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.

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

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

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

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




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

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

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

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

How do employees define “financial well-being?”

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

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

Now vs Later… and Everything In-Between

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

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

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

 What are the chances?

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

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

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

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

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

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

DI can set you apart

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

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

1Career Builder / Harris online poll conducted June 2017

2 US Social Security Administration, Fact Sheet 2018

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

4 Survey conducted for MassMutual by Greenwald & Associates in 2017




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/




Selecting benefits and insurance products that make sense for you

By Carol Harnett, President, Council for Disability Awareness

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




Beyond medical: How supplemental benefits help attract and retain talent

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

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

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

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

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

Why peace of mind matters

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

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

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

Getting beyond medical

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

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

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

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

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

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

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

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




The basics of the Social Security Disability Income Program

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

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

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

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

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

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

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

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

You must have worked to qualify

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

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

You must qualify medically and vocationally

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

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

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

Many Issues are surprisingly irrelevant to the SSA

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

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

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

The SSDI Application Process

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

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

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

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

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

When Awarded SSDI

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

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

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

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

 




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

 

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

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

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

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

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

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

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

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

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

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

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

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




What to Do Now to Prepare for a Smooth Maternity Leave

Mother with her newborn baby.

Has the latest mommy blog replaced the Wall Street Journal as your go-to online reading? Congratulations! There’s no more exciting time than when you’re expecting a baby. But, along with the anticipation comes some worry — about your baby’s health of course, but also smaller things, like will you ever learn how that car seat works (yes); will you ever get a shower again (yes); and…how can you prepare for a smooth maternity leave? We can’t really help you with the first two, except to assure you that you’ll be fine, but here are some pointers to help with the third.

Check on your insurance coverage.

Now’s the time to find out exactly what your benefits are, from confirming what hospitals and services are covered to making sure baby is added to your policy.

Check your company’s maternity leave policy to see what coverage you have, which could fall under paid or unpaid family leave or short-term disability coverage. Yes, believe it or not, pregnancy is included as a disability — in fact, it’s the No. 1 cause of short-term disability claims.

Short-term plans typically cover you from the date your physician tells you to stop working before delivery (this can vary based on your particular situation) until six to eight weeks after delivery, depending on plan specifics. And there usually will be a short “elimination period” before benefits are payable. In the event you have pre- or post-partum complications and your doctor determines it’s best for you to be out of work longer, your short-term plan will usually cover the additional time — up to what’s called the “maximum payable period” or MPP for the plan (usually six months, although it can be as short as three months). Anything beyond the MPP would have to be covered by your long-term plan — if you have one.

To get short- or long-term disability coverage through your employer, you may have to sign up for it either when you first become eligible for benefits or during the annual open enrollment period. Keep in mind that you need to sign up for it before you become pregnant. And once you’ve got it, remember that other, unexpected, health events could keep you from working in the future, so it’s to your advantage to maintain continuous coverage (more on that here.)

Line up daycare.

In some areas, it can seem as tricky to get into a top-flight daycare center as to get into the college of your choice. The time to get on the waiting list is the minute you know you need to

Of course, there are numerous childcare options, from nannies to nanny shares to family members, so take the time to talk through the pros and cons and find the one that best suits your familial and financial situation. In addition to giving you peace of mind, having your daycare situation handled presents the solid message to your workplace that you are indeed intending to return. 

Tell your boss before social media.

Even if you’re not “friends” with your boss, social media news travels incredibly fast and your manager might not appreciate finding out your exciting news after your Twitter followers and Facebook friends do. 

Of course you’re going to break the news to family and IRL friends, but offer your boss the courtesy of letting her or him know before you post to the wider world online. Hopefully they will be happy for you, but remember, this might cause your manager some anxiety, too, so don’t be offended if the first reaction isn’t what you’d hoped for. 

Develop a plan.

You might use the first meeting to assure them that you’ve got your leave handled, but press for a separate meeting to go over the details. You’ll want to give them a chance to get over their shock and get some questions ready. 

Create a plan that includes as many details as you can about your planned leave and return, such as important upcoming events like client reviews or sales meetings, along with a preliminary idea of how you see those duties being handled. Naturally you can’t anticipate everything that might arise, but an initial plan will give your manager the added confidence that nothing is going to fall through the cracks. 

Document everything.

When you think about it, a lot of what we do every day is just second nature. Reports go to this client this day. That client prefers invoices in this format. You always give an end-of-week sales update to this person.

As you prep for your leave, look at the cadence of your days, weeks, and even months and figure out what types of details you can leave that will make the break seamless for your clients and your “replacement,” whether that’s one person or several dividing up duties. 

Then develop a “cheat sheet” that shows what dates each day or month certain activities should happen, and include a template, if possible, for agendas, reports, proposals and the like. The more your team knows, the smoother your leave — and your eventual return — will be. 

Don’t commit to too much availability until you know.

You might think you’ll be totally into a Monday morning sales call, until you spend all Sunday night soothing a fussy newborn. Beware of biting off more than you can (or want!) to chew and give the office some very loose guidelines, such as that you’ll check email once a week and respond to anything crucial, or if someone texts you with an urgent manner, you’ll respond as soon as you are able. 

Make sure your email and voicemail messages steer correspondents to other resources to avoid too many questions or issues, and then plan to play it by ear to determine what works best for you and baby. You may find that it’s a nice respite from “Goodnight Moon” to talk marketing, or you might want nothing to do with the office update. 

But above all else, enjoy every minute with your newborn. All too soon you’ll be back at the office and you’ll likely be pleasantly surprised at how little has changed (except you!) 




5 Frequently Asked Questions About Disability Insurance

Woman with crutches sitting on a sofaDisability insurance provides critical financial protection to American workers. Yet it’s a highly misunderstood form of insurance. You probably have health insurance, home or renter’s insurance, and car insurance. But what about your need for income protection insurance?

Disability insurance pays you a portion of your income when an injury or illness takes you out of work for an extended period of time. It’s a critical form of insurance for most working Americans — because it means if you have to miss work for weeks or months at a time, you will have a financial safety net in place to help cover the bills.

Here are six frequently asked questions about disability insurance:

1. Do I really need it?

Most people hear the word “disability” and assume this form of insurance only applies to very serious injuries and illnesses — yet many common injuries (like fractures) or chronic conditions (like back, hip, or knee problems) can result in your not being able to do your job and earn a paycheck.

According to the U.S. Social Security Administration, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of some disabling condition before they reach age 67 (the normal retirement age). Will you have an ability to pay your bills if you need to miss work for several months? If you don’t have access to that much in emergency savings, or friends or family that can help pay your bills when you need to take time off work, disability insurance makes a lot of sense.

2. What’s the difference between short term and long-term disability insurance?

Short-term disability (STD) insurance plans generally protect your income for up to three or more commonly six months. Some plans can run even longer than that. Short-term plans typically cover between 60 and 70 percent of your pay, depending on the policy.

Long-term disability (LTD) insurance protects your income if you need to miss work for longer than three to six months. It usually covers 40 to 70 percent of your income. It costs more than short-term disability insurance because it’s a policy that will protect you for a significantly longer time. The time your coverage pays benefits will range depending on your policy. It can be for a specific period — ranging from two to five or ten years — or until your Social Security retirement age. The waiting period for most LTD policies is three or six months — so you’ll need a plan to cover costs before the payments begin (usually this time is covered by your STD plan or your savings.)

3. Does disability insurance cover all disabilities?

Every plan will have its own definition of disability, so you’ll need to review the definition in your particular policy. In general, many policies do not include the following disabilities:

  • A disability resulting from participation in a riot
  • Injuries which are intentional and a result of self-infliction
  • War or any act of war
  • Any period of disability during incarceration
  • A disability resulting from a crime in which the individual has been convicted
  • Pre-existing conditions (definition varies by policy)
  • For short-term disability: occupational sickness or injury (as this is generally covered by Worker’s Compensation)

4. Can I work part-time and still collect benefits?

Your insurance contract will specify if you can receive benefits while working part-time. Many policies allow you to work, but take the amount you earn and subtract it from your benefit. If your policy has a lifetime benefit cap, working part-time may extend the life of your benefits.

5. How much disability insurance should I get?

Insurance companies typically do not sell disability insurance policies which replace all of your income. But, they do sell policies which can replace up to 70 percent of your income. If your employer does not offer a disability plan with 70 percent coverage, you may want to look for supplemental insurance coverage to offset the difference.

One major benefit of owning your policy: When you pay premiums yourself, you are paying with after-tax dollars. Therefore, any benefits will likely be tax-free. Tax-free benefits paying 70 percent of your income comes close to being 100 percent of your take-home pay. If your employer pays the premiums and the cost is not included in your taxable income, then benefits will likely be subject to taxation.

A good rule of thumb is 70 percent coverage, but, as with all insurance needs, it depends on your circumstances and what you can afford. Regardless, seek out a qualified advisor if you need help crunching the numbers.

Disability insurance is a good idea

Just think how devastating the loss of income would be for you and your dependents. Then think how much worse it would be to lose the ability to earn an income. This is a circumstance you can avoid with proper planning and an action plan.