Helping Your Team with Financial Literacy (Without Overstepping Your Bounds)

As Financial Literacy Month winds down, it’s the perfect time to talk with your employees about financial wellness, which is every bit as important as physical wellness.

In fact, the stress caused by financial issues is pervasive. The 2018 PwC Employee Financial Wellness Survey found that financial stress isn’t limited to one generation–Millennials, GenX and Baby Boomers alike report stress created by financial challenges and money matters. Nearly half (47 percent) report stress related to their financial situation, and 41 percent say their stress level as it pertains to financial issues has increased over the past 12 months.

It’s tempting to say “Well, their financial life isn’t our problem…we pay them well, and what they do with their money is their business.” But you might be surprised to find that assistance with financial matters was named as the top desired employee benefit they don’t already have.

Here are some ways that you can help your employees feel more financially secure—and help them increase their financial literacy.

Survey and Learn What Employees Need

While the issues might vary among different employees and demographics, it’s helpful to know what’s keeping them awake at night—whether it’s paying off their student loans, helping save for their child’s education or scraping together a down payment on a home. Knowing what issues are most worrisome can help you determine where you might want to provide extra support, and perhaps even look into new benefit offerings that help ease their burden. For example, some forward-thinking companies have started offering a wide array of potential benefits, such as disability insurance, student loan reimbursement, pet health insurance or childcare assistance.

Boost Financial Literacy with a Game

You might be surprised to find that employees don’t know as much about financial terms as you think, and it’s hard for them to make a wise choice between a PPO and HMO, for instance, if they don’t understand the relative merits of each one. Some employees might benefit from an adjustable rate mortgage if they are only living in a house temporarily, but they’ve only ever heard of a conventional loan. Employees are much more likely to pay attention to dry financial terms when you present them in a fun way…from a TV-style game show quiz or a team trivia game (with snacks and prizes of course!).

Incentivize Them to Save More

Want to increase your employees’ savings? Try some of the more creative new programs that HR departments are using, such as automatically opting “in” to a savings program (rather than having them decide) and auto-increasing their rate of savings. Or have a financial wellness game where each employee chooses a goal and aims to save $5 a day toward their vision. Have them report on how they are achieving the savings, from brown bagging their lunch to walking right past that sale at the shoe store.

Bring in an Expert

From retirement savings to mortgages, employees often don’t understand a wide variety of financial concepts—the very backbone of “financial literacy.” Brainstorm types of professionals you know who might be willing to come in and share their expertise. These could include:

Having an expert provide a “lunch and learn” can up employees’ confidence on financial issues and introduce them to an avenue to turn to when they have questions.

Offer Additional Resources

Inviting a professional to share expertise is engaging, but often employees need even more information. Compile a list of resources you can offer, such as

Secure Healthy Lifelong Financial Wellness

Finally, realize that not every employee understands the many benefit options that are available to them—and therefore aren’t taking advantage of them. During Financial Literacy Month, set up one-on-ones or small groups to review available coverage and answer questions about what programs might be right for them. Cover such topics as disability insurance, the various health plans you offer and any other financially related benefit your company provides.  The Council on Economic Education also offers state by state education groups.

After all, you care about your employees’ well-being, and you also want to make sure their work is not affected by financial stress. Helping them with financial literacy can ensure they are equipped with the money smarts they need.

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Windfall or Investment? How to Make the Most of that Tax Refund

Are you on track to receive a tax refund? If so, it can feel like a windfall or even like winning the lottery. The natural desire to spend “found money” can easily spiral into ideas of grandeur. While jetting off on vacation, or buying that new gas grille, are worthy causes, take a pause. There are a few financial strategies you might consider first.

In response to a new survey, 54% of folks who expect to get a refund said they plan to save or invest the money….And some of them actually will!

Pay Down Credit Card Debt

If you have run up your credit cards over the year, paying off the balance should be your first step. That’s because unpaid charges come with a hefty interest rate that can mean you wind up paying even more for everything you’ve purchased. Whittling down debt should top your financial “to-do” list. Applying a tax refund can take care of a large amount of this in one fell swoop. This gives you a highly motivating head start.

Set Up An Emergency Fund

Are you one of the 60 percent of Americans who can’t cover an unexpected $1,000 expense? Building up your emergency fund can be a smart move to help you with those unexpected realities of life—from faulty car brakes to a leaky roof to a sick pet. Just remember that the money should only be used for true “emergencies” (and no, a sale at your favorite department store doesn’t count).

Time for Home Improvements

While saving for a rainy day might be fiscally responsible, it also might strike you as a little boring. Tackling important home improvements can give you the benefit of improving the value of your home—while giving you something you can enjoy today. According to Remodeling magazine’s 2019 Cost Vs. Value report, the top home improvement that brings the most value is a garage door replacement, while other top projects that will simultaneously boost your satisfaction include minor kitchen remodels and deck additions.

Another smart choice—although, admittedly, less exciting than a sparkling new kitchen—is to make energy upgrades. Believe it or not, when Remodeling Magazine used to include insulation on its list of home improvement projects, attic insulation had an astonishing 117 percent ROI. Adding insulation and other energy-efficient features may also allow you to keep more money in your wallet all year long in the form of reduced energy bills.

Share Some Goodwill – Make a Donation

Spending money on yourself is fun—but spending it on someone else can feel even better. If there’s a cause you’ve been wanting to support, allocating part of your refund to a local school or women’s shelter can put a spring in your step that no new sandals ever could.

Reward Yourself

Of course, we don’t want to be spoilsports. Sometimes getting a tax refund is a fun way to reward yourself for the hard work you’ve done all year. So by all means, earmark it for a whim. Use it for a long weekend at a nearby resort or a wardrobe refresh. Just make sure that any choices you make today won’t impact your financial future. Perhaps consider allocating the majority of the refund to one of the financial goals above. Then, use a small percentage for a planned splurge. Ensure that you identify exactly what you’re spending it for. Letting the money absorb back into your account, or spending it something forgettable won’t have the same emotional impact as putting it toward something specific and enjoyable, even if it means delaying the gratification.

Review and Adjust Your Withholding

Remember, as exciting as it is to get what feels like a windfall as a tax return, that money actually is yours. It could have been in your paycheck all year long. Having that extra bump throughout the year can allow you to keep your emergency fund strong. It also can be the difference in paying off your credit card bills in full. This offers ongoing financial rewards. You could also use it for a weekly date night or support the nearby senior center regularly.

If you’d like to revisit your withholding to potentially make changes, talk to your HR department. They can help review your current status and the paperwork required to change it. Of course, it’s always wise to talk with a tax professional if you have any questions. But letting Uncle Sam keep your money all year—interest free!—is rarely the best use for it.

What Every Employee Should Know About Their Tax Refund


Based on early 2019 returns, the average tax refund is $2,640, down by more than 16 percent compared with the same period for 2018. What gives, your employees might ask? This will be hard for them to swallow, but it’s actually good news.  Basically, instead of a bigger refund at the end, they have been getting more in their paycheck each week throughout the year, but not even realizing it.

As an HR professional, it can sometimes be challenging to help employees make wise choices with their money. However, tax refund time is a fantastic opportunity to approach some financial wellness issues.

First, remember that it’s important to share with your colleagues that tax refunds aren’t “free money.” While it’s exciting to receive a “windfall” in the form of a tax refund in April, that money has been held interest-free by Uncle Sam all year long.

So the first step might be to invite them to review their withholding to see if they want to make any changes. If so, they can fill out Form W-4 to make any changes—potentially having even more money in their paycheck each month.

If they’re on board, you can share some ideas of what they can then do with that money on a regular basis.

Invest in Their Retirement

If your company offers a retirement plan, like a 401(k), remind each employee to consider checking that they are making use of it—especially if you offer a company match. That’s essentially free money that your employee might be forgoing in their quest to amass a large refund.

Keep Credit Card Debt at Bay

Another byproduct of forgoing extra monthly money to try to nab that big return is that they might be accruing unnecessary interest on their credit cards. While it’s important to discuss the wise use of credit, it can be hard for employees to get out of the mindset that they can rack up their credit card bills, expecting to use that April windfall to pay them off. In the meantime, the interest they are paying means that they are really just paying their own money out of pocket to the credit card company, while (as we said!) Uncle Sam is keeping their money interest free. Explaining the dichotomy might help them see that they would be far better off adjusting their withholding rather than waiting to pay the balance off in a lump sum.

Elect to Take Extra Benefits

Many companies offer employees the opportunity to buy additional policies, such as long-term disability or life insurance. While no one likes to confront the fact that they may need them, the reality is that no one can ever know what might happen. In fact, statistics show that more than a quarter of today’s young adults aged 20 can expect to be out of work for at least one year at some point in their career. Applying that extra in their paycheck to these extra benefits can mean the world to them—and their family—should they need it.

Establish an HSA

Many companies offer high-deductible health plans, that often come with a Health Savings Account, or HSA. Employees can make tax-deductible contributions and then use the money to pay for any eventual care—effectively making their healthcare dollars go farther.

Make an Extra Payment on a Mortgage

If an employee holds a mortgage, they may be surprised how much they can save over the life of the loan just by making an extra payment each month—or even each year—in the form of reduced interest. Some mortgages may not allow pre-payment.  You might suggest they speak with their lender to find out if they can make an extra payment penalty-free. If so, ask the lender to share the math about the difference that might make over the long term. The results can be eye-opening.

While you should always make sure your employees seek tax advice from a professional, providing general financial wellness information can help them make better financial decisions. Challenge them to think about whether changing their withholding might help them make smarter financial decisions all year long, rather than relying on a windfall that might come too late.

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An Employer’s Guide to Understanding Social Security Disability Insurance


Carol Harnett: [00:00:00] Hello, this is Carol Harnett. I’m the president of The Council for Disability Awareness. Welcome to our podcast, which is called The Financial Health and Income Network. Today we are going to talk specifically to employers about how Social Security Disability Insurance works and how it can help protect employees who can no longer work due to an illness or an injury.

What is important for employers to know in a grounding basis, around disability insurance products is that in the group insurance market, there is a product that most employers are probably familiar with called long term disability insurance. About one third of employees — according to the Bureau of Labor Statistics — in the United States have what’s called an LTD policy — a long term disability insurance policy — that’s either fully paid by the employer, or partially paid by the employer.

In addition to that, about half of Americans have some form of disability coverage, most of which makes up the difference. It is either a group policy that the employee pays all of the premium for instead of getting assistance from their employer, or they may be doing something called an individual disability insurance policy that they secure working directly with an agent or an advisor and an individual disability carrier.

Today we are going to focus on this very specific type of coverage that is provided by the federal government but has a very well-defined process, including a very well-defined approval process, application process, and review process. This is Social Security Disability Insurance.

You can hear the full podcast or if you’d rather read than listen, we captured the transcript from the conversation below.

Introducing Ted Norwood from IBI, Inc.

I’m really pleased to have a subject matter expert with us on the show today. My guest is Ted Norwood. He’s the general counsel and director of representation at Integrated Benefits, Inc. We are very pleased that IBI, which is their acronym, is a member of The Council for Disability Awareness and supports us. So we thank them for that. Welcome Ted. We’re so pleased to have you here with us today.

Ted Norwood: [00:02:21] Thanks Carol. It is a pleasure to be here. I’m really excited to let people know about how all this works because it is a frequently misunderstood system.

Carol Harnett: [00:02:36] If you don’t mind, I’m going to kick you off in the most basic of all things, which is: we assume that everybody understands what SSDI is, and with them we use the acronym all the time, and A, nobody even understands what the acronym means and B, really doesn’t understand what the coverage is. Can you go right to the basics and ground our employer listeners in that?

What is SSDI?

Ted Norwood: [00:03:08] Sure. SSDI– commonly just referred to as Social Security Disability– is a disability program through the federal government’s social security system that you pay into from your paycheck through your taxes.

It covers anyone that pays in. It doesn’t cover lots of federal employees, people that don’t pay those taxes. For instance, lots of teachers aren’t covered– they’re covered by different things. Railroad workers are covered by a separate policy, but they must pay in, and that differentiates it from the other social security disability program that people often combine with it or get confused by, which is SSI, or supplemental security income. This is a disability program for people that don’t have the work history or haven’t paid in. It’s a much smaller benefit.

SSDI is a better benefit; it’s a pretty strong benefit with an average payout of $1,600 a month. After being disabled for twenty-nine months, you become Medicare-eligible, and it will last until Social Security finds that you are no longer disabled or until you hit full retirement age. And they do reviews every two to five years of your case to see if you’re still disabled.

Although social security policy can bore some people– the big takeaway is that Social Security Disability is designed to work with long term disability to provide the best policies. A combination is the most important thing.

Carol Harnett: [00:05:08] That’s really well said and it’s a great basic summary. One thing I’d like to ask is– and I think some of our listeners are not familiar with — is I’ve often heard that you have to pay quote-unquote a certain amount of quarters into Social Security before you would become eligible for SSDI. What does that mean when people say that?

What is Elligibility for SSDI?

Ted Norwood: [00:05:35] It means you have to work a certain amount. You know, if you just go out and get a job and then claim disability right away, you haven’t really paid in enough to qualify. The rule is about 40 quarters, which is about 10 years of work. If you’re younger than that, there are formulas for adjusting that. When people are applying for Social Security disability, they usually have a significant amount of work history, and if they don’t have the work history, then they have to apply for the SSI. So most of your applicants are people that have a strong work record, but they’re not able to do the job that they’ve been doing anymore.

Carol Harnett: [00:06:32] Those are good points. When you say a strong work record, is that a nice way of saying that these are people who are older, who have worked for a period of time? If so, do you happen to know what the average age might be for a typical applicant?

Applicant Profile

Ted Norwood: [00:06:51] Uh-oh, I think I’m busted here because I don’t know what the average age of the typical applicant would be, but I would say it would skew older. Young people are covered. If you’re working at a salary job, odds are you’re probably covered if you’re going through, or if you have a steady job, or even steady seasonal work, but the average applicant is older. That’s probably mostly a factor of the wear and tear that goes on to your body after years of working. You know in your 20s and 30s you’re going to be stronger and more flexible, with better recovery and stuff, and less likely to have those over time injuries. So I would say that average applicant is probably around 50 if I had to guess.

Carol Harnett: [00:07:52] Okay, that seems fair. When I think about what I know about long term disability claims, we do know when people are younger that is often when we’ll see more accident related reasons for being out of work, while illness is usually the major reason why people are out on long term disability. Accidents will play a larger role the younger you are and then the older you are obviously illness tends to play the biggest role.

Now you just made a point that I think is really important for employers to understand, which is a big differentiator between long term disability insurance and SSDI, and that is this idea of what type of work are you disabled from? Are you disabled from your ability to do your own occupation, or your own job, or are you disabled from being able to do any kind of work? And can you shed some light for listeners on the requirements around your inability to work when you apply for SSDI?

Clarify the Inability to Work

Ted Norwood: [00:09:05] Absolutely. This is a critical difference between the private disability and this public disability. When people think that they’re disabled, and they can’t work as an engineer anymore, or they can’t work in their factory anymore, or as a teacher, they think: well, “I’m disabled.” If you have a private policy, then that’ll mean you will be disabled, probably for a couple of years at least.

Social Security is different. Social Security I call a “catastrophic” disability policy– that’s an unofficial term– but it only covers you if you’re disabled from any work. The language of the Act says from being able to perform jobs that exist in significant numbers. Once upon a time they liberally interpreted that and they’d cut you some slack, but over the last 15 or more years, they’ve really cracked down, and when they say significant numbers, I mean almost any job.

So, if you are, let’s say you’re 49 and and you had a really good job at a Ford plant, and you have some back problems. Maybe you had some cancer, something going on, something severe, you no longer can do that job. But if Social Security thinks that you can be a ticket taker at the movie theater on a full-time basis– which I don’t even know what movie theaters employ those people– they’re going to deny your case.  They use a lot of outdated information, which isn’t necessarily their fault, but it’s difficult and they’re very tough.

An important thing to understand is that if you’re relying on Social Security, you have to be really, really limited.  If you can’t do hard physical work, but you could do a sit-down job, there’s a really good chance you won’t get your Social Security. The terrible thing about that is that if you’re used to doing hard work, and then you want to transition to a sit-down job, it might be really hard, especially if you’re older, to transition to that. So you end up in this gap where Social Security says, “you’re not disabled, you’re capable of performing some jobs. You’re just unemployed.”  Meanwhile, unemployment says yeah, you’re unemployed; but you know, our insurance only lasts for so long, and it’s really tough for people to find the resources to be able to make those transitions and get those jobs.

Job Function Differentiation

Carol Harnett: [00:12:00] That’s a really fair point. In long term disability insurance– provided, both by an employer and bought individually by the consumer, does somebody quote-unquote meet the definition of disability? We don’t expect someone who’s done a job like a physician, for example, or a senior executive in a company, to do a job that goes outside of their knowledge, skills, and abilities. We don’t expect them to be that ticket taker at a movie theater. It’s a much closer alliance to work, that either is exactly like what they used to do, or similar to what they used to do, using transferable skills.

Sometimes, a surgeon may no longer be able to do surgery because she has a hand tremor, but she could do medical reviews for an insurance company. She could also see patients and screen them for whether they’re a candidate for surgery. That is big difference between a private disability insurance policy and a public one like SSDI, is that correct?

Accommodations for Work: Private vs. SSDI

Ted Norwood: [00:13:28] Yes, and I would add that lots of private policies that I’ve seen factor in income. For instance, you are a successful surgeon who develops a hand tremor. Although you might make several hundred thousand dollars a year, you will go to an insurance review physician position, and you are probably not going to come close to that salary.

The policies on the private side will lots of times accommodate that. They might say: “Hey, this is an offset– because you’re capable of doing this or we expect you to try to find this,” but they make up the difference. Social Security says that if you have a really solid job making $60,000 a year, but they think that you might still be able to do this job, which is minimum wage,  they expect you to go do it.

Carol Harnett: [00:14:34] Yes, I think that’s that is probably not on their radar.

Ted Norwood: [00:14:42] No. When I’ve talked to employers and when I talk to claimants and people in general, they really don’t know anything about it, I always tell them that that’s fine. Hopefully you don’t have to really ever know about the details of Social Security Disability. You find if you have to go through it, that’s really unfortunate, but once you become an employer, and you’re making decisions about whether or not to offer policies to your employees, it’s then it becomes important to understand what they’re really facing. If you think that someone will, they can just get on Social Security, you know, if they can’t work here– that’s not as easy as it may sound. Unfortunately. I wish it were.

Carol Harnett: [00:15:36] You mentioned an average benefit, but because we’re talking about the monetary side of Social Security now, can you help listeners understand the range of payments? And can you also clarify, is there a cap or a maximum that somebody might receive on Social Security Disability?


Ted Norwood: [00:16:02] Well sure. Once you go on Social Security Disability, your payment depends on your work history and your payment history. When I say your work history, that means what you’ve paid in. You don’t pay into Social Security if you make over a certain salary or income per year; you only pay up to a cap. The max benefit, what does it end up being? I think I want to say it’s about three thousand dollars, and it can go up if you have dependents because it gives you extra benefits if you have minor dependents during the same time you’re out. But you know, you can’t replace a large salary just on Social Security disability.

Carol Harnett: [00:17:00] And if there were a minimum payment?

Ted Norwood: [00:17:05] Well, the minimum payment would be about eight hundred dollars. The SSI benefit, which varies– and that’s for people that don’t have any SSDI coverage at all– usually is somewhere between five and eight hundred depending on all the factors that go into that. So SSDI is always going to be better than that.

And I say “always.” You know, whenever as a lawyer I say “always” that really just means “almost always.” Sure enough, some lawyer’s listening saying “no, that’s not true; here is the example where it’s different.” And yes, but speaking generally, for someone to take away,I would say, $800, but that’s very low.

Carol Harnett: [00:17:56] It’s not a lot of money; this is a monthly payment, just to clarify for our listeners.

Ted Norwood: [00:18:03] Yes. It’s a monthly payment.

Attorney Required

One of the things I should mention — talking about lawyers– another difference between private insurance and Social Security is you almost need to have a lawyer to get on Social Security [Disability]. If you have a terminal illness, you probably don’t, but you’re taking a risk doing it yourself. To use the Social Security’s Disability program, it’s strongly encouraged that you use an attorney– even by Social Security.

Private insurance, you don’t need an attorney to get on. Sometimes there are disputes between insurers and claimants, and you might need a specific type of attorney when that comes up. But for the most part, you don’t get an attorney to activate your private disability policy; that’s a big advantage, too.

Carol Harnett: [00:19:04] Yes. You’re leading right into the next question, which is: What is the process? How do you apply and when do you apply for Social Security disability? How does the process work and how quickly might you receive a decision?

The Application Process

Ted Norwood: [00:19:22] Social Security only covers disabilities that arise from a medically identified problem that will last for 12 months or more.

If you break both your legs, but you’re probably going to be better in six to eight months, then you won’t qualify. If there are complications with that and it ends up taking 12 months before you can go back to work, then you could qualify. However, Social Security’s going to look at that very suspiciously.

Once you are out, or once you know you’re probably going to be out for a year and facing a kind of a grim diagnosis — there’s a lot of really grim stuff we deal with in disability, obviously– then you should apply. Once you’re sure you’re not going to be able to do this for a long time, then you want to apply.

You can file online. Everyone should be online creating their My SSA Account, even if they’re not about to apply.  It’s good that Social Security’s trying to expand their online presence and getting that set up helps them out.  You can go online and apply. You can also go up to your district office; the same place where you get your Social Security card, and file an application. Social Security will take it, make sure you have coverage for SSDI. Then, they send it out to the state agency, which is a federally-funded state agency.


They will evaluate you. The first step takes somewhere between two and six months, and this depends on how quickly they get your doctor’s records, how backed up they are, how difficult your case is, and if they have to send you to an exam.

After the initial evaluation, there’s about a 35% chance of being awarded– which means a 65% chance of being denied. The next step is to then file a reconsideration, which is just a review by that same state agency. There are certain regions in the country currently where you don’t have to file for reconsideration, but Social Security just changed that and they’re moving to everyone going back to reconsideration.

Annual Chart for SSDI’s Overall Award/Denials at Each Level


Reconsideration. It’s the exact same process again, but they have someone else at the agency look at it. Obviously since it’s the same agency, they’re not going to have the same award rate of their own denial, so it’s about a 15% chance they’ll pay that case. So an 85% chance you’re going to be denied.

Now you are 6 to 12 months into your application and you still don’t have benefits. Now you request a hearing with an administrative law judge. Your case gets back to the federal Social Security program. They’ll assign your case to a hearing office, which is different than your district office, and there’s a long wait for that. It’s somewhere between 12 and 20 months. Depending on where you are, there are a few offices that are under 12 months, and there are some offices that are getting close to 30 months of waiting time.

Building a Case

Now you wait and you build your case. Hopefully you keep going to the doctor. You don’t get any benefits, or any insurance, and you wait until you get in front of a judge. You explain your case to the judge, and you’ll give him all of you medical records that you can get a hold of, and he’ll make a decision. Hopefully you have a good attorney.

At that point you have about a 45 percent chance to be awarded. If you’re denied by an ALJ you do have an appeal within Social Security to their Appeals Council. It’s another year usually and they don’t send many cases back because they’re really trying to not add to that backlog they already have and they basically dare you to take your case to Federal Court.

Appeals in Federal Court

If you talk to your attorney and they want to take your case to Federal Court, you can do that. The courts love this because courts are ALWAYS looking to have lots of cases– that’s a lawyer joke!  Social Security floods the courts with these cases. At that point, your case is no longer actually in the agency, it’s in federal court, and you’re actually suing Social Security and saying, “hey, you guys didn’t follow your own rules, and you wrongfully denied my disability.”

Click to get average wait time for a hearing in your area.

The odss are 50/50 in the federal courts, but it’s important to remember that most attorneys will only take very strong cases to federal court. It’s a really long, difficult process and you can’t just take your chances up there. You’ve got to have a really good case now. I will say this: most attorneys only take really good cases to begin with.

One thing that’s important is there’s a myth of disability fraud, It doesn’t really exist, because you have to work so long to get coverage to even qualify. If you haven’t worked enough, your scam isn’t going to work, because you just can’t get benefits. You get awarded, only after a long, difficult process. That is, if you work long enough to qualify. You go two years without income, and then all you get is $1,800 a month, which is certainly less than you were making before. So it’s a really, really bad scam. But people continue to think there’s a lot of fraud, when most of the rot is actually on the inside.

Carol Harnett: [00:26:00] I would ask a clarifying question: you’ve mentioned having an attorney help you with your case. Is there a charge for people when they have an attorney help?

Associated Attorney Fees

Ted Norwood: [00:26:11] Social Security has really set some strict rules on on fees, and your fee always has to be approved by Social Security. You cannot charge a fee up front. All fees are– if the claimant is paying it– your fee has to be contingent, and the max you can get is 25 percent. If you use Social Security’s fee agreement, the cap is $6,000. An attorney can charge their fees and expenses to a claimant. Most do, but some don’t though, and some attorneys will ask for money up front to hold to cover expenses and stuff, but most don’t. It’s pretty much free for you to get the attorney to do their work, but they’ll only take your case if they think they can win. If they don’t think you have a case then it’s not a sound business decision for them.

Carol Harnett: [00:27:08] Great. Well, I can’t believe how fast this time is going. We have a little less than three minutes.

Ted Norwood: [00:27:14] I saw that.

Carol Harnett: [00:27:16] I had to look at my list of questions and I think the best one to choose at this point is: in your experience what final closing words of advice would you give to employers when you think about disability in general and Social Security disability insurance on top of that?

Final Word to Employers

Ted Norwood: [00:27:35] Group private disability insurance is a pretty affordable benefit, and it is a lifesaver for your employees if they go out of work. Fighting with Social Security is so hard. Everyone we represent that has LTD says, “that $10 a month was the best decision I ever made.” They get their benefits quicker. They still have to go through the Social Security process, because there’s an offset to that LTD, but they have money, they’re getting something. They’re not scrambling.

Social Security– if you have to wait for Social Security, it doesn’t just decimate your spirit and your income; it decimates your insurance coverage; your ability to pay for the doctors, who eventually stop seeing you. It ruins marriages and relationships and strains your family because people lose their houses. And it is long and difficult and tragic. It’s so affordable and such a good benefit to give to your employees. When they go out sick, or they get cancer, they wear down– and they’re better-taken care of. I believe in it,  and it was not even on my radar when I came out of law school; I hope employers at least look into it.

Carol Harnett: [00:29:08] Well said. I’ve known a gentleman by the name of Dick Mucci who currently runs the group insurance operation at Lincoln Financial. He has worked in and around individual disability and group disability, the private industry, his whole career. He has always said he couldn’t imagine why employers wouldn’t provide long-term disability coverage. It’s difficult for an employer to lay someone off after three or six months and leave them without some form of an income to help them get through long term disability.

So with that, Ted, I’m going to say, thank you so much for the information you shared. It’s been a privilege to have you on this show.

Ted Norwood: [00:29:54] Thanks for having me; I appreciate it. Good luck, everyone.

Carol Harnett: [00:29:57] Thank you, everyone. Bye-bye.

Click below for more articles from Ted Norwood about Social Security Disability Insurance.

How Employer-Provided Disability Insurance Can Help When SSDI Falls Short

Important details about employer paid insurance to help fill the gap when social security income is delayed or falls short

Half of American workers have some sort of disability coverage: either employer-paid long term disability insurance, one they pay for through an agent, and/ or one funded by the federal government called Social Security Disability Insurance (or SSDI). Below are facts regarding SSDI and LTD. It is important for employers to know that SSDI is designed to work with long term disability to provide the best policies for employees.

The following content has been provided to the CDA by Ted Norwood, the General Counsel and Director of Representation, at Integrated Benefits, Inc.

The Relationship Between SSDI and Private Group Insurance

  • 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. This could be 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.
  • As companies become leaner, employees become even more vital to the organization’s success and more difficult and expensive to replace. In the long term, losing employees is difficult. Certainly, 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.  Therefore, private disability insurance benefits in the workplace is an important way for employers to care for employee financial health.
  • About half of workers in the private sector do not have income-replacement benefits. If they’re unable to work for an extended period of time, they must rely on the Social Security Administration’s Disability Income (SSDI) program – if they qualify – to partially replace their salaries.

Facts About SSDI

  • You must have worked to qualify and made Social Security contributions. (Teachers often do not make Social Security contributions.)
  • You must qualify medically and vocationally.
  • SSA does not consider income in its evaluation of disability.
  • The SSA only evaluates whether an individual could perform the function of a job that exists.
  • SSDI Application Process – The wait is long (15 months or more). It can be challenging to get approved, and it lacks good recovery resources.

Group Long Term Disability Policies Protect Employees from the Disadvantages of SSDI

  • These LTD policies usually start with an own-occupation period of two years. As a result, the employee receive benefits immediately on completion of the elimination period (3 or 6 months).
  • Group LTD policies usually pay higher benefits than SSDI does. They typically treat SSDI benefits as an “offset” which means the additional coverage is available at an affordable price.
  • Group insurers typically require claimants to apply for SSDI benefits, but most of them will also provide a lawyer to assist with the applications.
  • Group LTD policies have better opportunities to provide vocational rehabilitation and return to work services.

For more from Ted Norwood on SSDI check out the following articles:

How Supplemental Benefits Complement an Employer’s Benefits Package

How Supplemental Benefits Work and How Employers Can Maximize Them

Carol Harnett [00:04.40]: Hi everyone, this is Carol Harnett. I am the president for the Council for Disability Awareness. The name of our show is the Financial Health and Income Network.

The Council for Disability Awareness is doing a campaign to help employers plan for annual enrollment for employees in 2019. The purpose is to give them material to consider, and help direct, motivate and shape their planning this year. Today’s topic is one that’s become particularly important over the last decade or more. The topic is something that’s called supplemental benefits.

Listen to the full podcast here, or if you’d rather read than listen, we captured the transcript from the conversation below.

I’m really pleased today to introduce our guest, Phil Bruen. He is the vice president for group life and disability products at MetLife. MetLife is a founding sponsor of the Council for Disability Awareness. We are so pleased and thankful for their support and particularly pleased to have Phil here today. Welcome Phil.

Phil Bruen [01:05.36]:  Hello Carol. Hello everyone. I’m glad to be here.

Carol Harnett [01:09.85]: Great! Well, without wasting any time, let’s get into this topic of supplemental benefits. Let’s just start with something really basic for people who might not be clear.  What are supplemental benefits?

Phil Bruen [01:25]: Thanks, Carol. Actually, as I think about it, we do hear the term supplemental benefits everywhere. I’d like to introduce the concept of thinking of these as complementary benefits to a core benefit program. When we think about supplemental, it’s something on top of, or an additive to supplement the benefits an individual has. A better way to think about it instead is that they’re highly complementary to a core benefit plan.

We also think about these in three categories which could include core benefits. One would be those benefits that help individuals in a broad sense around health. The second would be those benefits that help an individual with life that could be life insurance. Health protection, life protection and financial protection.

Within those categories, there are different types of benefits that can be offered.  

When you think about financial protection and a voluntary benefit that’s very popular would be legal services. That could help individuals with estate planning and wills, or something like a speeding ticket.  It’s as simple as that. Accesss to a high-quality network of attorneys, nationally certified. It’s become a very popular benefit. Worksite property and casualty is another one that you could consider as financial protection.

Certainly, a healthcare plan is foundational. I’d suggest that disability is another foundational benefit because it protects an individual’s income. It is an employer-paid benefit and dental usually falls in that core benefit category. But it can be offered on a voluntary basis.

The way I think about it, first as a suite of benefits to offer an employer to help meet their needs that are complementary to an employer-paid program or a benefit plan. That’s how I would suggest we think about supplemental benefits in general.

Carol Harnett [03:56.88]: I like that Phil.. You’re the first time I’ve heard that called it complementary. It doesn’t mean others haven’t it’s just the first time I’ve heard it.  If I’m connecting this correctly, supplemental benefits are interchanged with voluntary benefits, and I like this idea of a suite of benefits that complement the core. I think that’s really important. Since you’ve sort of foreshadowed this idea of core benefits and complementary benefits, why should an employer consider adding them to their employee benefits package?

Phil Bruen [04:39.89]: Great question. I think the first and foremost reason is really what’s happening with an employer’s health care plan.

If I think of that category of health protection. The health care plan is foundational, but with rise of employer-offered medical with high deductible, employees or dependents, could be left with significant out-of-pocket costs they simply can’t afford. As an example, in last year’s MetLife Employee Benefit Trend Study, more than half of U.S. workers live paycheck-to-paycheck. The Federal Reserve reported that 40% of Americans could not afford an unexpected $400 cost. If we have a medical episode, and that bill is likely more than $400, having a benefit like critical illness, accident or hospital indemnity, can help fill those gaps in for those unexpected moments that tie really to health and health protection.

Carol Harnett [05:52.94]: Thank you. I think that’s a great example. If you don’t mind, I’ll ask you to continue on that. This is some of the more popular complementary benefits that I’ve heard spoken of, particularly leading with the critical illness benefit. Can you help people understand what those products are actually designed to do and what they cover.?

Phil Bruen [06:20.98]: Absolutely. What’s great about these benefits is that they tend to fit four different employee populations. If you think of someone who has a lot of children, or are in a younger population, versus someone who might be a little bit more mature in the organization, they may have different needs. They also may have different budgets related to the health care plan and what might be unexpected. We found that accident, critical illness and hospital indemnity have some of the lowest understanding scores. In our Employee Benefit Trend Study, just a little over a third of employees said they understood how accident insurance works. Only over a quarter,  29%, said they understood how critical illness insurance works. For hospital indemnity only 26% understand how hospital indemnity insurance program works. It’s not just offering the benefits, but educating employees on where these might work, how they might fit, and how they complement their health care plan. This is compared to dental where two thirds of employees say they understand how their dental insurance works, and vision where 62% say they understand how it works. It is understandable.

I’ll spend a little bit of time to describe some of these. Critical illness – the benefit is fairly descriptive. That’s a benefit that would be paid in a lump sum.  Depending if the employee covers both themselves or their spouse, a benefit would be paid in a lump sum for serious, or full benefit, like cancer.

There are different definitions of cancer as that’s a fairly common condition. Partial benefits for cancer would be a partial payment, not a full payment, for more limited cancer condition, coronary bypass graft, or major organ failure. These are examples of the categories that would be payable in a lump sum.  It is intended for something that is very severe. Eighty-seven perecent of claim activity are in those listed conditions that I just outlined. The average benefit payment is $15,000.

What would be more of a severe condition? An individual with cancer, or someone with a major artery condition, like an organ failure, is going to have a lot of costs that aren’t covered under the plan. They may also have transportation costs, and other related costs. That is what that benefit is really structured and designed to do – help individuals in terms of a complementary protection.

Carol Harnett [09:24.23]:  I sometimes speculate that part of the reason why employees get confused about critical illness, because I agree with you, I believe it’s an appropriately named benefit particularly the way you’ve just described it. I recall that when Walgreens went to a high-deductible health plan for benefit-eligible employees, they went to a five thousand dollar deductible. They phrased this to mitigate the five thousand dollar deductible, so they paid for a five thousand dollar critical illness benefit.  As a result, it appeared that their employees thought that benefit was meant to offset the deductible. What you’re saying is that’s only true if it meets one of these critical situations.

Phil Bruen [10:15.28]: That’s correct. Another way I think about this too is we have these conversations you can even tie it to disability. If you think about a disability benefit certainly that’s a baseline level of protection or a layer of protection. You can see it as something that might complement a disability policy because if anyone is impacted by these conditions as I’ve described, there’s over 30 conditions that are covered. I just highlighted the top conditions.

It essentially is intended to cover those severe conditions where the individual would have additional expenses associated with those conditions, where their disability protection isn’t enough. It’s probably a consolation, or a combination of both additional costs related to that condition. There is impact where individuals would have higher deductibles and co-pays and maximum out-of-pocket benefits where these conditions will likely trigger that maximum. That’s a way to think about that and a common way to position it is with this concept of short-term disability. Then it’s an additional benefit in those situations where a short-term disability event is more severe.

Carol Harnett [11:42.88]: Thank you. I think that’s really helpful. And I interrupted you I know you were going to I think about accident next.

Phil Bruen [11:50.72]: Accident has a very different premium structure. It’s usually more affordable, but it does help fill the gap for those unexpected events that might happen. I can give you some examples of this in terms of where this comes up. It’s would apply to emergency room visits or medical testing, and follow-up for physician, for certain fractures, medical appliances, therapy services outpatient surgery, lacerations, ambulance, and some other critical urgent care events. About 57% of the accident claims are covered with that list of examples with average benefit payout of 1,700. That’s an example where it can help fill the gap. It’s an affordable level of coverage typically how it’s outlined. It’s a scheduled payment that can address part of a copay or an out-of-pocket deductible, to help supplement that in these circumstances.

As you can imagine folks who have children, or who have kids playing in sports, where they may have torn cartilage, laceration or eye injury or something of that nature. They can see and understand where this might be the kind of protection that could help them. That’s the accident benefit.

Again, in the same way, you get a sense of hospital indemnity. It pays a benefit, usually around hospitalization, both for sickness, for admission or confinement, or accident confinement or an ICU confinement benefit. It’s a bit more of a severe condition typically, so it’s a broad coverage.

The condition is really around hospital confinement of some form. That’s a situation where deductibles are going to be higher in terms of the actual co-pays and out-of-pocket expense. It’s a way to help cover some of that cost. Eighty percent of the benefits are usually paid for those three confinement scenarios, and the average benefit payment is $1,500. The price point there would be a little bit different, not quite as much as critical Illness.  It’s a good example where individuals look at their own personal circumstances. They look at their budget for their own family situation, and find one of these that may work better for them than another.

I have just a little bit on dental. I highlight this because sometimes dental is more often a core benefit. Dental is quite often fairly heavily employee-paid, either by the share of premium that the employee pays, or the co-pays. We are seeing some movement towards a greater increase in the offering of a voluntary dental plan.

The reality is that dental plan designs have remained unchanged for a long time. They can be outdated. I think it’s helpful to lift the hood to make sure the plan design elements meet employee needs. We would offer a plan design review to make sure that these benefits as they’re described provide the most value and are modernized to meet current oral health care needs. When there’s a voluntary plan, it’s helpful in offering a dental plan to offer two options. One is a richer plan, and one that may be a lower price point for individuals who have less oral health care needs and may want a less costly plan that they can afford.

It’s going to be fairly logical and important that it’s communicated along with the enrollment strategies. This is to help employees understand the value of a dental plan. Receiving regular dental care is important not only to oral health, but its impact on overall health and well-being.

Carol Harnett [16:37.18]: Well said, and I’m glad to hear that you will review plan design with employers when they’re looking at dental, because I have seen in another part of my life where I write about employee benefits that some employers still have a plan design that reflects the origin of dental insurance, which is the 1960s and have caps of a thousand dollars, which certainly didn’t don’t scale as well to 2019. So I think that’s really important.  

Phil Bruen [17:12.89]: With dental, It’s really all all about those details. There’s no question.

Carol Harnett [17:15.93]: Absolutely. It’s funny Walgreens has been very public in some ways about their utilization. They found with dental, and I’m curious about whether you see this, that while it’s a very popular benefit, in a two-year period, 70% of their employees never used the dental benefit. Are you seeing similar trends or do you see higher utilization than that?

Phil Bruen [17:44.59]: Actually we do see higher utilization.  The more individuals use their dental plan, the more it helps demonstrate the value of the benefit itself, from an employer perspective. It’s an area we look closely at. When we plan into the future we help support the regular habit of going to the dentist – preventive care. Most plans pay all, or virtually all, the costs for preventive dental treatment. Doing that can avoid other costs over time, that not only impacts oral health, but overall physical health and well-being.

Carol Harnett [18:41.23]: I remember the early research that came out with the connection between heart disease and dental disease. I think that’s something people often miss. I’m looking at the clock and we have just a little more than 11 minutes left. Is there another benefit you’d like to highlight for us, or would you like to move on to discussing another element?

Phil Bruen [19:06.77]: I think that was good to just get a sense of those coverages. Feel free to fire away if you would.

Carol Harnett [19:17.65]: This has been great. I am sure for employers who are listening, it both can be overwhelming, but also confirming the way you are explaining it. It helps people start to figure out how do you lay out lack a blueprint for what you might want to do with benefits. Since supplemental benefits, or complementary benefits, are often employee-paid fully, and sometimes partially, how can an employer help their employees, their staff, learn more about these complementary and supplemental benefits and consider enrolling in them?

Phil Bruen [19:58.83]: There’s quite a bit. I think that’s a great question.The first aspect of that is it’s never too soon to start planning for the enrollment season – the annual open enrollment season. Thinking about what an employer wants to accomplish in that annual enrollment season, and thinking about that on a multi-year strategy, as something over time. What are the goals to accomplish?

I think that’s where it all starts. We learned this from the employee benefit trend study – employees are confused and they are stressed by the enrollment process. Only half are confident that they made the right decisions. Nearly half are stressed with the process, and over a third say they’re confused. To the degree that an employer can work with their broker partners, and others, to help map out a comprehensive enrollment and communication strategy, I think that’s where it starts. It potentially starts with an assessment or a survey. That is a good place to start. Determine gaps, in terms of understanding benefits that are available, and build a communication strategy that’s multi-pronged with multiple touch points. Employee demographics, their desires, dreams, and location can come into play.

A good place to start is the term, a “heat map,” or mapping a way to look at where those gaps would be, and then building a plan to close those gaps. From there, step back. Then go back to that broader comprehensive benefit strategy, key messages that are the objective to convey there. Because those messages can be very complementary to these complementary benefits.

If the employer is changing their health care plan, they can complement that with some additional communication about the availability of critical illness, accident, hospital indemnity. It’s a very natural communication at that point in time. Put in the context of what else is happening, there are communication firms that are very skilled at helping tie those programs together. It may be that they’re also introducing a wellness program, very closely associated with some of these complementary benefits.

We’re hearing a lot about financial wellness, and financial wellness plans. Depending on how the employer is approaching that, we hear about student loan debt, and other needs that employees have, very specific to employers. If there are solutions that can help address some of that, they can also be a complementary product or benefit message tied to something like legal solutions, financial wellness solutions, as well as, auto and home purchase at the worksite.

Thinking about financial wellness in that context can help as well. I think about the planning process and reflecting the fact that employees aren’t that confident. Anything the employer can do to help give them greater confidence through effective multipoint communication strategies is going to help employees see the value in their overall benefit package as they approach annual enrollment season. Right now is actually a good time to start.

Carol Harnett [24:06.26]: Yes, absolutely. That’s a great summary because I know some people are for, and some people are against, selling products like home and auto in the workplace. If you think about it, as human beings, we think about our life as a whole. We don’t think about benefits necessarily that we get at work, and benefits that we get at home. If we can tie it all together, it can ease somebody when they’re making an overall strategy for how to protect their lives and insure their lives.  

I like how you explained that, and I have a question. I know some employers who will pay part of the premium for complimentary benefit. Is that common or is it more common for the employee to pay all of the premium?

Phil Bruen [25:502.38]: I’d say for most of these benefits it’s more common that the employee would pay for most of that benefit, but there can be times, your Walgreens example is one, it’s usually tied to some change in the healthcare plan, or some change of that nature. Although there may have been some employers with the recent tax cut who had considered enhancing their benefit package in some fashion, it’s you that’s probably more of the exception. It’s usually tied to some other action that the employer is taking where this can help reinforce the message that employers always want to offer a competitive benefit package.

It’s a tight labor market, right. A valued benefit package, comprehensive in nature, is an important consideration for employees, both staying at an employer and and also joining an employer. That may be part of it too. It could be tied to an employer within very tight labor market. They may consider enhancing their benefits to pay for a portion of the cost for some of these benefits as well.

Learn more about what are the most important benefits an employer can offer both current and prospective employees. See our blog with important facts about supplemental insurance benefits.

Carol Harnett [26:25.63]: Thank you. That’s great insight. So I’m going to give you the final word. We have about three minutes left. Are there any parting tips for employers that they should consider when adding supplemental or complementary benefits to their overall benefits package?

Phil Bruen [26:48.30]: Well, I think I covered quite a few of them already. It is helpful to think about it over a multi-year period, and not to approach or emphasize every benefit every year. It is helpful to focus on a theme for a particular year, or a campaign theme to highlight aspects of their benefits. I like the categories health protection, life protection, and then overall financial wellness or financial protection. There may be different themes in a particular year, and they can think about it over a multi-year benefit,  It creates a better approach, strategically, around a benefit strategy – as opposed to just tactically coming at it each year in terms of what they want to do. It may be helpful to step back a little bit about what to emphasize. Use a heat map, and look at what the biggest gaps are, and what an employer wants to accomplish in that particular year.

Carol Harnett [28:05.59]: I love that. What a great way to summarize. I am looking at my own notes and I had highlighted the multi-year strategy. For all the years that I’ve talked with employers about their plans, very often it’s a singular strategy every year. The idea of creating this heat map, which is another great phrase, and deciding what you’re going to focus on each year, is not only helpful to you as an employer and developing an overall compensation benefit strategy, but I think more helpful for your employees.

Phil Bruen [28:44.65]: Don’t get me wrong, I’m not talking about 10 years. I’m suggesting you have a three-year strategy.

Carol Harnett [28:55.24]: In my head, I thought three. I think three years is a great period of time particularly the way you laid it out. I like the theme of health protection, a theme of life protection, and a final theme on financial protection.

I’m going to going to close and thank you so much Phil. It’s been great to have you on the show again. You’ve become such a great resource, for not only the Council for Disability Awareness, but also for our listening audience. So thank you so much for your time and your knowledge and your expertise. I want to say thank you as well to our listeners.

Phil Bruen [29:46.82]: Thanks Carol. Bye.

Carol Harnett [29:46.24]: We wish you the best for the rest of the day and the week, and thanks to everyone else. Good-bye.

Beyond Medical: How Supplemental Benefits Help Attract and Retain Talent

How Supplemental Benefits Can Help Attract and Retain Talent

In an increasingly competitive job market, employee benefits elevate companies in the minds of their current employees, as well as prospective workers. Below are some of the most important and sought after benefits for employees. Content here was provided to the Council for Disability Awareness blog by benefits expert Phil Bruen, VP, Group Life and Disability Products at MetLife.

1. Disability Insurance and Income Replacement
Just one in four of today’s 20 year-olds will become disabled 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 these complement 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. Nearly half of employees 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. Additional benefits, like lifetime income solutions, life insurance products, financial planning, and education services work to strengthen overall benefit plans. They also give workers additional ways to prepare for retirement.

1 Disability Statistics, The Council for Disability Awareness accessed
September 2018:

2 Chances of a Disability, Ibid, The Council for Disability Awareness 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.

Employee Benefits 101 for Freelancers and Entrepreneurs

Carol Harnett: Hello and welcome to the Financial Health and Income Network radio program. My name is Carol Harnett, and I am the president of the Council for Disability Awareness, a non-profit organization dedicated to helping working Americans understand their employee benefits and insurance options, as well as ways to make certain they still have an income stream if they’re temporarily out of work due to an injury or illness.

Today on our podcast, I’m pleased to be joined by Jennifer Fitzgerald and Mary Beth Storjohann. Jennifer is the CEO and co-founder of Policygenius, which is a company with a simple mission: to get people the insurance coverage they need and make them feel good about it, which I just love.

And [our other guest,] Mary Beth Storjohann, is the founder of Workable Wealth, which is a business specializing in financial planning for Gen Y or the Millennials, depending on what you like to call them.

She works as a writer, speaker, and a financial coach with individuals and couples in their 20s and 30s across the country to help them make educated decisions with their money. Mary Beth is also a paid spokesperson for the Council for Disability Awareness. We’re really pleased to be working with her and particularly in helping us reach out to the Gen Y generation.

So all of our companies really are based on the concept of providing unbiased advice to consumers about how to navigate the insurance and the benefits process. All three of us interestingly enough– because our topic today is specifically on freelancers and entrepreneurs and how they might want to start thinking about their benefits– fall into one or both of those categories, so we’ll be able to provide some personal perspective.

You can hear the full podcast or if you’d rather read than listen, we captured the transcript from the conversation below.

Welcome to the show Jennifer and Mary Beth.

Jennifer Fitzgerald: [00:02:23] Thanks so much for having us.

Mary Beth Storjohann: [00:02:25] Thank you Carol.

Carol Harnett: [00:02:27] You’re very welcome. Let’s get started as I have a question that’s for both of you, but I’m going to put it to Mary Beth first. When you think about– particularly as being somebody who’s in this space, Mary Beth, how should entrepreneurs and freelancers think about protecting their health, their income, and their savings?

Mary Beth Storjohann: [00:02:51] I think the first thing as a freelancer/ entrepreneur, you have to understand that there is no big brother and no employer looking out for you; you alone are responsible for taking care of and educating yourself in those areas in terms of risk protection – that’s one of the biggest things I see.

It’s actually really an overlooked topic. People think, “oh, no.” When I mention it to a lot of my clients, it’s like a deer in headlights, “I hadn’t thought about that.” So I think the biggest thing is recognizing that you are responsible for taking action in these areas.

And then from there you really need to step back and take a look at your lifestyle and your family. What would happen to your family’s lifestyle, to your income, in the case of a sickness or death or injury? Consider what your current goals are for yourself or your current situation and for the future.

What if something happened to you? Where would those goals end up? If you want to send your kid to college, would you still be able to do that? If you wanted to buy that new home? Those are all things to think about when it comes to protecting your health and income and savings. It is basically just figuring out if it is worth the risk of not having the protection or is this something that you should take action to buy some products that are out there to protect yourself.

Carol Harnett: [00:04:02] Great. Now, Jennifer, I’m going to follow-up the same question to you. You’re in a unique space in that you actually have employees, and we’ve never talked about this, but are you the type of employer who provides your employees with benefits or do you encourage them to go out on their own to do this?

Jennifer Fitzgerald: [00:04:26] It’s a great question, Carol. Given the mission of our company, we believe in providing benefits to our employees, but that might not be the case for other entrepreneurs, particularly small business owners when you have a smaller workforce. My advice to other small business owners and entrepreneurs is to consider a couple of things:

  • One is your budget and what you can sustainably afford. The last thing you want to do is offer, or entice employees with the rich benefit offering that you have to pull back later. It’s better to start modestly and then build up over time as your budget can afford it.

  • The second thing is consider the needs of your employees. If you have younger, single, healthy employees, their needs are going to be different than employees who have families, mortgages, things like that.

So, consider your employee mix, and consider your budget. Consider that employees do look to their employer to provide these types of benefits, and manage those expectations accordingly.

Carol Harnett: [00:05:25] Thank you. You know I am going to actually go off the cuff for a minute because you both inspired me a little bit.

Now, all three of us have made decisions to be in our own businesses. And I know for myself– and I think part of it is frankly my background; although originally a physiologist, I have worked in and around insurance and consulting for a good number of years– so when I went into my own business, I actually was really conscious about making sure that I had some particular types of coverage. I absolutely wanted to have health insurance. Obviously, I worked in healthcare so I know that’s important, and obviously,s now it’s the law because I started five years ago.

But then I did– in my case, frankly – I spent a lot of time in the disability insurance industry–  I wanted to make sure I continued to protect my income. As you both went out on your own, are there some conscious decisions you made to make sure that you had some really basic benefits that were important to you?

Why don’t we have Mary Beth start because Jennifer just spoke?

Mary Beth Storjohann: [00:06:30] As an entrepreneur and a financial planner, I think I’m the most risk averse person. So I always err on the side of conservatism, and therefore I was very conservative myself. When I made the transition from employee to founding Workable Wealth, I had already thought out some private forms of disability insurance and some life insurance for myself as well.

When I made that transition, what I thought about was my husband and what my income will look like going forward, and then again ensure that we are protected in all of those areas in terms of healthcare disability and life insurance because we’re a unique situation. We don’t have kids yet. But those are things that might be on the horizon. So making sure that we’re planning for today and also for the future because that’s kind of what you do. I work with Gen Y Millennials and in this age group you have to kind of balance. So those were definitely boxes I checked off.

Carol Harnett: [00:07:21] Interesting. How about you, Jennifer?

Jennifer Fitzgerald: [00:07:23] Like Mary Beth, I was also conscious of that when I was starting out as an entrepreneur particularly because I was leaving a corporate job at an employer that provided a very generous benefits package; great health insurance, disability, and life insurance.

I wanted to make sure I could afford to be on my own and what the options were to continue those benefits. It so happens that it was easy to convert disability and life insurance to an individual policy that I could afford for myself. The health insurance, comparing what I would be paying with COBRA versus getting my own plan on the marketplace, I decided to get my own plan because that was a more cost-effective option for me, but it’s definitely something that I considered.

And it’s advice for several other friends. The startup scene is hot. A lot of people want to be entrepreneurs and start their own company. The biggest piece of advice I give them is, make sure that, if there are any benefits that you have at work and that you want, to continue to do that because it can be difficult to get disability insurance in particular if you’re a brand new entrepreneur or a freelancer. The options are more limited, so consider those carefully before you leave a job where you have benefits coverage.

Carol Harnett: [00:08:41] Yeah, that’s actually a really good point. I already had two disability policies in addition to the one. I also was in a very rich corporate benefits package before I left and struck out on my own. But I had two policies: an individual policy that was an association policy, it’s a group technically, and then I also had a voluntary policy. And to your point when you want to supplement that with an individual policy, you have to show proof of income for a period of time so it can become difficult to do that. It’s very important to think through that.

Mary Beth Storjohann: [00:09:20] I was just going to say the same thing. My policy’s actually an association policy as well, so it is a group policy. I was able to get that through one of the organizations I participate in as an independent financial planner.

For freelancers and entrepreneurs out there, I would encourage you to look at that route too. If an individual policy is not an option, look to the group policies for any organizations you’re a part of  because that can be a more affordable option.

Carol Harnett: [00:09:44] That’s a great point. And I will want to get back to you at some point Mary Beth because I remember when I went out on my own, I was maxing out my 401k. And that is the one thing I will admit I did let go. I knew I was doing better when I got back on track with the future, but I wasn’t thinking about retirement at the time I was starting a business.

So I’m going to ask Jennifer a question specific to the most important employee benefit — whether we’re working for  somebody or working for ourselves– I think we’d all agree is health insurance. In some ways we can also argue it it does protect your income because we do know the connection with medical bankruptcy.

What option should entrepreneurs and freelancers consider, Jennifer, starting with health insurance, but then looking at the broader pieces around benefits?

Jennifer Fitzgerald: [00:10:36] Sure, for health insurance, there are a few options now, thankfully more than there were a few years ago.

The first is if you’re leaving a job with coverage, you know COBRA’s there, so talk to your HR person about what it would cost to extend your health insurance coverage with your group on COBRA. That’s particularly important if you have a doctor that accepts your current plan that you’d like to keep seeing.

The second place to go are the Affordable Care Act exchanges or your state health insurance marketplace. Loss of a job or or leaving your job is an event that allows you to enroll in health insurance outside of open enrollment. And particularly for freelancers or entrepreneurs starting out, your income most likely is going to decline from your full-time job, meaning you might be eligible for a subsidy to help you pay for the monthly premium. And if that’s the case definitely go to the state marketplace, which is where you have to shop to get that subsidy.

A separate option for entrepreneurs is the all-in-one options services that provide HR, payroll, benefits. They often will have access to to health insurance plans that aren’t available on the exchange to small businesses. Definitely worth a look there, too, if you have employees that you’re needing to cover.

Carol Harnett: [00:11:55] You know, that’s a really good point, and it’s one I often forget to tell people, that there are those services out there and they seem to be picking up steam given the number of small businesses that are being started. So a lot of us would argue it’s important at some point to have some HR assistance and I think that’s good for people to consider.

Another question for both of you, but we’ll start with Mary Beth this time: how should people think about protecting their income through insurance?

One of the places we default is disability insurance. But when we think about it, particularly when you’re new in your own business, it can become an expensive insurance sometimes, particularly on the individual side, depending on your age and the provisions that you want.

So we’re trying to expand some of the conversations to things like critical illness and accident insurance as a cheaper alternative to disability insurance and as a way to maybe make up the deductible for a high deductible health plan.

So how should people think about protecting their income Mary Beth?  

Mary Beth Storjohann: [00:12:56] First, I think they actually have to start thinking about it. A lot of the clients I work with in terms of education perspective think “it won’t happen to me,” but in reality it could and it might. According to the Social Security Administration– this is a stat that I quote to a lot of my clients– is that 1 in 4 of today’s 20 year olds will end up disabled before retirement age, experiencing some sort of a disability.

The average disability actually lasts up to like almost three years, and that’s definitely long enough to do some serious damage to your finances and also long enough to fully wipe out your emergency fund because in my personal finance realm we recommend typically a 3 to 6 month cushion for your lifestyle expenses in your emergency funds. If you’re disabled for three years and have no income that’s going to definitely do some damage.

I bring it back there right away to kind of make that relationship stickier and then the thing you have to think about is first, what will happen if you’re out of work for an extended period of time, where will your income come from? You know, what if you can’t go to work and how will you pay your bills? Do you have credit cards and student loans and mortgages that still need to be paid.

You have to really step back and a lot of people just don’t even consider those questions. They think they have the emergency fund in place, and they don’t consider the longevity of what a disability will look like.

And then, understanding, what disability insurance does. So it’s when it will kick in, how much of your income will it replace, and then obviously, I think, disability insurance will cover up to 66 and 2/3 [percent] of your income, so understanding that’s definitely a better replacement ratio than zero.

And so the thing you have to consider is for example, their short-term versus long-term disability and there’s elimination periods there, so when it comes to cost effectiveness, as I mentioned before, are there any trade association policies that you can take a part in. Is it perhaps the way that you can self-insure against the short-term disability, you know for that maybe 90 day period and then purchase a long-term disability policy and save yourself some money there.

So I think there’s ways to get creative with it, but it’s understanding, It’s really going back to understanding your personal financial situation and what it what it looks like now, what it could look like if you didn’t have your income any longer, and being able to fill in those gaps.  

Carol Harnett: [00:15:09] Great, and I’m sure Jennifer you have some places to fill in the gaps because for people who haven’t had a chance to look at policies {audio garbled}. I think your algorithms are really interesting. So I’ll let you explain them, but, you know, how does somebody who’s trying to sort through this idea of protecting their income, how do they start to make some choices? Is there an income threshold they should be thinking about, and what are their alternatives if they don’t have a lot of excess cash?

Jennifer Fitzgerald: [00:15:37] Sure, that’s it’s a great question and one that we see a lot, particularly for people who are self-employed. I completely agree with Mary Beth’s analysis in terms of you know, trying to self-insure for the short-term and looking at the cost-effective options for long term disability insurance beyond that. Association policies are a great place to start.

I’d add on two other pieces of advice. One is if you don’t belong to an association and you can get long term disability insurance, work with a broker who can help you tweak and design a policy that’ll get it, will likely get it down to a monthly cost that you can afford, particularly if you’re younger, you can typically get a policy that you can’t afford it might require some belt-tightening in some other instances, but I think all of us would agree that it’s really really important in terms of protecting yourself, not just your income but your savings, your assets, and what you put away from retirement.

If you live in a state where these policies are available, critical illness insurance and accident Insurance can be cost-effective alternatives if you can’t find disability insurance. And what those policies do is they pay a  cash benefit if you suffer an accidental injury, or if you get diagnosed with a critical illness. That cash you can use either to meet a deductible on your health plan or to cover living expenses because if you get diagnosed with cancer or you suffer a heart attack, odds are you’re going to be out of work for some time.

So those policies can help cover the “beyond the health” cost of those conditions. So if you live in a state where those policies are available, we  highly recommend them as a short-term and often cost effective alternative to disability insurance if you can’t get it.

Carol Harnett: [00:17:29] Yeah, I don’t….  I had the great privilege of meeting. Dr. Marius Barnard who is Christiaan Barnard’s brother. And he, the two of them, were actually involved in the surgery that did the first human heart transplant in South Africa many years ago.

And most people don’t know that Dr. Marius Barnard actually created the concept of critical illness insurance. Because he used to have patients that always died. And once they developed heart transplants, he had patients who survived but were wiped out financially and so that was his reason for creating critical Illness, but I think it’s interesting at the end of his own life– and he passed away last week– he developed a very unique cancer. And he used– he had critical illness insurance– he used the lump sum payment to pay for the experimental treatment that his carrier wouldn’t. So it was an interesting application of critical illness insurance. So sometimes we don’t always realize there’s a way you can unanticipatedly benefit from having that kind of insurance.

So Jennifer I’m going to actually take a question back to you again and say are there are other products beyond health insurance and. disability insurance and even the cheaper alternatives of critical illness and accident when available. Are there other products that entrepreneurs and freelancers should consider, could consider perhaps maybe as their income flow gets a little bit better?

Jennifer Fitzgerald: [00:18:59] Definitely. So, you know the first thing that we look at beyond those needs that you mentioned is do you have a need for life insurance. And not everybody does, but if you have a dependent spouse or children or even if you have a business partner that you are part of so a lot of a lot of entrepreneurs would get life and disability insurance not only to protect themselves, but to protect the business and their business partner is going concerns.

And beyond that, you know, it’s often overlooked, but protecting yourself against business risks. So, your laptop that you use as a freelancer, you know, sometimes there’s liability that you could be on the hook for, as an entrepreneur, as a freelancer, but we always advise folks don’t overlook the business risks involved in your day-to-day as an entrepreneur or a freelancer. So, you know, there are some very affordable policies out there for property protection, liability protection, and to definitely not forget about that as as part of your overall risk management tool box.

Carol Harnett: [00:20:00] You know, I think you bring up an interesting point. My sister is also an entrepreneur and she didn’t go the VC route, but she did have private individual investors and their requirement was for her to have key man insurance, which she was able to address via a disability policy that protected the company.

So I think sometimes entrepreneurs don’t forget, you know, they don’t, they just are looking at their immediate situation and sometimes they aren’t looking at growth and what you might need to attract additional money or in cash sometimes when you want to advance the business. So that’s a really good point.

Mary Beth, is there other things that that you find either for yourself or people you counsel who are freelancer entrepreneurs that they should consider?

Mary Beth Storjohann: [00:20:44] You know, I think Jennifer checked all the boxes there. Errors and Omissions insurance, liability insurance and life insurance if you need  it.

I think for me – working with a lot of entrepreneurs and freelancers, life insurance is a big one. I work with a lot of younger couples and people who are starting their own businesses. And so it’s more than just telling them hey, you need to get life insurance, and understanding the questions to ask themselves around that. It’s important to understand what the values and goals are for your family.

One of the big things people will get is a couple hundred thousand dollar policy and they think they’re good to go. Ultimately, what it comes down to is whether your family is fully dependent on your income or another person’s income. Having that conversation and if you have small children at home, what happens if something happens to one of the spouses and you pass away and there’s one of you left? Would your significant other want to go back to work full time, or is there going to be a reduction in income there as well? It goes back to if you have a mortgage and if you want that debt wiped out so there’s no stress and you know your partner has the home fully paid off and can stay there without concern.

There’s a lot of questions you have to ask in terms of understanding how much coverage you actually need. That’s the one I really focus on with clients is disability and life insurance. There’s a lot of questions there because if something did happen, it will obviously come to a lot of changes in your life, and understanding what you would want to happen if unfortunately something did happen to you.

Carol Harnett: [00:22:15] Thank you. You both inspired a thought I actually didn’t consider asking you until now, which is that a lot of us, when we think about entrepreneurs and freelancing, we think about people early in their careers or maybe people who’ve worked for, you know, about 10 years or so and we’re seeing them make a break.

But in 2008, we saw a different trend with entrepreneurs, and that was — in some industries, massive– layoffs that we saw people in their late forties, fifties, and even early sixties becoming entrepreneurs and freelancers. Would you give different advice to someone who– let’s pick an age– let’s say is 52 years old? Would you give them different advice that you would give to somebody who’s earlier in their career? Let’s say late twenties or early thirties.

And it can be either one of you by the way.

Mary Beth Storjohann: [00:23:10] I’ll go first on that one. I know for me my financial planner answer is: It really depends on their situation. So if they’re in their fifties and they’re still going to be working for the next twenty years because they’re playing catch-up with retirement, that’s a different look than if they’re in their fifties and they have a short timeframe and they have the retirement cushion and their self insured by then.

As you get older it definitely gets into more of a detailed specific answer. You know, a twenty- and thirty-year-old, you can typically throw  out a general number that can give a bigger protection for the long term, but as you get older, I think we need more details, more specifics.

So I was going to give you the generic “it depends,” but I truly believe it. You know, I think as you get older too and your net worth grows, you get more into the types of policies that might make more sense in terms of, life insurance, term versus whole life. It really depends on your net worth and where you’re at in terms of retirement.

Carol Harnett: [00:24:05] Great.

Jennifer Fitzgerald: [00:24:06] I would agree with Mary Beth that it does get more complicated if you were in your fifties and you’re either working to catch up with retirement assets or you’re stringing together some freelance or part-time jobs because of a layoff. The complexity is that insurance is definitely more expensive whether it’s health insurance or disability insurance– and you might have other needs such as long-term care start to surface.

So it’s definitely a more complicated situation and the advice is going to be different. In some cases, disability insurance might not be available if there’s been some adverse health conditions in which case self-insurance is going to be possibly your only option. The landscape definitely changes and it’s one of the reasons why for young people in their twenties and thirties, that we we encourage them to get the policies that you need early, lock them in with a non-cancelable policy if you can, because you never know, what’s going to happen twenty or thirty years down the road.

Mary Beth Storjohann: [00:25:07] Exactly. That’s exactly what I tell my clients.

Carol Harnett: [00:25:10] You know and it makes me want to close with a question, that I tipped my hand at earlier in the show, and that is when I was going in my own business, I had Mac. I was one of those people when I first entered my career my Dad’s and Mom’s counsel to me was, “You know, we don’t care, how much money you’re making, we don’t need to know, but even if you’re not making a lot at least put something in savings for retirement – even though you’re 24 years old, 25 years old.” Often when people start their own businesses, retirement isn’t something people think about. I knew I was finally doing better in my business when I was confident to start developing vehicles to enhance my retirement future.

What is your advice as an entrepreneur for when you should start paying attention to it particularly if you start when you’re younger – because actually, it can be smaller amounts of money and a little bit easier.

Mary Beth Storjohann: [00:26:13] The earlier you start the better, and that’s always my aim with clients, starting small and putting something away. I work with twenty and thirty year-olds, you know, different, varying incomes, but most of the time especially with the variable income, I think it’s really hard.

That’s the biggest thing for an entrepreneur, the biggest thing to tackle, especially when you’re starting off, is the huge swings that you’re experiencing and actually trying to manage those. There’s lot of cash flow work that comes into helping my clients understand how to actually set up a budget and not minding setting up the emergency fund. First we need to set up your lifestyle cushion fund to pull from in those lean months, so you’re not constantly playing catch-up and feeling like you’re on that hamster wheel.

One of the first things is understanding how to manage your cash flow. Once you have that under control, you should be able to get yourself on some sort of ongoing budget, where you’re treating your retirement savings like you’re treating it as a bill. It’s something that you have to pay each month. Basically you’re making it manageable. The earlier you start the better, I always say whether it’s $25 or it’s $100 my goal is at least to be putting $100 away into an account and taking advantage of those things. Obviously, if you have a kind of debt, you want to tackle those things first. You want to make sure you’re building up the cushion, emergency cushion, and tackling the debt. And then retirement comes after those things, which is really hard as an entrepreneur.

That’s one of the big things too, I will say, is a lot of entrepreneurs who are starting their own businesses take on a ton of debt. And it’s kind of like that. There’s some sort of mindset that’s out there right now with personal development. You’re throwing money at the business; it’s okay because you might fail, but eventually it’ll catch back up and you’ll be rich or whatever that is. Breaking that debt mindset is also a big thing.

From there take advantage of the retirement plans that are out there for you. For solo entrepreneurs, there’s a solo 401K, there’s a SEP IRA, and there’s a solo IRA. Those are the ones that are going to allow you to shelter some of your income and basically save on taxes.

For younger clients who are in their twenties and thirties, one of the best things to do is still take advantage of that Roth IRA if you can. Once you get your income above above that, then you want to take advantage of the SEP IRA or solo 401K. But I say doing Roth IRA when you’re young, and again, just starting with those automatic contributions and treating it like it’s part of your bill payment, is going to be a huge thing to do.

Carol Harnett: [00:28:34] That’s great advice. Do you have anything to add to that, Jennifer?

Jennifer Fitzgerald: [00:28:38] No. Mary Beth is the expert here and she’s absolutely right that as an entrepreneur who is struggling with a variable income and doesn’t know what six months will look like, let alone what retirement thirty, forty years, down the road looks like, it’s definitely something that’s easy to put off. The way that I found that I can do it is also just treating it like a bill and then it’s something that you don’t touch or or think about.

Carol Harnett: [00:29:05] Exactly, and that’s exactly how I wound up handling it, but to both of your points, I didn’t start thinking about it until there was less variability in my income flow and kind of more money saved away.

The one thing that all of us have talked about is– but it’s because the nature of the variability of the business– that sometimes we take too much on at points because we’re afraid for the periods when we’re going to be lower than we were hoping we would be in. And that’s sometimes both the thrill and the challenge of being an entrepreneur and a freelancer.

I want to say thank you to both of you. We did this exactly in the time frame we planned. In 30 minutes, for our audience, for people who either are entrepreneurs or freelancers or considering becoming one, this is terrific advice, from people who are experts in the area and are also entrepreneurs and freelancers, to take in mind as you move forward.

Obviously health insurance is a requirement for most of us by law right now, so you want to make sure you do that. But you also do want to take a look at some other things, particularly protecting your income flow, because we are all sensitive to what a small change in your health can do to your income flow. We want people to consider that and cost compare life insurance, and as you’re doing better, to start thinking about putting away at least some money toward retirement and taking advantage of some of the vehicles that are out there.

Thank you everyone. Thank you Jennifer and Mary Beth for your participation. Please check out their companies. They’re wonderful companies, Policygenius and Workable Wealth, and until next time we’ll talk about finance and health.

Thank you everybody.  

Mary Beth Storjohann: [00:31:03] Thanks.

Jennifer Fitzgerald: [00:31:04] Thank you

How Employers Can Influence the Move to Value-Based Healthcare

Steven Schutzer, M.D., president of the Connecticut Joint Replacement Institute, and Carol Harnett, president of The Council for Disability Awareness, share a discussion on this CDA podcast about value-based healthcare — a healthcare delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes. Under value-based care agreements, providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.

The discussion covers a wide variety of topics with a focus on helping employers understand the positive impact VBHC can have on employee health and productivity and health plan performance.

Topics discussed include centers of excellence, why this movement is important and relevant to the entire population, challenges and obstacles in using a VBHC approach and how to overcome them, and how employers can measure results. 

Carol Harnett: Hello everyone. This is Carol Harnett. I’m the president of The Council for Disability Awareness, a non-profit whose role it is to educate employers, employees, and financial advisors and consultants about employee benefits in general and specifically about disability and income protection whenever we can.

Our show is called the Financial Health and Income Network, and today I am pleased to host a very special guest Dr. Steve Schutzer. Dr. Schutzer is the president of the Connecticut Joint Replacement Surgeons, the physician executive for the orthopedic service line at Saint Francis Hospital and Medical Center in Hartford, Connecticut, which is where I’m located as well. He’s also the physician director of the Connecticut Joint Replacement Institute at Saint Francis Hospital and Medical Center. I have had the pleasure of knowing Dr. Schutzer for about a year, although I knew of him for many years because he is listed in Connecticut magazine as one of the best physicians in the state, particularly for joint replacement.

Thank you for joining us, Steve. We’re so glad to have you here with us today.

Steve Schutzer, MD: Thank you so much, Carol, for having me. It’s a pleasure to spend the time with you.

CH: Anyone listening to this show can benefit from our conversation, but our targeted audience today is employers. The goal we have for the show is to help employers understand a concept that’s been around for a little while called value-based healthcare.

Some employers may have heard this phrase within the context of something called “value-based insurance design.” Today we wanted to walk you through some of the basics of what value-based healthcare is, ground you in it, and give you enough information that you can talk about this concept with your employee benefits broker or consultant, or with an insurance carrier.

Steve, the place I want to start is with the basics of value-based healthcare, and why you choose to get involved in this initiative?

SS: So let me start with the second part of that question, Carol. As you mentioned, I’m an orthopedic surgeon with a special interest in arthroplasty — total hip and total knee replacement. And I became dissatisfied, disgruntled and even say, embarrassed at the state of our healthcare system about 12 or 15 years ago and I felt that there was a moral imperative to try to improve it. I read some books about value-based healthcare written by Professor Michael Porter on redefining healthcare and was smitten and overcome with a passion for trying to move our system to value.

Now, what is value-based healthcare? Fundamentally it is very simple. It’s a delivery model in which we as providers to hospitals and physicians are paid based on our outcomes. I mean, it’s not unlike any other sector of our economy. We are rewarded for outcomes. And this would replace the decades-old entrenched system known as fee-for-service, where providers are paid for their volume irrespective of the outcome.

Put another way, Carol, if you have a bad outcome and you got to repeat it. Well, guess what? You get paid again. And this just incentivizes more and more care delivery without any respect in terms of the outcomes that are anticipated.

You know, I love that explanation because at its core it makes so much sense. I started my career on the healthcare side focused in sports medicine and then in the larger circle of rehabilitative medicine and industrial medicine. And I think what always took me back when I talked with people from the general population, or even relatives, was they would say: Well, I saw an orthopedist for my knee pain and he or she said there’s really nothing I have to worry about. And I said: Ok, can you tell me more about that? And you’d hear some pretty significant symptoms. And you’d ask if they’d ever had physical therapy and sometimes they had and sometimes they hadn’t. I even find in the general population in these conversations a lack of knowledge that there can be a difference in quality, that there can be a different outcome. That they paint all orthopedic surgeons with a similar brush; all physical therapists with a similar brush.

CH: How would you tell an employer who is also a person first, who doesn’t have a background in medicine, why value and outcomes are important even though that seems like such a basic question?

SS: You actually have articulated the question and the answer. It is extremely important and there is great variation. The problem is, Carol, that I can go on Consumer Reports and learn more about a toaster oven than I can about my surgeon who’s about to take my hip or knee. And that’s just unconscionable and unacceptable.

I’m a simple-minded guy from the Bronx as you know, and there’s something called the health care value equation, and it’s  very simple. The numerator are the outcomes that matter to a given patient for their particular problem. If it’s prostate cancer and maybe impotence or bladder control, that’s what the patient really cares about over the true cost — not the charge — but the true cost of delivering that care, and that becomes a mathematical equation upon which providers can be rated and judged.

The problem is finding information about real outcomes, even if you were a very sophisticated healthcare shopper. Even YOU would have trouble. Correct, Carol?

CH: That’s absolutely correct. I have spent a lot of my career in healthcare and then insurance and then to consulting, and I’ve had the good fortune of getting to know people like you and others. Frankly, if I ever had a non-orthopedic problem, I’d probably call you and say:  Okay, this is the problem I have. Out of all the physicians you know, who is it that you would go to if you had this situation. But most people don’t have access to that kind of a network. And it’s really, really frustrating. I think most people, including our employer listeners, don’t think about it until they’re in a situation that’s a little more challenging or a little scary, and they start to realize that, perhaps, staying even in their local community may not be the best decision for them, and that’s the first time you ever think about it.

I knew you from the original rankings at Connecticut Magazine listed once a year on the best physicians. Originally the list was created by surveying other physicians and asking them the physicians they considered to be the best in their respective specialties. I spent my time in healthcare in the greater New York and New Jersey area, so I didn’t know anybody here when I moved into the area.  So, Connecticut Magazine became my way of looking and finding even a good primary care physician. So, that’s one of the challenges. You can imagine employers who are listening thinking: Okay, so I want to get my employees value; I want to get them good care, good outcomes. What do I do?

I will tell those employers — because I spent a lot of time in the health and productivity space — you want your employees to go to a good physician because you almost always see your employees come back to work sooner, be more productive when they return, and if they haven’t left the workplace, which is the ideal situation, they also tend to be more productive while they’re being treated. They tend to be at work more often.

What we’re both sort of foreshadowing is something that can go beyond physicians, and that is if you do need a procedure.  You would either have to go to a hospital or an outpatient surgery center or something along those lines, so there is a concept of value called a center of excellence.

Can you help audiences understand what that is about?  What is a center of excellence?

SS: Yes, and I think that is again is a great question. Unfortunately, Carol, that term — “center of excellence” — has been bastardized to some extent because anybody can claim they are a center of excellence. But with time and over time various organizations are accrediting entities as being a true center of excellence. And each has their own proprietary criteria looking at whatever metrics they can access. Unfortunately, most of this data as you know comes from CMS administrative claims databases, which are based on coding and you know there are all sorts of potential vagaries and inconsistencies and flaws. But, be that as it may, centers of excellence do make a difference.

And you know in our Forum coming up on December 6th and 7th, we’re going to be highlighting two types of centers of excellence: one being virtual with a very fascinating company called AiR Healthcare from Minneapolis — the Wainwright company — and the other one being a physical center of excellence here: the Connecticut Joint Replacement Institute.

And here’s some very simple data for the employers who are listening. This is data from another source, but it’s factual. It was from a very large employer in the United States where they referred all of their patients who were in the queue for spine operation to a spine center of excellence and 50% of them, Carol, never had a spine operation.

Now, forget the millions of dollars of savings. Just think of the human misery of those fifty percent of patients that would have had surgery that they never needed. Now that’s for spine. Spine is difficult because there is a lot of gray area, but joints to me are kind of cut and dry.

This is the way I think. If somebody has end-stage arthritis of the hip and severe pain and can’t walk, they need a joint replacement. The same source of information from a very large employer showed that 20% of the patients scheduled for joint replacement were pulled out of the surgery queue and sent to a center of excellence, and never needed a joint replacement. And that’s just striking information.

CH: I will concur with the information you’re sharing. When I worked in sports medicine and physical rehabilitation, we had a lot of people with spine complaints, including elite and Olympic athletes. And some of them — even the athletes — would often want a quick fix.

We did research at the center I was at — and I worked at a couple of world-class rehabilitation institutes, including the Kessler Institute for Rehab in New Jersey — and we’ve done research on the topic, which we’ve seen replicated in other places and that’s when people go through back surgery, in five years, they have the same outcomes as people who went through physical therapy and returned to full activity.

And I obviously know on a patient level and a one-on-one level how important that is to share this information. But since so many people receive their health care through employers, I’m really happy we are about talking about this topic.

I will add a little bit of information to the data you shared. A person who’s become a friend of mine is Tom Emerick, who was the global leader of benefits for Walmart. He’s a very dear friend. I used to consult for Walmart when Tom was the leader there. Tom really was one of the first employers who brought in a centers of excellence model. He always tells the story about contracting with Mayo and contracting with Cleveland Clinic. The first thing they offered to any covered associate in the Walmart system that who needed an organ transplant was to go to one of these two centers of excellence. Their family member could come with them. All expenses were paid; all co-pays, all the deductibles were waived. Fifty percent of the transplant patients were turned back because they didn’t need the transplant. And that to me was one of the most shocking things I ever heard. How is that even possible?

Walmart became a real leader in this field as did many others who quickly followed suit. So, I can’t emphasize enough to employers how when we think about centers of excellence, we think about big things like that, right? We think about organ transplants.

But I will tell you from having worked in the disability insurance side of the business for a while that that’s really a small percentage of what’s happening. Big dollar ticket items from a medical perspective, but a small number of people from a population perspective. That’s why things you’re talking about such arthroplasty and spine surgery and even more common become more important to find these value centers — these centers of excellence. Places where you know your employees and their family members — if you cover their family members — are going to not only get great results, they’re going to get long-lasting great results: meaning we don’t have to do things called revisions and go back in and do surgery or have complications because they’ve been in a much better place.

SS: That’s right. We’ve just covered very briefly three different procedures: organ transplant, total joints and spine. And we’re talking about 20% to 50% of unnecessary major operations. When I drill down in that data, I was really interested that this large employer on par with Walmart had saved twenty million dollars in that year. That’s a lot of money.

What I really liked about that experience was that two-thirds was saved on the quality side and only one-third was cutting a discount. In fact, for the employer — because many of these patients are travel patients — they netted out zero because they got a deal from the provider for this new volume of patients but it cost them to transport the patient and family. So that netted out zero, but the real value was going to a center of excellence and deciding: You know what? This patient doesn’t need surgery, or having surgery and reducing those risks of complications and re-admissions.

CH: Absolutely, very well said. And I do want to remind our listeners at this point about something we talked about a little bit before getting on the air, which is that not only is this movement important — and we are certainly directing our comments right now to just the employee population and their family members if they are covered. But this is relevant to the whole population. And I would imagine you see a mix of both people who are still working and people who are retired in the work that you do. And just for a brief comment because some payers by the way as you provide retiree medical care: How does this apply to the entire population?  

SS: I don’t really discriminate in terms of whether they’re employees or not employees, or their age bracket. Half of my practice is Medicare and actually half of my practice are commercially insured. So, the average age for a total hip replacement in my practice is about 58. There are not necessarily older. That’s the average, which means I’ve got some in their 40s and some in their 80s and some even in the 90s. So, I don’t really discriminate between what demographic they come from.

SS: Patients are a little more demanding today. They want to get back on their feet quicker. And, again, when you have an entity that’s focused as we are like a laser beam on arthroplasty, you just keep getting better and better: refining your outcomes, refining your processes, to drive better value for the patient.

CH: Wonderful. So well said. Now, we’re talking about all the positives that are involved in value-based healthcare and we certainly know that there can be some obstacles and there can be some challenges. Can you talk a little bit about that and what employers can do to help overcome those problems?

SS: Carol, that’s something that we’ve been thinking about here for very long time. We’ve heard interesting comments from the payer community that the providers are “tone deaf.”

And here we’re thinking as providers: Where are the employers? We’ve got an incredible product — many other people do as well — and it’s just not gaining traction. So, we’re wondering where they are. They’re wondering where we are. So, something tells me something is in the middle and not making this happen. As you learn about the complexity of the healthcare ecosystem, it becomes clear that there are many intermediaries, some of whom are not completely aligned with value. There’s nothing specifically in it for them and overcoming that takes time.

Listen. It’s a 3.2. trillion dollar a year industry of which one-third easily is waste. But that’s one trillion dollars that you’re talking about taking from somebody’s pocket and they don’t like that. And there’s all sorts of push back and political things and lobbying that that impede this movement to value.

As you know last year, we had our first annual Moving to Value forum at the Del Mar hotel in West Hartford, CT. This year, we’re having our second forum at the Marriott in Hartford. But last year we focused on obstacles: obstacles to moving to value. And we looked at it from the perspective of the provider, the payer and the employer. And each of these stakeholders have challenges.

I would say from my perspective the biggest challenge I see gets down to benefit design. If patients are not incentivized to move to centers of excellence to change their behavior, it’s just not going to occur. If it occurs it’s going so slowly that it’s not measurable. So if I want to implore employers, I would ask them to get involved at the benefit level and really start to look at this: Does this benefit design really move patients to higher value, or is it more entrenchment in old models and old designs?

You know, again, there are obstacles all along the ecosystem. For us it’s data, its position alignment. We’ve been able to make some great changes so our positions, Carol, all abide by protocols.

We have 18 clinical protocols, which we abide by so we can measure it and look how we’re doing. That’s a big challenge to get orthopedic surgeons to agree to anything, but we’ve been able to overcome that. From the employer perspective, I can tell you that if we don’t start shifting market and rewarding the providers that are spending time and resources — a lot of money — then I’m afraid it’s just going to move slowly.

There was a great piece the other day from Michael Thompson in which 60% of employers are not capitalizing on their opportunities to address the health care waste despite the fact that they all recognize there is substantial waste and inefficiency.

CH: Much like you I grew up in the New York City area except I’m a Staten Island girl. And the story you’re telling, I’ve tried to tell employers, in particular because that’s where I’ve spent the majority of the latter half of my career in working with and educating and doing design work.

I grew up on what’s called the South Shore, which means if you live on that shore, you go down to the end of the island and you can see New York City across New York City Harbor. And I can’t tell you how many people I grew up with — and when I was young, it would be more of their grandparents and sometimes their parents — who would have cardiac issues or cancer or some major health condition. And instead of driving across the Verrazano Bridge through Brooklyn to Manhattan, or taking the ferry and going into one of the world class centers of medical excellence, they would have their surgery at St. Vincent’s or Staten Island Hospital, which I’m sure are fine for average things. But you don’t give up going to world-class cardiac center when you’ve got a pretty complicated cardiac condition when you can see the place where you can get the best care. But that happens all the time.

People go to places they’re familiar with and so you have to incentivize them. I’m so glad you brought that up. Employees have to be incentivized to do it, but the employers are also going to want to incentivize physicians and reward physicians who are giving great care and producing great outcomes.

Of course my prejudice extends all the way to people when they’re out of work. So even if I were to evaluate the services that your practice does I would be like not only do you get great medical outcomes, but your patients are back to work sooner and they’re not going back into the OR because some mistake has been made or they don’t have sepsis or they have a hospital-acquired infection. Those all become important things because it gets them back to work, feeling good, and going back to their lives. And that’s really important.

There are two things I want us to talk a little bit about before we run out of time. You want to talk about the upcoming Forum because I will tell people, again, I knew Dr. Schutzer on paper.  And then I got to meet him about a year ago when I was invited to go to your first forum and was astonished.

And please don’t take that the wrong way. I was astonished by the quality of the conference and the types of people who were there. So, I want to talk a little bit about that. And I would like you to close out our talk on value-based healthcare by explaining how an employer can measure — beyond what we already discussed — that it is working for them.

SS: So, first of all, the Forum is December 6th and December 7th. We are having a Thursday evening venue at the Marriott and that’s going to focus on pharmaceutical costs: “Stop Overpaying for Pharmacy” is the title. We’ve got two fabulous speakers, and then the next day on Friday we’re going to focus on primary care modernization. and centers of excellence.

As far as measurement, I always say this: orthopedic surgeons are not historically known to be a group that’s really very concerned about spend. We use expensive trinkets. Our tools are expensive; our widgets are expensive; and we’ve never really paid attention to that because, guess what? We don’t pay for them. Someone else does.

So, how have we been able to take these 10 formerly competing orthopedic surgeons with completely different motives, bring them together 11 years ago, align their interests without any economic incentive, and pull off what we’ve done here. And it comes down to data.

We’ve got a very rich database of 30,000 patients. The data is clean, credible and actionable, and it helps change behavior. So, I would ask employers when their reviewing their contracts and when they’re in discussions with provider groups to ask to see their data. I wouldn’t even sit down with a provider without that data being available.

So they shouldn’t ask to see it. They should really demand it. Then the question is: Is the data clean? And that gets very difficult because you can manipulate data anyway you want.

A very quick case in point. I’ll point myself out, Carol. A few years ago, ProPublica came out with rankings of physicians, and I looked at myself as a hip surgeon / knee surgeon. I thought it was decent.

Well, I got I got listed as a high-risk provider for hip arthroplasty. I was upset by that and I did a little digging. It turned out that I was taking patients back to the operating room because of bleeding in a day when we were using Heparin as an anticoagulant. I was taught by my mentor to not to put a bandaid on it. Take them back and wash out that bleeding. So, I thought I was doing what I thought was best for the patient, perhaps saving infections. That very next day another ranking agency came out and gave me the only five-star hip replacement surgery in the state of Connecticut. So, am I a hero, or am I a zero? So confusing to me. You have the same data.

So it is not easy. You have to dig deep. You have to look into the information. Perhaps recruit some other folks like Jeff Hogan and Paul Grady who really understand this ecosystem to provide some insight into that.

CH: You’re so generous to share a personal story like that because I can’t imagine what your face looked like when you saw yourself being lowly-rated when that is not generally how you are known in the Greater Hartford area or the Connecticut community.

I have a friend who is a specialty reconstruction surgeon. Not only does he only do breast reconstruction for women who’ve had mastectomies, but he does only what’s called the DIEP procedure, which is where a woman, as you know, donates some of her own body tissue to form the breast mound.

What I’ve learned from him is there are only 12 centers around the country that do this. It’s considered the state-of-the-art procedure. But the normal flap failure rate, which is really what these breast mounds are called is 30 percent. In his practice and in his hospital it’s only one percent. But the only reason why I know that information is because I know him. And that’s the challenge that we still have. How do we get that information shared in context?

Well, this time has just flown, and I know that we’re counting down the last minute. So, I want to first of all say thank you so much for making the time to do this. I know how incredibly busy you are in all the work you do in your own professional practice, the work you do with Moving to Value, and the upcoming Moving to Value forum.

I will highly encourage people to attend this forum because I’ve attended myself before and will be attending again. This is well worth your time and effort, particularly if you’re an employer in the greater New York and New England area. Consider coming to the Moving to Value forum, which people can find out more information about at It is being held in downtown Hartford, and we hope to see you there. Thank you so much, Steve.

SS: I really appreciate your time, Carol. I can’t thank you enough for this opportunity. Have a great weekend.

CH: You, too, and thank you to everyone who’s listened.

Paid Leave – What Is It and How Does It Work?

Employees who want to learn more about how the Family Medical Leave Act, short- and long-term disability insurance, and paid leave help them protect their jobs – and receive an income – when they cannot work due to illness or caregiving responsibilities need to look no further than listening to this podcast.

, president of The
Council for Disability Awareness
, interviewed Heather Cook from Lincoln
Financial Group
who is an expert on disability insurance, and paid and
unpaid leave.

If you’d rather read than listen, we captured the transcript
from the conversation below.

Carol Harnett: Hello! My name is Carol Harnett and I am the President of The Council for Disability Awareness. We are a nonprofit group whose mission is to educate employees and working adults — along with their employers and financial advisors — about benefits in general, the importance of income protection, and how people can insure their income so if they need to leave the workplace — most for a temporary period of time; some for a long-term period of time — they can still receive an income stream.

October is open enrollment month for us and for many people that are listening on the show. Our aim today is to provide people with a real primer – a step-by-step explanation of how leaving the workplace can operate particularly from the point of view of protecting your job number one, and number two receiving an income while you’re gone.

I’m really pleased to have someone who is a specialist in this area. My guest today is Heather Cook. Heather is a regional vice president for short-term disability and leave operations at Lincoln Financial Group

And we are happy to say that Lincoln is a member company and a supporter of The Council for Disability Awareness, and we thank them for that.

Welcome, Heather. I’m so pleased to have you on the show today.

Heather Cook: Very happy to be here. Thanks so much for having me

CH: Oh, it’s our pleasure. So, Heather, let me set the stage again.  Everyone is welcome to listen, but our real audience today are indeed employees and working adults. One of the things that captured my attention in 2017 was this: The Pew research group simultaneously did two surveys of Americans in general. This survey goes beyond working adults. They essentially asked them what benefits they thought were important for employees to receive, what the most important benefits were, and then asked very specific questions around paid leave.

And what was most interesting to me is that 85 percent of Americans believe working adults are entitled to paid leave for their own serious health condition. A slightly smaller percentage believe people should also receive paid leave for caring for a family member other than a child.

And then the lowest ranked category by the general American public was paid leave for the birth or adoption of a child. Following the Fall 2018 election, The Society for Human Resource Managers predicted that with a large group of women and minorities joining House of Representatives that paid leave is going to become an important topic again.

Heather, can you start where the concept of leave often started, which was in the in the 1990s with the passage of the federal Family Medical Leave Act and, since then, state, city and municipality leaves. Can you explain to people what protection exists for people who work who need to leave the workplace?

HC: Absolutely.
Yes. Thanks so much for the introduction there. So, the Family and Medical
Leave Act (which you’re right started back in 1993) is really a means to offer
employees 12 weeks of job protection within a 12-month period for very specific
qualifying reasons. If an employee needs to be out of work to care for a new
child, to take care of someone in their family with a serious health condition,
or for their own personal medical condition, then they can take FML.

FML applies as long as they work for an employer who is eligible. Basically, that means any company with about 50 employees or more within a certain radius. So, it’s a good benefit that is well-known and common, but it doesn’t apply to everyone. Employees really need to know and understand what the eligibility requirements are to qualify for the Family Medical Leave Act and in what situations it applies.

And it’s important to note as well that while FMLA is widely available, it is an unpaid leave. It protects your job while you’re out of work, but it does not guarantee you that income protection piece that so many of us are in need of and looking for when we have to take time off due to a stressful situation.

CH: Thank you for
that overview, Heather. I think some people forget that your employer has to be
of a certain size before some of these benefits and protections that we’re
going to be talking about apply. I think people are familiar now with some
aspects of leave because of all of the coverage in the media.

Can you comment for any employers that might be listening on the concept of intermittent leave? Can you explain to people a little bit about what that means and how that works?

HC: Absolutely. So intermittent leave is really beneficial to employees who have to be out of work for either treatment of a medical condition or because they are under a medical condition that just doesn’t allow them to perform their job duties, but it’s not on a continuous basis.

So maybe it’s a sporadic condition that flares up every now and again, and the employee needs to be out of work more sporadically either to attend treatment or to just deal with those flare-ups that pop up every once in a while. The Family Medical Leave Act does provide an option for employees to be out of work intermittently in addition to a continuous block of time.

And basically what happens then is they would just need to report the time that they are out of work to their employer or to their insurance carrier to make sure that the time is tracked against their overall bank of time. And, of course, it has to be supported either by a medical provider, or if they are out caring for a family member, have the appropriate documentation that indicates an intermittent time from work is what’s required and necessary for the life event the person is going through.

CH: Thank you for explaining intermittent leave, Heather, because I know people get quite confused about that benefit. It is a good benefit for people going through treatments or having to intermittently take care of a loved one.

So maybe we should walk through next how employees can get the most out of leave benefits and employee benefits such as short- and long-term disability.

Let’s start with short-term disability. Can you help employees understand the difference between FMLA and a short-term disability plan?

HC: Sure. So FMLA, as I mentioned is really the job protection portion of your time out of work. It guarantees that when you’re able to return to work after you have a FML-protected absence that you have a job to come back to. But, remember, it doesn’t provide income replacement.

Short-term disability is going to be that benefit that provides you with a certain percentage of your pay for a defined number of weeks as long as you have restrictions from your own medical condition that prevents you from doing the core duties of your job or your occupation.

FMLA and short-term disability really work hand-in-hand to provide a more holistic benefit to the employee so that they don’t have to worry about their job protection or their income while they’re out of work. But it’s important to note that while there are some states that have mandated disability leave laws in place, most of the time short-term disability benefits are offered through an employer benefit plan.

And it’s very important as you’re going through open enrollment period to pay attention to what options you have from a disability perspective and whether that’s employee- or employer-paid, and really how much you can expect from a percentage of pay and a number of weeks benefit if you have to go out of work due to your own medical condition. 

CH: Heather, I’m really glad you brought that up because I think it’s a wonderful thing when employers provide and pay for our short-term disability benefits. But one of the things I think employees don’t realize until they have to use the benefit is – because the employer paid the premiums – that, when they receive the benefit, it is taxable.

HC: Absolutely,
and for employers who may be listening, this is an important time to talk about
the fact that it’s important for them to consider if they are going to be
generous and pay all the premium. If they are, they should consider providing a
larger percentage of coverage.

CH: Great point,
Heather. Can you talk about how part-time disability or intermittent disability
might work under STD?

HC: Absolutely. So, it depends upon whether your policy covers partial disability benefits. A lot of employers do offer it, which I think is a great benefit because what it does is incentivizes you to get back to work more quickly. I think it’s great when employers meet employees halfway and say: We don’t need you to be fully functional at a 100 percent to come back to work. Or, if it’s a day here or there, you can only work part of the work week, that’s fine. 

With a part-time or intermittent work provision, employers and the disability carrier work with you to make sure you can ease back into work in a way that is beneficial to you and really takes care of your health. Employers don’t want employees rushing back too soon and putting their own health at risk.

So, partial disability really allows for the employee and the employer to work together in a manner that is most beneficial and advantageous really to both sides and allows employees to work more of a partial schedule – whether that be 4 hours a day every day or maybe just a couple days a week until their medical condition allows them to ramp back up to full capacity. During that time employees are reaping the advantage of getting a little bit of income from their actual wages at work and then disability insurance is picking up a good portion of what’s left – sometimes up to 100 percent of your salary.

But even if it’s not 100 percent, at least it’s a little bit extra money to work with while you’re still out on disability.

CH: Great! Thank you for that overview, because, again, I feel like we never talked about some of the really helpful benefits that a lot of people have under short-term disability.

HC: I was just going to stress the importance of employees having a conversation with their managers and their HR benefits team when they’re ready to come back to work, because your employer might be willing to support you in a partial capacity. So, if you’re not sure, it doesn’t hurt to ask.

CH: That’s a really good point, Heather, as often claims examiners who are working on the claim will help with the process of setting up a partial return to work.

Since we’re talking about disability, let’s talk about long-term disability insurance. For people who are listening that are not familiar with long-term disability coverage, it’s worth going over some insurance terms.

There is a predetermined length of coverage for short-term disability that includes something called an elimination period. This is a waiting period for benefits. With short-term disability policies, an elimination period can be five, seven, 15 or 30 days – or another defined period of time. It depends upon how your employer designed the plan with their carrier. Long-term disability coverage usually has a three- or six-month elimination period.

Heather, can you explain for people some of the differences between short- and long-term disability, and how they could prepare potentially for using LTD benefits?

HC: Yes, absolutely, Carol. Once the short-term disability claim is coming to an end in terms of that defined duration, an employee’s case manager will reach out and let them know that they’re approaching the start of a possible long-term disability claim – if they have that benefit available to them. LTD is used a lot of times for absences related to chronic conditions that run a little bit longer than 3 to 6 months. Or maybe there’s a longer recovery time associated with a major surgery, or something of that nature and employees just need a little bit longer period of time to recover.  

Other times employees are on long-term disability for an indefinite period of time and even up until retirement age. So, long-term disability coverage is really serving a lot of different needs for a variety of individuals. One thing to note with long term disability is the percentage of pay that you get may be different than what you received during your short-term disability claim.

It’s important to just be aware of what your specific policy covers and the percentage of pay it replaces, as well as any applicable offsets that might be taken from your benefit.  For instance, if you’re required to apply for Social Security benefits, that may be a deduction from your long-term disability payments. LTD can get a little bit more complicated in terms of understanding the benefit. This is why it’s really important to do your research ahead of time and know what your policy covers and what you can expect in terms of income replacement.

The other thing that is sometimes different in long-term disability is the way that your claim is evaluated. During short-term disability, we’re really looking at whether or not you can perform your job as you did it for your employer before you went out of work. But in long-term disability, a lot of times we’re looking at whether you can do your occupation as it’s understood in the national economy.

Taking that a step further, LTD broadens the definition of disability to see if there’s any other place you could get back to work in a similar occupation. The threshold for meeting long-term disability benefits is sometimes a little bit different and I think that’s important for employees to be aware of.

CH: It’s very important, Heather. It might sound like a negative to some listeners, but I always remember when I was involved in claims one of the examples we would give people to understand was this: A cashier at a traditional supermarket for lack of a better term where you’re not moving or swiping large boxes like you would as a Costco cashier, or any of the other big box container types of stores, is classified the same way as the Costco cashier. But the Costco cashier may have different physical requirements. So, in long-term disability, the way the cashier job is classified for a regular supermarket becomes the definition used for the Costco cashier during LTD. 

Vocational rehab counselors often get involved in cases like the one I just described or in cases where someone can’t go back to their own occupation at all. The counselors assess the out-of-work employee’s skills for what we would call “transferable skills” that they could use potentially at a new job or a new occupation.

HC: Vocational resources can be a huge help to claimants, and they’ll even go as far as helping you with your resume if you’ve been out of work for a while, and really helping to identify what a comparable occupation might look like. Vocational counselors leverage the skills, training and experience that you have to make sure a new job or occupation is the right fit for the person who’s out of work. 

CH:  A lot of people in the United States might not know that there’s a group in the UK which is similar to The Council for Disability Awareness called the Income Protection Task Force. They did a study called the 7 Families Project where they helped seven people who did not have disability benefits and paid them a benefit for a year. They also gave them all the services that come with a long-term disability or individual disability policy, including vocational rehabilitation services. It turned out that the most important benefit was the vocational rehab counseling. Five of the seven people in the program were back to work in less than a year. Personally, the 7 Families Project is such a great example of how important vocational rehabilitation benefits are.

I want to move on to the thing that really is in the news. We have a good chunk of the 10 remaining minutes to talk about “paid leave.”

For people who work for employers, you should know that there are sometimes different levels of protection and generosity under the various kinds of family medical leave. The most generous one is the one that’s always applied to your situation by your employer. 

Sometimes you might live in a city or a state that has a more generous set of leave regulations than the federal law does. The most generous provisions always apply to you and your situation.

So, to review, we have unpaid leave that protects your job when you can’t work. Not everyone has short- and long-term disability benefits, but we know that at least a third of people have long-term disability provided by their employer. And at least 40 percent have short-term disability benefits provided by their employer – meaning that their employer pays either all of the insurance premiums, or pays a portion of them.

From there, we move to paid leave and this idea that if people leave the workplace they actually receive compensation. Heather, can you start to walk us through the basics of paid leave and how that works –  let’s say starting with your own health condition?

HC: Yes, absolutely. Starting with your own health condition and thinking about paid leave – there are a few states across the country that offer a paid leave program and mandate that employers that operate in those states provide it to their employees. States like California, New Jersey, Rhode Island and, most recently, New York all have their own paid family leave benefits. They can be used typically for your own medical condition, to bond with a child, or to care for a family member. Paid leave is becoming more and more prevalent.

Let’s walk through paid leave for your own medical condition for a minute. I think one of the most basic and common forms of paid leave is simply using your sick and vacation time. I think that’s often overlooked because we hear a lot more about these about paid leave programs that are starting to roll out lately and are getting more and more popular. But sick and vacation time are more prevalent – a lot of employees have access to them. I would say more and more employees do have access to some type of paid sick or vacation time that they can draw from and utilize that to supplement their job protection under FMLA or unpaid state leave.

Paid sick or vacation time is definitely an avenue for people to pursue if they need to take time off from work for their own medical condition and they don’t have access to other benefits that we just walked through.

CH: You’ve made a really important point, Heather. Some employers require that their employees take at least some of their paid time off or vacation or sick leave before they access FMLA or while they’re accessing FMLA. Is this still a requirement? 

HC: It can be, Carol. It’s really at the employer’s discretion. We still see a lot of employers who require employees to utilize some of their PTO time before as they go out on FML. But it’s not required across the board. Some employers elect to just allow employees to hang on to that time.

CH: This is a good example of another question employees should ask their employer during open enrollment. 

HC: It’s really important that employees understand how all their leave and disability benefits work together because a lot of these options that we’re talking about today overlap with one another and can create a complicated landscape. And not one that you really want to be trying to navigate for the first time when you have a life event. The more you can think about what you would do if you couldn’t work ahead of time, and plan and ask questions and do your research, the more confident and comfortable people will feel should they have to utilize these benefits in the future.

CH: That’s a great summary, Heather. Can you walk people through an example now about how they would coordinate their benefits if, for example, a woman is going to go out of work on maternity leave?. How does she coordinate FML, short-term disability, paid leave and even vacation or sick time? 

HC: Absolutely. The first step is really to let your employer know that you need to take time off from work. From there, your employer can point you in the right direction to file the appropriate benefits. Some employers manage this process in-house.

It may simply involve going to your HR department and filing a formal leave of absence. You can do this ahead of time and don’t have to wait until you’re in the delivery room to move forward with a claim request. Doing this well in advance can provide you peace of mind.

If your employers use a disability or leave carrier to manage pregnancy claims, typically all you have to do is make one call to get that process going. Then the case manager who’s assigned to help you through that process will reach out and have a conversation. They’ll let you know if you meet the eligibility requirements for the benefit. They’ll explain how different benefits such as disability and paid parental leave may overlap with one another. They’ll also tell you what documentation you might need to supply in order to get those benefits approved. 

The key questions you would want to ask in preparing for something like having a child is what percentage of my pay would I receive if I’m out on these benefits? How long can I use my bank of time, and how do I know if I’m eligible? And then, finally, what paperwork do I need to submit?

CH: Thank you, Heather. So, as we close down our conversation, what can we walk people just briefly through about taking a leave for the care of a child, or for the care of another loved one (where that is covered)?

HC: So more and more we’re seeing family members take time off not for themselves, but to care for a new child or for a family member. A lot of these leaves are now being covered not just by FMLA and state leaves (which we know are unpaid). A lot now is covered under some type of paid family leave program.

It’s important to also ask the question of whether or not your employer has benefits that cover you to take that time off. The process is actually very similar to filing a claim for your own medical or health condition. The first step is really making sure that your employer is aware of your need for time off, determining whether you meet the eligibility, and having the benefits available to you. Then you submit whatever paperwork is required, which is typically a birth certification or a medical certification form to document that the family member is in need of care, or that you recently had a child to bond with.

It’s not a whole lot of burden of proof on you. It’s more about completing a couple of forms and confirming the dates that you’ll be out of work with your employer. The process really can go pretty smoothly from there.

CH: We’ve talked a lot about how you can prepare ahead of time for filing a claim. But what happens to someone who perhaps has an accident or something they haven’t planned? And let’s say it’s not a minor accident – it’s a bigger accident. And they wind up hospitalized for a short period of time. How do they go about filing a claim? Can someone who is a relative or a friend start a claim process for them? 

HC: Sure, life happens certainly, and there are going to be situations that come up that we don’t expect. So employers and insurance companies really try to make it as easy as possible for that person to get the help they need when they need it. Anybody can file a claim on your behalf. A lot of times even your employer can do it for you.

It’s really just making sure you have the phone number to call. Other people can call in that claim or leave request on your behalf and get the process moving. Then your claim case manager (whether they be at your employer or with the insurance company) will do all of the heavy lifting after that. They will make the phone calls to the hospital, confirm your admission, and get any medical records that might be necessary.

It is possible if you’re incapacitated, or not able to advocate for yourself, that your claim can continue to move on and you get the benefits you need by other people helping you and being advocates on your behalf.

CH: Thank you so much, Heather, for your time and the great information you’ve provided on family medical leave, short- and long-term disability insurance, and paid leave. I know our listeners have learned a great deal. 

HC: Thanks very much for having me. I appreciate the opportunity to be a guest on this show.

CH: As a reminder for our listeners, you can access more information on the topics we discussed today at either or