Help Your Employees Understand Disability Insurance with these Five Questions

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

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

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

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

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

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

  1. What does disability mean in this context?

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

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

  1. What are the statistical chances of becoming disabled?

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

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

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

  1. How would you pay your bills?

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

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

  1. What does Workers’ Comp and SSDI cover?

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

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

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

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

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

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

 




4 Things to Know About Family Leave and Your Income

Mother holding a baby.Becoming a parent is an extraordinary and, at times, stressful endeavor. Your life is about to fundamentally change. And as you plan the myriad dimensions of this new reality, you may be wondering how you’ll cover all the bills while you take time off work.

Family leave is a complex issue and it requires a good amount of research. Begin by reading your employer handbook or asking a co-worker how they dealt with family leave and what they were offered. Consider what will work best for you, in terms of the time you’d prefer to take off work. If you do become pregnant, make sure you let your boss know before anyone else. Embrace it enthusiastically as an opportunity for growth. As Carol Walker, president of the consulting firm Prepared to Lead tells the Harvard Business Review: “Planning for your maternity leave is an opportunity to demonstrate to everyone that you’re in the game.”

Here are a few ways you can replace your income during family leave:

Paid Family Leave

This is the ideal situation of course, but don’t hold your hopes up too high. The National Compensation Survey (NCS) conducted by the Bureau of Labor Statistics, revealed that just 14 percent of civilian workers had access to paid family leave in 2016. There are a few states who are pioneering paid leave: These include California, New Jersey, and Rhode Island, and New York joined the group in January 2018. If you work in the tech industry, you could also be in luck: Tech companies offer some of the best family leave out there. Ask your HR team or boss if they offer this benefit.

Short-Term Disability Insurance

Short-term disability insurance is another way to protect your income when you cannot work due to an illness or injury. This includes pregnancies — and it’s very commonly used for this purpose by employers. Short-term disability insurance plans often cover six weeks post-partum. It covers a portion of your income — normally around 60 percent. Several states such as New York, New Jersey, Hawaii and Rhode Island have short term disability laws in place. You can also purchase this form of insurance as an individual.

Unpaid Family Leave

The vast majority of American workers don’t have access to paid family leave (88 percent according to the NCS study). So your next step is to see if you qualify for unpaid family leave — which keeps your job intact although it doesn’t offer a salary. The federal Family and Medical Leave Act (FMLA) was signed into law in 1993 and it guarantees eligible workers up to 12 weeks of job-protected, unpaid leave per year. FMLA does have its limitations though: it only applies to companies that have more than 50 employees within 75 miles of your workplace. You also need to have worked there for at least a year and put in a minimum of 1,250 hours. Laws around this also vary from state-to-state so you’ll need to research your local situation. FMLA applies to giving birth, adopting a child, or fostering a child — and it can also be used in the cases of caring for a spouse or parent with a serious health condition. There are ways of making it work while on unpaid leave—you just need to plan well.

Paid Time Off (PTO)

Many people will use some of their PTO to cover their income for part of their leave. Your workplace may require you to use up your accumulated PTO before benefits can kick in. Others will allow the benefits to begin immediately, which may allow you to use some of your PTO to extend the length of time you can stay at home.

Take the time to educate yourself on the benefits that apply to you. Know your rights and don’t be afraid to try to negotiate a better deal. If you are just starting to think about having a child, now is a great idea to build out a financial plan to help avoid the stressors down the line. With a plan in place, you can relax and enjoy the extraordinary gift of welcoming a new life into the world.




Five Employee-Focused Programs to Enhance in 2020

The start of a New Year—and decade!—is the perfect time to kick off or refresh HR-related programs. As company culture becomes more important than ever for employees, the payoff that comes from programs that meet their needs can be huge in terms of retention. Don’t forget that with the New Year comes resolutions—and for some employees that might include looking for a new job if they aren’t satisfied with their current situation. Here are five programs to consider offering to help keep employee loyalty high.

  1. Diversity and inclusion efforts

Why it’s important: Maintaining a diverse workforce remains a priority for companies, who find it leads to more innovation and better financial performance, as well as for employees; in one survey more than 80% of respondents said they preferred a diverse workplace.

What you can do: The first step is to examine your recruiting efforts to make sure that you’re building a diversity pipeline from the start. Then, take a look at your teams to see if they are integrated. Does your workplace foster inclusion by creating teams of different genders, cultures, abilities and ages? Are there policies you could implement, such as more flexibility, that would make it easier for all employees to be part of the team? Consider convening a task force to offer insight into what they think could contribute to a more inclusive environment.

  1. Mentoring

Why it’s important: More than 90% of workers who have a mentor say they are satisfied with their jobs, which is crucial for retention. In addition, mentors can help newer employees build their skills, which benefits the entire organization.

What you can do: Whether you choose a formal or informal mentor program, creating ways for employees to work together and learn from each other is positive for everyone. If you have a wide variety of ages, encourage a “reverse mentoring” dynamic, where older employees learn from younger employees, as well, as one more way to support your inclusion efforts.

  1. Professional development

Why it’s important: It’s no secret that today’s workers need to be focused on upskilling to stay competitive. According to MetLife’s 2019 U.S. Employee Benefit Trends Study, more than 90% of respondents find career development and training to be key considerations when deciding whether to accept a job or stay at the one they have. And helping workers develop new skills doesn’t just benefit them—their new talents will help your organization as a whole.

What you can do: Find out what skills your employees need that will also make them more effective to the company and then help them get the appropriate training, whether it’s attending an industry conference or completing an online program. You can also encourage more informal educational opportunities, such as inviting the team to read a pertinent book and then have a discussion group around it.

  1. Employee appreciation

Why it’s important: Do your employees know how important they are to the success of the company and how much you value them? It’s vital to create a program that acknowledges everything from day-to-day hard work to someone who goes above and beyond on a specific project.

What you can do: The easiest way to foster a dynamic of appreciation is by encouraging team leaders to just say “thank you;” a Deloitte survey found that 85% of workers valued a simple acknowledgment of their hard work. Written notes are a nice touch as a tangible reminder that employees can look back on. And there are many low-cost ways to acknowledge efforts, from a small gift card to a special parking space for a month. A more involved recognition program might include an awards program where team members submit nominations and an executive team chooses the winners.

  1. New benefits offerings

Why it’s important: Offering competitive compensation is vital to attract and retain top talent, but don’t overlook your benefits program as another way to convey your commitment to your employees. Believe it or not, one survey even found that many employees would prefer more benefits over more pay.

What you can do: Offering solid healthcare and retirement plans are important places to start. But then look beyond those to additional ways you can offer your employees peace of mind, such as with life insurance and disability insurance. Other popular choices include programs that promote financial wellness, improved health and flexible work options. Talk to your team about what’s important to them and then do what you can to bolster your menu of benefit choices to include those that are most important and therefore most inclined to spur loyalty.

According to Glassdoor’s Chief Economist, Dr. Andrew Chamberlain, company culture will come first in 2020, he says in a list of HR predictions. Now is the time to review the programs you already offer and see where you can strengthen existing efforts or introduce new ones to help create the workplace environment that your employees demand.

 




Five Tips for First Time Disability Insurance Shoppers

Long-term disability insurance. It’s not as immediate a need as health insurance, and you probably don’t think it works into your long-term financial plan as much as life insurance does.

But it’s still really, really important.

Long-term disability insurance is, at its core, income replacement. It can help you make ends meet when you’re unable to work without needing to completely drain your emergency fund or other savings. So why isn’t it as popular as other insurance types?

If you’re a first-time long-term disability shopper, it can be easy to find yourself overwhelmed or confused with this unfamiliar topic. But if you get to the core of what a long-term disability insurance policy can do for you, and cut through the noise of agents trying to upsell you on things you don’t need, it’s pretty easy to see the benefits.

Here are five questions every first-time long-term disability insurance shopper should know the answer to before they start hunting for a policy.

Do you need long-term disability insurance coverage?

In short, yes. You should have some sort of income protection; one in four workers will become disabled at some point in their careers, usually from an illness like cancer. But the bills won’t stop, even if your paycheck does. The last thing you want is to worry about unpaid bills, on top of recovery.

The good news is that you might already have it. Disability insurance was provided by over 200,000 employers in 2014, so there’s a chance that you are either enrolled in some sort of disability insurance plan, or have the option to enroll. It’s important to know this before you start your shopping journey: If you already have an employer-sponsored disability plan, the supplemental long-term disability insurance you can buy on your own may be limiting.

The point of this guide is to give you the basics of what you need to know about long-term disability insurance.

Some coverage is better than no coverage, so the most important thing is to make sure you have protection. A licensed broker can walk you through the confusing parts and help you make the right decision for your financial situation, but you should at least know where to start.

What are the basics of long-term disability insurance?

Long-term disability insurance covers just that – long-term disabilities. This is generally defined as a period of longer than 90 days of being unable to work due to an injury or illness. It’s only available for people who work over 30 hours a week (the accepted definition of working full time).

  • Elimination period – This is how long it’ll be before your long-term disability coverage kicks in. Also called the waiting period, you’ll usually see it in periods of 60, 90, 180, or 365 days. The longer your elimination period, the lower your premiums, but policies are usually very cost-effective with 90-day elimination periods.
  • Benefit period – How long your benefits will last. You usually have the option to choose between 2, 5, and 10-year periods, or until retirement age, or until you return to work. The longer the benefit period, the higher your premiums.
  • Replacement rate – The amount of your monthly pre-tax income that you’ll be able to cover. You can choose a monthly benefit up to the maximum allowed, usually 60% of your gross pay for most policies. The higher the replacement rate, the more expensive your policy.
  • Own occupation – Generally, your disability should be “own occupation” – that is, you’re considered disabled if you can’t do your own job, as opposed to being considered disabled only if you can’t do any job (known as “any occupation” which, obviously, is a very different definition). For more information on occupation definitions when it comes to long-term disability insurance, check out our full primer here.

How do you know how much coverage you need?

When you’re trying to decide how much long-term disability coverage you need, you need to consider two things: How much money you need coming in, and how long you need it to last.

The amount of income replacement you need depends on your individual circumstances. Your lifestyle, and the amount of money you need to cover your everyday expenses, will be the biggest driver. It will also depend on how well you’re able to self-insure. For most people this comes in the form of an emergency fund. While this can help in the short-term, most emergency funds are only meant to last around six months, up to a year at the most. Many people won’t have an emergency fund that can last multiple years, and dipping into other savings, such as an IRA, comes with a penalty.

Remember those benefit period lengths we talked about in the last section? While you can get coverage that lasts all the way to retirement, the average disability claim is around three years. That means a long-term disability policy with a benefit period of five years will cover most instances of disability.

What affects the price of your long-term disability policy?

As mentioned, the elimination period, benefit period, and replacement rate will all affect your premium. However, there are some things about yourself that will also determine how much you’ll pay for a long-term disability insurance policy. Some of them will be familiar if you’ve shopped for other types of insurance products, they include:

  • Your occupation. Some jobs inherently put people more at risk of a disability than others. A landscaper will likely face higher rates than a writer.
  • Your age. Since older people are more at risk of becoming disabled than younger people, rates will increase the longer you wait to apply for long-term disability insurance. In the next section, we’ll talk about how you can lock in rates if you apply when you’re younger.
  • Your gender. Long-term disability policies for women typically end up being more expensive than for men.
  • Your health. The insurance carrier will want to know your current health and health history to predict your chances of becoming disabled. They do this through underwriting and a basic medical exam. Essentially, a short, free physical with a blood test. Pre-existing conditions may cause the insurer to shorten the benefit period. Or the insurer may include exclusions for certain conditions that won’t be covered.

What riders are available?

An insurance policy isn’t a one-size-fits-all deal. Every situation is different, and policies need to reflect this fact. That’s where riders come in.

Riders are a way for you to customize a standard policy so that it better fits your needs. There are two main caveats when it comes to riders. First, features that are riders with some insurers might be standard fare with other insurers. You might be paying more for the same features depending on the carrier.

Second, riders can increase the cost of a policy. Your choice of riders depend on your individual needs and what your budget can support. Know your options, but talk to a licensed agent about what each rider will do to your policy’s cost.

Common riders for long-term disability insurance policies include:

  • Non-cancelable rider – Looking to lock in your rates for as long as you pay your premiums? A non-cancelable rider will let you do that. That means your policy stays affordable for as long as you need it – a great incentive for getting protection early!
  • Future increase rider – We already talked about how your health affects your premiums. But what if you decide down the line that you need additional coverage? If it’s been 10 years since you first applied and your health has gotten worse. What does that mean for your options? With a future increase rider, your medical insurability is locked in. Therefore, in the future, when you need coverage that corresponds to your new earnings, you can increase it regardless of changes to your health.
  • True own occupation rider – Remember at the beginning of this guide when we talked about “own occupation” being part of the definition of disability? Well, there are actually a few different levels of own occupation (we go into them in-depth here). A true own occupation rider means that if you can’t work in your own occupation – even if you start working elsewhere – your benefit will be paid.
  • Residual disability coverage rider – Let’s say you’re still able to work but your disability has reduced your capacity to do so and you’re making less money than you were pre-disability (for example, you’re only able to work part-time now). A residual disability coverage rider will allow you to receive partial benefits. That way you can make up the difference in income amounts.

Remember, getting some long-term disability insurance coverage is better than having none at all. This guide is your introduction to the world of long-term disability insurance, and now you’re ready to get some free long-term disability insurance quotes in minutes. But there’s always a helpful Policygenius expert a call (or email, or chat) away to answer any questions you have once you start on your journey.

This article originally appeared on Policygenius.




How Disability Benefits Can Support You

More than 155 million U.S. workers are insured for a disability through the Social Security Disability Insurance (SSDI) program. They receive this insurance coverage through their payroll taxes, or FICA taxes, as a part of the Social Security program.

When those who experience a chronic health condition, injury or sudden medical crisis need support – SSDI is there to help. It’s estimated that fewer than one in three U.S. workers have private disability insurance, which means their primary means of assistance, if they experience a work-disrupting disability, is SSDI.

Health conditions such as heart disease, cancer, arthritis, stroke and Type 2 diabetes are among the chronic illnesses that can interrupt someone’s time on the job. Sudden severe health issues include heart attack, aneurysm, traumatic brain injury or spinal cord injury.

These dire circumstances are when the SSDI program is most vital for former workers. The average SSDI recipient is 54 years old and has worked 22 years before a disability occurs and they apply.

The following are the top reasons men and women apply for disability insurance benefits:

1. Income to support yourself and your family. Men and women apply for disability benefits because if they’re approved, they’ll receive important income to sustain their households while they deal with stabilization of, and possible recovery from, their health issue. For some individuals, a health crisis may require 2, 3 or 4 years of treatment and rehabilitation to reach stability before returning to work. Without the ability to earn income, the SSDI program becomes a vital financial support. In 2019, the average monthly benefit for a disabled worker is $1,234, which is about $14,800 annually. For a disabled worker with a family, it increases to $2,130 per month, or $25,560 per year.

2. Health insurance for your medical needs. Another crucial benefit for people who apply for Social Security disability benefits is healthcare coverage through Medicare. Individuals approved for benefits will become eligible for Medicare 24 months after their cash SSDI benefits begin. For some, the wait to receive approval may last 24 months or longer, as they wait for the Social Security Administration to review their claim through appeals. This means many people are immediately able to access Medicare once the SSA approves benefits. Access to healthcare is especially vital for individuals with disabilities dealing with chronic health conditions and degenerative diseases, since ongoing, expensive treatment often can be required.

3. Protect your retirement benefits. Many individuals can discover an important protection by applying for disability benefits, called the “retirement freeze.” You may be aware that the SSA tracks your reported earning over the course of your working career to calculate your Social Security retirement benefits. This includes the years that you don’t work because of a disability: Those years are counted as $0 in earnings. However, if you apply for SSDI and are approved, this means those years with $0 earnings are not factored into your retirement benefit, with the potential to receive more in retirement as a result.

4. Protect your long-term disability income. For workers who have purchased long-term disability insurance benefits, they also receive an important protection. Most LTD insurance plans are designed to integrate with SSDI, so participating workers benefit from lower LTD premiums. Individuals can also benefit from immediate access to income following a disability with their LTD coverage, and then turn to SSDI as another source of support, including income, Medicare and other program benefits. Applying for SSDI provides a protection that can help ensure LTD benefits also continue for former workers.

5. Support for going back to work again. Another advantage when applying for disability benefits is the ability to receive return-to-work protections. Individuals can access important incentives when approved for SSDI benefits. These protections include a trial work period, 9 months over the course of 60 months (5 years), to try working and earning as much as you can and still receive SSDI benefits. Following this period, you have an extended period of eligibility of 36 months to be able to work, earn money and receive SSDI benefits whenever your earnings fall below a certain level. Many other incentives are available to help those who don’t want to give up on returning to work.




Live Confidently

By Katie McCord Jenkins, President and Chairperson, Illinois Mutual.

If you were to ask me what type of business my company is in, you might be surprised with my response: We are in the business of preserving dreams and enabling people to live fearlessly in a time when so many live paycheck to paycheck.

Yes, I see the value of purchasing disability income insurance (DI, as I often refer to it), life and worksite insurance products. However, I believe those products are merely the tools that allow people to achieve and safeguard their financial security.

When you form a financial plan, you are expressing your devotion to your loved ones. If you are unable to work due to an injury, illness or pregnancy, products like disability insurance make it possible to pay your bills and keep the dreams you have for those that matter most alive. I’ve learned that those dreams vary from person to person, but the result of enrolling for or purchasing DI is the same: a sense of financial security.

Take Alan, for example. Owners of a dairy farm, Alan and his wife, Stephanie, are living the life they always wanted for their family. They are grateful for their ability to meaningfully contribute to their local community and surrounding areas through the hard work they enjoy. Choosing to be business owners, though, is something of a leap of faith that naturally comes with some apprehension. Yet, it’s what people do in order to follow the dream of owning a business. In order to reduce some of the risks of being a business owner, Alan purchased a DI policy. He understood that protecting his income is key to protecting his way of life⁠—the life he and Stephanie have built for their family.

Alan explained: “Having this insurance has given us the opportunity to enjoy the positive things in life a little more and worry a little bit less about some of the negative things that can happen in life.” He knows that having an income protection plan in place empowers small business owners to live more confidently and actively pursue their dreams.

I’m passionate about the importance of having disability insurance as part of your financial plan – as were my grandfather and father before me. There are a number of good carriers in the country who believe, as I do, that we can never forget that our job is to serve you. We work to fulfill our promise to pay claims with a sense of compassion and understanding that reflect the mountain of details that come along with experiencing a disability and being out of work.

We recently heard from a mother whose daughter, a professional single mom in her 40’s, suffered a stroke: “I bought a van with an access seat. A seat in the middle row will slowly make a 90-degree turn. It will tilt back and lower my daughter to the ground level. This van has been the most wonderful gift from God. The van was perfect. Without [the disability insurance check], I could have never afforded it. Thank you for your help.”

I am truly energized by the work my company does every day because, just like me, people are going to work every day to provide for those who depend on them. We recognize the significance of those relationships and prioritize offering DI coverage as a benefit to our qualified employees at no charge for this reason. It’s our way of honoring our employees and their commitment to those who matter most to them.

DI is an insurance product that is a critical part of financial planning, and the impact of knowing disability income insurance is in place to keep dreams alive and enable more working Americans to live confidently is truly what it’s all about.




How Paid Family and Medical Leave Policies Can Impact How You Choose Your Benefits

Annual enrollment will soon be underway for many employees. During this time, workers choose benefits they feel are most important to protect their health and financial well-being. Understanding the benefits your employer offers and their associated costs are most likely key considerations for you.

 

In this post, I am going to focus on one type of benefit – disability insurance – that insures your income if you can’t work for a period of time. I’ll also explain how this type of coverage interacts with a variety of paid-leave policies and programs. I hope to unravel some of the mystery and confusing terminology associated with both paid leave and income protection insurance.

 

Income sources if you can’t work

There are different ways to sustain an income when you can’t work due to an injury, illness or pregnancy. Personal savings, state and employer-paid medical and family leave, Social Security disability benefits, and private insurance are all sources that may be available. How do these sources help, and do they provide enough income to help you live the type of life you want to live?

 

Do the Research and Weigh the Facts

Disability happens! Even minor illnesses, injuries and pregnancies with a short duration of recovery (such as a knee surgery) can interfere with your ability to work and earn an income. In fact:

  • If you were to keep track of the 20 -year-olds in today’s workforce, you’d find nearly 25 percent of them will be out of work for at least one year due to heath conditions before they reach retirement. (1)
  • Almost half of American adults indicate they can’t pay an unexpected $400 bill without having to take out a loan or sell something. (2)
  • 6 percent of working Americans will experience a short-term disability (six months or less) due to illness, injury or pregnancy on average every year. (3)  

 

Make the Time to Increase your Knowledge

Where will you find the money to live if you lose your ability to work? Understanding the different income sources available can help you make choices during annual enrollment that fit your needs.

 

Employer-paid leave benefits can provide you with some kind of a paycheck when you can’t work, however, this income may not last long enough to meet your needs. And it’s up to your employer to (a) provide these benefits, (b) determine how long you can receive them, and (c) decide how much you get paid. Some paid leave programs only pay a percentage of your income – and this income is taxable. Sick leave and salary continuation benefits are examples of these benefits.

 

State- and/or federal-provided leave programs can give you an income while you’re unable to work. These programs include worker’s compensation, Social Security Disability Income, and paid family and medical leave benefits. Worker’s compensation benefits pay a percentage of your income if you have an on-the-job accident or work-related illness that cause you to leave work. Social Security provides long-term benefits if you’re disabled for at least five months, are qualified to apply, and are unable to work at any type of job. If you are approved, you may receive benefits up to the normal Social Security retirement.

 

State-mandated paid family and medical leave is emerging in a growing number of states. This short-term benefit provides you with an income while you’re out of work for medical conditions, for the birth or adoption of a child, or caring for a family member. Benefits are typically provided from 12 weeks up to 1 year and can cover from 50 percent to 90 percent of your income.

Oregon is the first state in the United States to offer 100 percent income replacement for low-wage workers taking leave for family, medical or safety reasons. Oregon (and New Jersey) includes victims of domestic violence in its paid family leave law, and defines family broadly to include “any individual related by blood or affinity whose close association with a covered individual is the equivalent of a family relationship” – in other words, you get to take time off to care for someone who is like a family member to you.

 

It’s important for you to check whether you live and/or work in a state where paid family and medical leave is available.

 

State-mandated disability insurance

State-mandated disability coverage is another source of income available to residents in a limited number of states and territories, including Hawaii, California, New York, New Jersey, Rhode Island, and Puerto Rico. These statutory plans generally provide benefits for six months up to one year. They pay you 50 percent to 70 percent of your income with a weekly cap on the maximum amount you can be paid (for example, $1,216 per week in California and $113 per week in Puerto Rico).

 

Statutory disability plans supplement your income for a short period of time, so you may want to consider adding other insurance products if you want to receive a larger sum while you can’t work, or in case you are out of work for a longer period of time

 

Voluntary, worksite or supplementary benefits. Many employers provide options for you to participate in short-term and/or long-term disability insurance. These options are offered by insurance carriers and supplement benefits you may receive from your employer, state and/or federal government programs. You pay the premiums for these optional benefits, although you usually pay less than you would if you bought this insurance on your own.

 

Short-term disability plans provide benefits for three months up to one year (after you satisfy a waiting or “elimination” period).

 

It may take a long period of time to recover from certain health conditions and complicated surgeries. In order to protect yourself from this risk, you can carry long-term disability coverage. Long-term disability insurance pays you benefits after you’ve been out of work for three months up to Social Security retirement age (again, after satisfying a waiting period).

 

Make the Choice to Protect Yourself

It’s important to understand the benefits available to you and how they work together to provide you with an income stream when you can’t work. These benefits help you live your life the way you planned to live it should you become pregnant, ill or have an injury. Making decisions about these benefits during annual enrollment is not always easy, but it is important.

 

Talk with your human resources area, read the materials available to you before annual enrollment begins, ask questions to clarify your benefits and the cost to you, and learn how all benefits may work together.

 

Most employers provide online access to information prior to annual enrollment that you can read on your own time schedule. Many employers also offer videos prior to enrollment. And meetings with human resources and insurance professionals as well as online chat may be available to help you navigate your benefit choices.

 

Remember, what you decide today could affect the rest of your life. Protect yourself and plan for unexpected events. This will help you take control of your financial well-being and help you live a happier life.

 

 

1. Social Security Administration, Disability and Death Probability Tables for Insured Workers Born in 1997, Table A.
2. Ibid
3. Integrated Benefits Institute, Health and Productivity Benchmarking 2016 (released November 2017), Short-Term Disability, All Employers, Condition-specific results.

 




Beyond Your Benefits Package: Why Open Enrollment is a Great Time to Focus on Your Financial Wellness

By Rachel Barrow, Second VP Marketing, Individual Markets, Guardian Life Insurance Company of America.

If you’re like many Americans, your employer offers key benefits that provide valuable protection for you and your family. And you’re probably familiar with open enrollment season – that time each year when you may be able to choose your health insurance provider, explore tax-advantaged accounts like Health Savings Accounts and Flexible Spending Accounts, review and update retirement plan contributions, and elect employer-offered protection products, like disability and life insurance.

 

These “worksite benefits” are offered by your employer typically at a discounted group cost, with the option to further supplement those benefits with voluntary benefits (usually paid by you) that provide additional coverage for health and income. What many employees don’t realize, however, is that Open Enrollment season also offers them the perfect opportunity to look beyond their employer-sponsored benefits — to consider their entire protection strategy and financial picture.

 

Your financial wellness depends on a strong holistic plan that covers all aspects of your financial picture. While employer-provided benefits are a great start, it’s important to keep in mind that those benefit options are not ordinarily designed to protect all aspects of your financial well-being. Fortunately, you can also purchase individual products, such as disability insurance, life insurance and annuities, typically sold through a financial professional, that complement the benefits available through your workplace. Doing so can help to give you more complete financial protection and reduce the risks you or your loved ones could face without them.

 

Some risks to look out for

It’s important to concentrate on at least three risks to your financial well-being:

  • The risk of losing your income
  • The risk of losing your life
  • The risk of outliving your retirement savings

 

There are steps you can take to address each of these three risks. Doing so can help to protect both you and those you care the most about.

 

Protecting your income during your working years

The ability to earn a living is one of the most important things in life. Income is essential to your livelihood and closely linked to your overall financial well-being. But when it comes to protecting your income, many working Americans may not realize the need to make it a priority.

 

It’s easy to underestimate the potential effects of a disability. Yet, here’s a sobering fact: “The perfect storm of medical bills, loss of income, illness and injury — all consequences of a disability — are the leading cause of personal bankruptcy in the United States.”[i]

 

According to The Guardian Life Insurance Company of America® (Guardian), roughly 50 percent of people who leave work because of an illness or injury have trouble paying their bills. Not surprisingly, workers who struggled financially during and after a leave from work had lower financial wellness scores and were more likely to report that the experience had a major or devastating effect on their household.[ii]

 

Even if your employer offers disability income insurance, there may be an income gap. One in 5 workers who made a disability insurance claim were surprised to learn that their employer-sponsored disability plans replaced only a portion of their salary, not 100 percent, based on Guardian’s research. Higher-income employees were also dismayed to learn that bonuses and/or commissions were not included in the calculation of their disability income benefit payments.

 

While no disability insurance plan will ever replace 100 percent of your income, purchasing individual disability income insurance from a financial professional will boost the amount of your money you will receive if you can’t work. If this is important to you, you’ll be able to “weather the storm” a little better if you become ill or are injured.

 

Protecting your loved ones if something should happen to you

If you have family or others who depend on you for financial support, purchasing life insurance from a life insurance professional is among the most important steps you can take for the financial wellness of your loved ones. Even if your employer provides you with this important coverage, it may not provide enough to financially protect those you care most about. And, in many instances, you will lose that coverage when you leave your employer. That’s why purchasing your own individual life insurance policy to supplement any workplace coverage you may have is a smart move, depending on the type of policy you buy.

 

Keep in mind the valuable protection role that life insurance plays: If something should happen to you, your policy’s death benefit will help ensure that your survivors can maintain their lifestyle, avoid financial hardship or bankruptcy, and continue to pay essential bills such as their rent or mortgage, health insurance, college tuition and car loans. Simply put, life insurance is one of easiest and most affordable ways to protect your loved ones should they lose your salary.

 

Protecting your income in retirement

The risk of outliving your retirement savings is a real one. While people who qualify for Social Security benefits in retirement can expect to receive a monthly benefit for the rest of their life, 80 percent of those participating in the 2019 Retirement Confidence Survey reported they would also rely on money from an employer-sponsored retirement savings plan, such as a 401(k), for income in retirement.[iii]

 

One problem with that approach is these individuals risk running out of money in retirement, since the retirement income generated from a retirement savings account depends entirely on the individual’s account balance, the performance of the account’s investments and the withdrawal strategy used.

 

Eighty percent of survey respondents plan to work during retirement to supplement their income, yet only 28 percent are ultimately able to do this.

 

As with disability income and life insurance, there are steps you can take to help protect your income in retirement. In addition to contributing as much as possible to your employer-sponsored retirement savings plan, you may wish to consider purchasing other products from a financial professional, such as bonds and CDs, which can provide somewhat predictable returns, with possible tax advantages, and can help round out your investment portfolio.

 

Another option to consider is an annuity. By paying an insurance company a specified amount of money, you receive regular payments for a set amount of time, or for life. There are many different types of annuities that can provide you with cash flow right away (immediate annuities) or at some point in the future (deferred annuities).

 

Make the right moves for your financial future today

During open enrollment, it’s a good idea to consider your overall financial wellness, and address not only the benefits your employer provides, but protection products that can supplement those valuable benefits. Doing so will help you to address the risks to your financial well-being head-on. You have the power to make the decision to go with what you truly need based on your goals or concerns. Go through your options and be sure you can explain what you are buying. It all has to be clear and valuable for you.

 

If you need assistance in addressing any of these risks, a qualified financial professional can help you understand your options — and put you on the path to enhanced financial wellness.

 

 

Rachel Barrow leads the Product Marketing team for Individual Markets at The Guardian Life Insurance Company of America®. She has been with Guardian Life since 2009 and in the insurance business for over 20 years. Rachel and her team produce educational tools and resources focused on strategies to help individuals, families and small business owners achieve financial security. Check out her previous post: Time to Invest in You: Ways to Make Your Retirement a Reality

 

Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

Guardian® is a registered trademark of The Guardian Life Insurance Company of America©. Copyright 2019 The Guardian Life Insurance Company of America.

 

 

2019-86981 (exp: 9/2021)

[i] Medical Debt as a Cause of Consumer Bankruptcy, 2014 Maine Law Review (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2515321), Posted Oct. 27, 2014; last revised Nov. 11, 2015

 

[ii] Source: Income Protection: The Role of Disability Insurance in Financial Wellness, The Guardian Life Insurance Company of America, New York, NY, May 2019 https://www.guardiananytime.com/gafd/wps/portal/fdhome/insights-perspectives/emerging-trends/income-protection

 

[iii] 2019 Retirement Confidence Survey Report conducted by the Employee Benefit Research Institute and Greenwald & Associates, April 23, 2019 https://www.ebri.org/docs/default-source/rcs/2019-rcs/2019-rcs-short-report.pdf




What You Should Know for Your First Open Enrollment

By Jenn Kischell, Vice President, Group Benefits, MetLife.

 

Open enrollment is taking place across the United States, and like millions of workers, you must submit your choices by a certain deadline. Many younger employees, however, are unsure about what types of coverage to select and how much and are tempted to wait until the last minute. This can lead you to decisions you may regret and financial setbacks.

 

Instead, take a minute to explore why benefits deserve your full attention and how to make the right choices.

 

Why Benefits Are Worth Your Attention

 

It’s tempting to procrastinate about benefits enrollment and you’re not alone. According to a recent MetLife survey, among young respondents (ages 21-38), about one in five spend only a few minutes reviewing benefits choices before making selections. And nearly half said they dread making annual benefit enrollment decisions equally as much as asking for a raise.

 

There are many reasons why you should think carefully about your benefits, including:

 

Benefits are part of your total compensation package. In fact, according to the Bureau of Labor Statistics, for every $2 employers spend in wages and salaries, they spend an additional $1 in benefits.

  • . Many employers are investing in their employees through generous benefits programs in order to attract the best employees, so you should take advantage of all they offer you.
  • Unexpected illness and accidents CAN happen. Per the Council for Disability Awareness (CDA), more than one in four of today’s 20-year-olds can expect to be out of work at least a year before they reach retirement age. This underscores why benefits like disability insurance are critical.
  • Benefits protect your savings. Most experts say people should have enough money to cover three to six months of living expenses if you’re unable to work, yet according to The CDA, only about half of adults in the U.S. have enough to cover just three months. In the MetLife survey, more than a quarter of young respondents said they could barely cover two weeks. Benefits help reduce financial burdens and anxiety, keeping money in your pocket.

 

How To Make the Right Choices

 

Especially for employees early in their career, being thoughtful about open enrollment can make the difference between achieving short- and long-term financial goals and pushing them off.

 

  • Assess your personal situation. Take an honest look at your lifestyle, health, family history and more before making selections. Consider your financial goals that could be thrown off by unexpected expenses. Many employers offer legal services, for example, that help reduce the cost of hiring a lawyer for speeding tickets, wills or landlord disputes.
  • Have meaningful conversations. Talk to trusted friends, colleagues or family for advice. MetLife’s survey found that just one-quarter of young people asked for advice from a friend before making benefit decisions. Conversations with people you trust can help you understand the personal value of benefits and provide insights you haven’t considered on how they relate to your life.
  • Do the research. Carefully read the full benefits package, as well as any additional material your employer may have available, such as videos and online guidance tools. You might be surprised about new offerings, or what existing options cover. For example, disability insurance might support mental and emotional illnesses, and some companies may offer auto and home insurance, or tuition reimbursement.

 

The bottom line is that employers offer benefits to stay competitive and help employees thrive. It’s up to employees, however, to make the most of the package to achieve their goals. By paying attention to your package, you can select the right “sweet spot” of benefits to build a better life.




Educating Employees About Disability Insurance? Ask Them 5 Questions

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

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

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

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

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

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

1. What does disability mean in this context?

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

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

2. What are the statistical chances of becoming disabled?

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

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

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

3. How would you pay your bills?

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

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

4. What does Workers’ Comp and SSDI cover?

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

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

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

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

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

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

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