Paid and Unpaid Leave: What You Need to Know (And How You Can Be Protected Without It)

Benefit packages can be confusing to understand, and – it’s sad but true – many times are forgotten the minute the onboarding paperwork is signed. Unfortunately that leaves many employees not fully understanding their benefits package, and one area of frequent confusion is what their “paid” and “unpaid” leave options are. Not being clear on what you can collect can either lead you not to take advantage of benefits you are due, or could lull you into thinking you are going to get paid more than you actually are.

Let’s break down the difference and share some insight into figuring out how you can make sure you have access to these important benefits.

Paid Leave

Getting paid when you’re not working? Sounds like a dream, right? In actuality, though, it’s a benefit that you earn through your service. At most workplaces, you are probably most familiar with paid leave as it applies to major holidays, vacation time, sick time, etc. In some cases, you let your HR department know how you are using your paid leave (“I’m sick!”), and in other cases, it’s all lumped together as “Paid Time Off” that you use at your discretion (“I’m sick of work!”)

But paid leave is also a benefit that allows workers to take part of their pay while you take more of an extended time away from work. This comes into play when you are dealing with a serious health condition — one that needs either inpatient care or ongoing treatment from a provider (including pregnancy) — caring for a family member with a serious health condition or caring for a newborn or newly adopted child or new foster child.

Paid leave is also offered to military personnel, under the Uniformed Services Employment and Reemployment Rights Act (USERRA)  if your military compensation is less than what you would be being paid at your company.

Note that only a few states have laws requiring paid leave for various circumstances. And while many companies have their own, more generous policies, the benefit is not as widespread as you might imagine: The National Partnership for Women and Families, a non-profit, non-partisan advocacy group, estimates that only 17 percent of workers in the United States have access to paid family leave through their employers.

Unpaid Leave

This is just what it sounds like – leave that is unpaid, but is designed to protect your job (and status and benefits) so you don’t have to quit in the event you need time off for a health situation.

The most well-known source of unpaid time off is the Family and Medical Leave Act (FMLA), which offers 12 weeks of unpaid leave to care for newborns or seriously ill family members for employees who have worked at least 1,250 hours in the prior year for a company that has 50 or more employees. Typically you will exhaust your paid leave first and then you can begin collecting these benefits.

Some military leave, such as deploying with the National Guard, also typically qualifies as unpaid leave.

Remember that companies may offer an extended unpaid leave of absence or other time off that may protect your job even above and beyond what they have to by law. It’s vital to talk to your HR department and get all the particulars in writing before taking leave.

How Disability Policies Can Keep Your Paycheck Intact

Whether or not your state or company offers ample paid leave, disability insurance (or, as we like to call it, “income insurance”) is a smart addition to your benefits package. Although fewer than 40 percent have access to personal medical leave through short-term disability insurance that is provided by their employer, most workplaces offer you the option of purchasing more. It’s a decision that can save your finances should the unexpected happen.

Check into both short-term policies, which typically run from 13 to 26 weeks, and long-term policies, which kick in when you have exhausted your short-term benefits. These policies cover a percentage of your pay up to your full pay depending on their conditions.

While most workers believe they will never need disability insurance, statistics show that nearly one-quarter of the 20-year-olds in today’s workforce will miss at least a year of work due to a health condition before they reach retirement age.

Disability coverage is an important benefit every worker should be well aware of to augment your existing paid and unpaid leave.




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

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

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

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

Plan with care

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

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

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

Explore your options and mind any gaps

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

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

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

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

Invest in yourself

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

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

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

2018-69267

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

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

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

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




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

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

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

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

How do employees define “financial well-being?”

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

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

Now vs Later… and Everything In-Between

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

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

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

 What are the chances?

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

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

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

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

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

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

DI can set you apart

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

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

1Career Builder / Harris online poll conducted June 2017

2 US Social Security Administration, Fact Sheet 2018

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

4 Survey conducted for MassMutual by Greenwald & Associates in 2017




SSDI lacks rehabilitation resources

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

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

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

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

SSDI is not all bad news for employers

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

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

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

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

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

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

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

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




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

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

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

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

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

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

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

Three Disadvantages of Relying on SSDI for Employee Disability Coverage

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

The Wait

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

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

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

SSDI is Hard to Get

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

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

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

SSDI Lacks Rehabilitation Resources

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

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

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

SSDI is Not All Bad News for Employers

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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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

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

Here’s an example:

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

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

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

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

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

Cap                               Salary Covered 

$10,000/month                  $200,000

$7,500/month                    $150,000

$6,000/month                    $120,000

$4,000/month                    $100,000

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

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

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

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

We consider you disabled under Social Security rules if:

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

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

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

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

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

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

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

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




Do your benefit priorities match your employers’?

By Diane Russell, Lincoln Financial

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

What employees are concerned about

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

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

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

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

Benefits make a difference

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

Benefits attract6

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

Benefits retain7

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

What employees value

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

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

Interconnected benefit solutions

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

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

How can your employer help?

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

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

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

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

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

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

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

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

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

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

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

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

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

Conclusion

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

Sources

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

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

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

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

5 See footnote 3.

6 Harris Poll for Glassdoor, December, 2015.

7 Glassdoor Employment Confidence Survey, October 2015.

8 Lincoln Financial Group “2017 Employee Benefits Study.”

9 See footnote 8.

10 See footnote 8.

 

 




Looking for top employees? These three benefits are a must

By Diane Russell, SVP Marketing, Lincoln Financial

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

What employees are concerned about

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

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

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

What employees value

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

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

Benefits make a difference7

Interconnected benefit solutions

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

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

How can employers help?

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

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

Sources

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

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

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

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

5 See footnote 3.

6 Lincoln Financial Group “2017 Employee Benefits Study.”

7 See footnote 6.

 

 




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

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

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

Absence can also be overwhelming for employers

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

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

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

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

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

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

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

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

Consolidated administration drives efficiency

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

Help is available

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

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

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

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

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

For more on paid leave and your paid leave strategy, tune into the CDA podcast, with Carol Harnett, Abigail O’Connell and Marjory Robertson.




Selecting benefits and insurance products that make sense for you

By Carol Harnett, President, Council for Disability Awareness

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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