefits they are familiar with and are educated about.9 Although that’s understandable, that may mean you could be missing out on valuable benefits. Be sure to look at your employer’s full range of benefit options — not just the ones you already know well.

2. Have you had a major change in your life that could affect your benefit needs?

This is another aspect of not just doing what you’re used to – if you’ve recently gotten married, divorced, had a baby, or gotten a significant raise, your benefit needs and beneficiaries may need another close look.

3. Health insurance may pay most of your medical bills, but can you also take advantage of other options that protect you against loss of income during an illness or injury? Although 51 percent of employees say they have a plan in place for their financial future, only 26 percent have insurance that will cover them in case they can’t work due to illness or injury.10 Remember, using your retirement savings is a short-term solution with long-term negative results.

4. What will your out-of-pocket costs be — co-pays, deductibles, higher costs for out-of-network providers?

It may not be possible to know exactly what your expenses will be, but consider the possibilities and investigate whether there are coverages such as accident and critical illness that offer cash payments to help fill in the gap.

5. Are you taking full advantage of your company’s retirement match program?

Many companies offer a percentage match up to a certain contribution amount. Don’t leave free money on the table — make sure you’re contributing, at the minimum, enough to get your full company match.

6. Is your company’s benefit program on par with other companies in your industry?

Don’t compare apples to oranges — not every industry offers the same level of benefits. It’s important to have a sense of what the is norm in your industry and if your company meets or even beats it.

Conclusion

The benefits companies provide and the efforts they make to assure their employees are fully informed about their choices offer a view into how much a company values its employees. Companies that are truly trying to attract and retain talented employees listen to what their employees are saying, and know the triumvirate of key benefit solutions — health insurance, retirement, and disability — can make a crucial difference.

Sources

1 Lincoln Financial Group, “2017 Financial Focus Study.”

2 Brooke Murphy, “96% of Patients Don’t Understand Their Emergency Insurance Coverage: 6 findings from the ACEP,” Becker’s Hospital Review, https://www.beckershospitalreview.com/payer-issues/96-of-patients-don-t-understand-their-emergency-insurance-coverage-6- findings-from-the-acep.html, May 9, 2016.

3 PwC, “Employee Financial Wellness Survey,” https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html, October 2018.

4 Transamerica Center for Retirement Studies. 2015 16th Annual Transamerica Retirement Survey.

5 See footnote 3.

6 Harris Poll for Glassdoor, December, 2015.

7 Glassdoor Employment Confidence Survey, October 2015.

8 Lincoln Financial Group “2017 Employee Benefits Study.”

9 See footnote 8.

10 See footnote 8.

 

 




Looking for top employees? These three benefits are a must

By Diane Russell, SVP Marketing, Lincoln Financial

Your company’s benefit package sends a message to your employees about what you feel is important and if you’re listening to their concerns and priorities. Get it right, and your benefits dollars will be well spent and will pay off in terms of employee satisfaction and retention. Your employees will know you’re listening — and responding — to what they are saying they want and need the most.

What employees are concerned about

The first step is to be in touch with the issues today’s employees are facing, and how those issues affect their benefit choices and work performance. We live in a time when financial stress is increasing, and health care is a significant contributor to that stress. In fact, 46 percent fear unforeseen health expenses more than any other concern.1 And that financial stress can impact employees’ health care decisions; In a 2016 study, nearly 80 percent of emergency room physicians reported treating patients who have health insurance but nevertheless chose to delay or even forgo medical care due to costs.2 When employees do decide to seek the medical care they need, many may have to make difficult decisions about where that money will come from.

One notable trend shows many Americans are funding everyday expenses by dipping into their retirement savings. In fact, 44 percent of workers surveyed said they’d most likely use money from their retirement accounts for expenses other than retirement, with 30 percent having already made one such withdrawal. 3 The top reason workers withdraw money from their retirement accounts is out-of-pocket medical expenses, with 28 percent of those surveyed withdrawing money for that reason. 4

 Not surprisingly, 42 percent of American workers are concerned about running out of money in retirement.5

What employees value

There’s a clearly defined hierarchy when it comes to what employees value and seek when they choose an employer. A recent Glassdoor Economic Research study ranked 54 benefits by how much correlation they had with overall satisfaction with benefit packages — and the core benefits of health insurance, paid leave and retirement (including pensions and 401K plans) were all in the top five. These benefits, along with disability coverage, are the benefits that can really make a difference to employees’ financial security and future.

That’s because health benefits can be a prime protection against financial pitfalls such as high deductibles and coinsurance, as well as the loss of income that often comes with a prolonged recovery. Employees agree this kind of protection can strongly contribute to a feeling of financial control and well-being, and view health insurance (97 percent) and disability insurance (93 percent) as important sources of protection and security for their families. They not only value this coverage, they also expect employers to offer it, with two out of three employees expecting employers to provide disability insurance.6

Benefits make a difference7

Interconnected benefit solutions

These three key benefit areas — health insurance, retirement, and disability — are interconnected. They serve as the legs of a three-legged stool when it comes to financial wellness. If one leg is taken away, or is inadequate, the whole stool may collapse.

As we’ve noted, many workers will turn to their retirement accounts to pay for out-of-pocket medical expenses. Another reason for withdrawals is when they are out of work for a prolonged period due to a serious illness or injury. An employee’s most important financial resource, after all, is their ability to earn an income. If employees’ health insurance or disability coverages are inadequate, and an employee needs to take out a 401K loan to pay medical expenses, the impact won’t just be on today’s finances, but also their long-term financial outlook.

How can employers help?

Employers need to reach out to their employees — and truly listen to and incorporate their responses when choosing the tactics and tools that will become part of their financial wellness offerings. They need to recognize the importance employees place on the three-legged stool of health insurance, retirement and disability, and educate employees thoroughly on their options.

Optimally, this could include providing concrete examples of how everyday health occurrences can affect the current and future financial picture, and how the benefits being offered can help. When companies are trying to attract and retain talent employees, this triumvirate of key benefit solutions are an essential element when it comes to formulating successful strategies.

Sources

1 Lincoln Financial Group, “2017 Financial Focus Study.”

2 Brooke Murphy, “96% of Patients Don’t Understand Their Emergency Insurance Coverage: 6 findings from the ACEP,” Becker’s Hospital Review, https://www.beckershospitalreview.com/payer-issues/96-of-patients-don-t-understand-their-emergency-insurance-coverage-6- findings-from-the-acep.html, May 9, 2016.

3 PwC, “Employee Financial Wellness Survey,” https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html, October 2018.

4 Transamerica Center for Retirement Studies. 2015 16th Annual Transamerica Retirement Survey.

5 See footnote 3.

6 Lincoln Financial Group “2017 Employee Benefits Study.”

7 See footnote 6.