Podcast: What Every Employer Should Know About Social Security Disability Insurance



Introduction

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

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

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

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


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


Introducing Ted Norwood from IBI, Inc.

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

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

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

What is SSDI?

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

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

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

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

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

What is Elligibility for SSDI?

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

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

Applicant Profile

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

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

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

Clarify the Inability to Work

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

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

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

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

Job Function Differentiation

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

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

Accommodations for Work: Private vs. SSDI

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

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

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

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

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

Payments

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

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

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

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

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

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

Attorney Required

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

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

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

The Application Process

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

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

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

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

Evaluation

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

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


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


Reconsideration

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

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

Building a Case

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

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

Appeals in Federal Court

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


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


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

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

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

Associated Attorney Fees

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

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

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

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

Final Word to Employers

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

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

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

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

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

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


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




Workplace Mental Health: Research on Preventing Lost Productivity & Work Disability

By Dr. David Berube, Chief Medical Officer,
VP at Lincoln Financial Group


Mental illness is a condition that affects a person’s thinking, feeling or mood. Such conditions may affect someone’s ability to relate to others and function each day, and each person will have different experiences, even people with the same diagnosis. It is not the result of one event, rather, according to research, mental illness is a culmination of several factors. According to the National Alliance on Mental Illness, factors could include genetics, environment and lifestyle. And, in the workplace, it can have various affects for those who suffer and those who employ them.

Pervasiveness of Mental Health Illness in the Workplace

The pervasiveness of mental health illness (MHI) in the workplace is high. In fact, it affects almost twenty percent of employees and costs employers over $80 billion annually, mostly for lost productivity and absenteeism.1 The most common mental diagnoses are: anxiety, depression, and substance abuse, and together, they account for over eight percent of all long-term disability claims.2 Although treatment may improve mood, behavior, productivity, and absenteeism,3 and can be cost-effective for employers,4 studies have shown that many people with MHI don’t get proper treatment.5

Barriers to Treatment

Why does this problem persist? Three major factors that may prevent those who suffer a mental illness condition from seeking and staying in treatment include a low perceived need for treatment, stigmatization surrounding MHI, and financial support for treatment. For example, employees and their family members may not be aware that they have a significant problem or that the problem they have is treatable; also, primary care may not adequately address screening for MHI.6 Additionally, workers may be concerned about stigmatization and discrimination at work or in their community. Then there is insurance; co-pays for healthcare visits and pharmaceuticals can be daunting, and insurance coverage for therapy may be limited.7

This doesn’t address the courage it takes for someone to seek help, the time it could take to find the right practitioner for quality care, and the potential challenge for confidently returning to work. Patients often wait a month or more for an appointment with a psychiatrist,8 while often times primary care physicians, who have limited training and specialization in MHI, may have to fill in for mental health professionals. The quality of patient care has also been a problem. One study shows that only fourteen percent of insured MHI patients received care that met best practice guidelines.9 Another unanticipated challenge is the ability for someone to effectively return to work. In the workplace, employers are often unsure about how to help someone with MHI stay at work or even return to work, citing concerns about confidentiality, stigma, managing the employee, and the accommodations needed for a successful employee transition.10 Because such protocols might not exist yet for an employer, employers may not recognize or address psychological, social and organizational job characteristics that could potentially affect work outcomes.11

Insurance Can Pave the Way to a Solution

Although these barriers to successful treatment exist, the good news is that effective solutions are available; they often relate to education, awareness and access. In specific scientific investigations and as well as consensus recommendations, there are proven circumstances that stand as evidence employers can achieve better results to support these employees. In fact, studies show that with good health insurance coverage (often employer-provided) for MHI, workers are much more likely to pursue treatment.9 Also, now more than ever, there are online and in-person resources to help educate employees about early recognition and treatment. There are also tools for for mental health professionals to assist MHI patients cope with life’s challenges, and the expected results in terms of better function at work and at home.12 Finally, a private prescreening can be the difference between someone who knows they need help, and those that take that first step to getting care. Confidential screening for MHI, in person or by phone, can identify MHI and engage people to initiate treatment early on if linked to the right interventions.13

Telecommunications Can Boost Timeliness of Treatment

In healthcare technology, automation has helped to speed up MHI patient access and care. Advances in telecommunications, like telepsychology, can be as effective as in-person therapy, in breaking down the stigma often associated with MHI, and enabling those who might not other wise reach out to do so. In turn it may reduce the shortage of professionals available for in-person treatment.14,15  As any other service provided, positive results will depend on engaging trained, licensed mental health professionals who are adept at using telepsychology.16

Regardless of how care is delivered, scientific evidence supports specific treatments that are most effective. Health insurers can have a significant role in ensuring quality and compliance — especially through MHI disease management.17

Employers Can Offer Return to Work (RTW) Strategies

For the employer, accommodating for employees with MHI can be challenging, but the basic principles are similar to those for other medical conditions. An important starting point for companies to support those returning to work after a MHI disability, is to ensure that there is a clear policy and protocol in place, as well as strong, consistent leadership to support those employees. Employers have generally had success when they offer encouragement, respect and confidentiality, and inquire about what types of accommodations would be helpful. The ultimate goal is to engage case managers and RTW coordinators to facilitate communication and the RTW process in a supportive environment.18 RTW strategies may include modified training and supervision, and gradually increasing hours and work demands.19 Effectively addressing MHI is challenging, but material evidence now exists for what works and how to achieve better results.

The time and effort needed to focus on RTW for employees with MHI is an investment in the workplace community for the longterm and far outweighs the cost of replacing critical talent. Early recognition, appropriate treatment, and productive accommodations are good for your bottom line and, more importantly, good for your employees.1


Dr. David Berube is the Chief Medical Officer at Lincoln Financial Group, a member of the Council for Disability Awareness. Dr. Berube is an occupational medicine specialist in West Haven, Connecticut. He received his medical degree from University of Rochester School of Medicine and Dentistry and a Masters in Public Health at Yale University. He’s been in practice for over 25 years.


1American Psychiatric Association Foundation. Business Case for Mental Health and Substance Use Disorder Treatment. 2010.

2 Council for Disability Awareness. Long Term Disability Claims Review. 2013.

3 Beck A, LA Crain, LI Solberg, et al. The Effect of Depression Treatment on Work Productivity. American Journal of Managed Care. 20(8):e294-301. 2014..

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Bridging the Gap- The Case for Supplemental Income Protection

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

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

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

The Income Gap | The Potential for Underinsurance

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

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

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

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

The Solution | Supplemental Income Protection

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

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

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

Enrollment Fundamentals

Employees are most satisfied with a new benefit offering when they clearly understand its value and how it applies to their situation. Employees may not understand the value of insurance products because the nature of insurance itself is complicated. To overcome this challenge, work with a provider on a strong educational approach, tailored to the demographics and culture of your company, so employees can feel confident in their decision. Personalized education is critical and educating employees on how their Group LTD plan works for them is essential. Employers see value in providers that offer a strong educational component.

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

A Win/Win

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


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

1 Mind, Body, and Wallet” Guardian 4th Annual Workplace Benefit Study, 2016

2 Council for Disability Awareness, Chances of Disability, http://disabilitycanhappen.org/overview/, accessed October 2018

3 Council for Disability Awareness, Long-Term Disability Claims Review, 2014

2018-68302




The Path to Financial Literacy

path to financial literacy

Financial literacy is not something that just happens to you.  In fact, it is a skill that involves education and practice.  And while you might believe you are financially literate because you make and stick to a budget, in reality, it is so much more than that. On the path to financial literacy, having a budget is but one of the many steps in the right direction toward being financially responsible. But being financially literate involves practicing and building on the skills you need to make sound decisions with your finances over a long period of time.

If you are a young or newly independent adult just starting out in the world, you will likely feel daunted by the trend in today’s high cost of living, especially if you are entering the workforce and learning what it means to balance new income with your new expenses. In fact, a recent survey from Merrill Lynch/Age Wave finds that 70 percent of adults aged 18 to 34 depend on their parents financially—whether for everyday expenses, like cell phones and groceries, or even rent or mortgage.  Despite this help, the survey found three-quarters of millennials define adulthood as being on their own financially.  So if this is the case for you, certainly you’re not alone.  

How Can You Build Financial Literacy? 

The topic of financial literacy is a timely one – April is National Financial Literacy Month – and here we provide some concepts for you to think about on your journey to a more financially literate future.

Create a Budget Consider Disability + Life Insurance
Start an Emergency Fund Plan for a Home Purchase
Check Your Credit Protect Your Apartment or Home
Maximize Retirement Options

Understand Your Health Insurance

Learn to Invest

Create a Budget

A personal monthly budget allows you to plan for how you’ll spend and/or save your money each month and also keep track of your spending patterns. Creating a budget may not sound exciting, it’s an important exercise in keeping your finances in order.

With a budget, you can begin to prioritize your spending and better manage your money and financial future.

Start an Emergency Fund

Charging an unexpected expense on a credit card can be financially devastating as high interest charges accrue. And yet, only 40 percent of Americans say they could cover an unexpected $1,000 bill with savings. While that sounds high, you could easily be hit with a staggering bill in one visit to the emergency room, the vet or the car repair shop. Building an emergency fund cushions the blow so you don’t have to rely on your credit card—or your parents.

Check Your Credit

What you don’t know can hurt you…and your financial future. We’re talking about your credit score…and if you’re like half of Americans, you haven’t checked your credit score recently.

A credit score ranges from 300 to 850, and anything over 700 is considered pretty good. A high credit score is a great advantage when you want to take out any kind of loan, including a mortgage. On the path to financial literacy, you’ll have lower interest rates, which saves you money in the long run.

It takes time and effort to build good credit by consistently paying your bills, but you can decimate your credit fairly quickly by defaulting on loans or filing for bankruptcy.

A study by the Federal Trade Commission (FTC) found that about 20 percent of consumers discovered an error when checking their reports, and that number could be even higher considering the recent spate of data breaches. A strong credit score ensures you are offered the best possible rates for credit cards and mortgage and auto loans. Not sure how you measure up? See if your credit card offers a free credit report as one of its perks, or visit Annualcreditreport.com to take a look at yours.

Maximize Retirement Options

Even if you don’t plan on retiring for decades, it’s important to start saving now. If your employer offers a retirement plan, don’t wait to sign up.  Many companies even offer a match up to a certain percentage, and if you don’t contribute at least that much, you are literally leaving money on the table.

If your employer doesn’t have a 401k plan, you can look into a Roth IRA. Whatever route you take, make sure you’re putting away enough money so you’ll be comfortable in your retirement years.

While saving for retirement can seem futile when you have so many needs now, we promise that your future self will thank you—a lot—for saving early when you have the longest potential time to take advantage of compounding interest. Need some saving inspiration on your journey to financial literacy? Check out this chart that shows what happens to your money if you start saving early, compared to later. 

Learn to Invest

Once you have your emergency savings set aside and you’ve signed up for a 401k or Roth IRA, it’s time to start thinking about investments. Investments include mutual funds, stocks, bonds, and real estate—but be sure you don’t put all your eggs in one basket. This means you should diversify your investments. That way if some parts of your portfolio aren’t very profitable for a few years, your other investments will help make up the difference.

Consider Disability and Life Insurance

Think you’re invincible? Think again—the scary truth is that more than one-quarter of today’s 20-year-olds can expect to be out of work for at least a year due to a disabling condition before they reach retirement age. While on your path to financial literacy, consider getting disability insurance; it can help you pay your bills until you are back to work.

And while you especially need life insurance if anyone depends on you financially, it’s a smart benefit for anyone to have, since the policy can cover funeral and burial expenses. The next step on the path to financial literacy is to make sure to check with your HR department to see what your company offers in terms of disability and life insurance—and make sure you take advantage of this important benefit.

Plan for a Home Purchase

Along the path to financial literacy, you might find yourself considering the purchase of your first home. And while it is easy these days to be priced out of homeownership in many markets, in other places, a monthly mortgage payment can be close to the same amount as rent. (This calculator will help you determine the viability of buying vs. renting.) And if the common down payment of 20 percent sounds daunting, there are a wide array of programs that can get you into a home for substantially less. If you are relatively settled in your locale, it’s worth talking to a real estate agent and mortgage broker to find out the true cost of home ownership, as it’s still a tried-and-true avenue to long-term wealth.

Protect Your Apartment or Home

If you are not ready to buy, and you plan to rent, you might not think you need insurance, but you’ll regret skimping on it if your apartment gets broken into or your dog bites a visitor. Renter’s insurance will cover your belongings in the case of theft, fire, water damage, etc., and also can cover liability for a variety of scenarios—and it’s typically surprisingly affordable, averaging less than $200 a year.

If you own a home, chances are good that you probably have homeowners insurance as a requirement from your mortgage provider, but double-check your policy to ensure it covers as much as you think it should—such as the actual “replacement value” of your items, rather than just cash value, and short-term lodging in the even you are displaced.

Understand Your Health Insurance

PPOs, HMOs, HSAs…the alphabet soup of health insurance is enough to give anyone a headache. But if you don’t know what your insurance covers, you could be on the hook for an unexpected high bill…or you might be delaying services that would be covered. Some plans even offer free telemedicine services or other perks that you could take advantage of if you only knew.  Log in to your health insurance portal and click around a little to find out what’s covered and where…certain insurance only works at specific hospitals, for example. If you have any questions, don’t hesitate to seek out your HR department. They are there to help make sure you understand your coverage and limits inside and out.

As life changes occur,  you naturally grow, learn, and build upon your experiences. In this way, it is important to understand that getting on the path to financial literacy is an ever-evolving journey; it takes time and perseverance. And while you may find one concept relevant now, you might find another one more relevant to your life situation later.  Each part of the process is not wasted, only propelling you to a more secure financial future.


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Earth Day | What Does It Mean to Go Green?

tips for how to go green this Earth Day

‘Going Green’ means to live life, as an individual as well as a community, in a way that is friendly to the natural environment and is sustainable for the earth, and Earth Day is the annual day of awareness that celebrates the green lifestyle.  

It is an opportunity for individuals and communities to come together to adopt new behaviors and share knowledge and practices that can lead to more environmentally friendly and ecologically responsible decisions and lifestyles.  As a result, Earth Day reminds us that small changes in how we live our daily lives today can help protect the environment and sustain its natural resources for future generations.

In our every deliberation, we must consider the impact of our decisions on the next seven generations. – Great Law of the Iroquois Confederacy

To meet today’s environmental challenges, it’s important for everyone to consider the effects of their actions at home and in the workplace. Here are a few tips and resources for environmental stewardship provided by experts at the World Watch Institute:

Recycle

Recycling programs exist in cities and towns across the United States, and as a result, helps save energy and protect the environment. According to the U.S. Environmental Protection Agency, for each pound of aluminum recovered, Americans save the energy resources necessary to generate roughly 7.5 kilowatt-hours of electricity. This is enough to power a city the size of Pittsburgh for six years!

What you can do:

  • Put a separate container next to your trash can or printer, making it easier to recycle your bottles, cans, and paper.

Turn Off the Lights

On the last Saturday in March hundreds of people, businesses, and governments around the world turn off their lights for an hour as part of Earth Hour, a movement to address climate change.

What you can do:

  • Although Earth Hour happens once a year, you can make an impact every day by turning off lights during bright daylight, or whenever you will be away for an extended period of time.

Make the Switch

Compared to traditional incandescents, energy-efficient lightbulbs such as halogen incandescents, compact fluorescent lamps (CFLs), and light emitting diodes (LEDs) have the following advantages:

  • Typically use about 25%-80% less energy than traditional incandescents, saving you money
  • Can last 3-25 times longer.

What you can do:

  • Plan to switch out your traditional incandescents with energy saving bulbs the next time your old bulbs die out.

Turn ON the Tap

It is known that plastic water bottles create huge environmental problems, and therefore the energy required to transport these bottles could fuel an estimated 1.5 million cars for a year. The kicker here? About 75 percent of water bottles are not recycled, rather, they end up in landfills, litter roadsides, and pollute waterways and oceans. 

What you can do:

  • Fill up your glasses and reusable water bottles with water from the sink. The United States has more than 160,000 public water systems, and by eliminating bottled water you can help to keep nearly 1 million tons of bottles out of the landfill, as well as save money on water costs.

Turn DOWN the Heat

The U.S. Department of Energy estimates that consumers can save up to 15 percent on heating and cooling bills just by adjusting their thermostats. Turning down the heat by 10 to 15 degrees Fahrenheit for eight hours can result in savings of 5–15 percent on your home heating bill.

What you can do:

  • Turn down your thermostat when you leave for work, or use a programmable thermostat to control your heating settings.

Support Food Recovery Programs

According to the United Nations Food and Agriculture Organization (FAO),  roughly a third of all food produced for human consumption—approximately 1.3 billion tons—gets lost or wasted, including 34 million tons in the United States annually.

What you can do:

  • Encourage your local restaurants and grocery stores to partner with food rescue organizations.
  • Go through your cabinets and shelves and donate any non-perishable canned and dried foods that you won’t be using to your nearest food bank or shelter.

Buy Local

Local and small businesses are more sustainable because they are often more accountable for their actions, have smaller environmental footprints, and innovate to meet local conditions—providing models for others to learn from.

What you can do:

  • Instead of relying exclusively on large supermarkets, consider farmers markets and local farms for your produce, eggs, dairy, and meat. Food from these sources is usually fresher and more flavorful, and your money will be going directly to these food producers.

Get Out and Ride

Carpooling and using public transportation helps cut down on greenhouse gas emissions, as well as gas bills. Cities across the country are investing in new mobility options like bike sharing programs, and people are renting for short-term use. As a result, there’s been a significant reduction in emissions.

What you can do:

  • If available, use your city’s bike share program to run short errands or commute to work. Memberships are generally inexpensive (only $75 for the year in Washington, D.C.), and by eliminating transportation costs, as well as a gym membership, you can save quite a bit of money!
  • Even if without bike share programs, many cities and towns are incorporating bike lanes and trails, making it easier and safer to use your bike for transportation and recreation.

Share a Car

Car sharing programs spread from Europe to the United States nearly 13 years ago and are increasingly popular, with U.S. membership jumping 117 percent between 2007 and 2009.  Consequently, in 2009 car-sharing was credited with reducing U.S. carbon emissions by more than 482,000 tons. 

What you can do:

  • Join a car share program! As of July 2011, there were 26 such programs in the U.S., with more than 560,000 people sharing over 10,000 vehicles.
  • Of course, if you don’t want to get rid of your own car, using a shared car when traveling in a city can greatly reduce the challenges of finding parking (car share programs have their own designated spots), as well as your environmental impact as you run errands or commute to work.

Plant a Garden

Whether you live in a studio loft or a house in the suburbs, growing your own vegetables is a simple way to bring fresh and nutritious food literally to your doorstep with minimal impact. 

What you can do:

  • Plant some lettuce in a window box. Lettuce seeds are cheap and easy to find, and when planted in full sun, one window box can provide enough to make several salads worth throughout a season.

Compost

What better way to fertilize a personal garden than using your own composted organic waste. Likely, you will not only reduce costs by buying less fertilizer, but you will also help to cut down on food and other organic waste.

What you can do:

Reduce Your Meat Consumption

Livestock production accounts for about 18 percent of all human-caused greenhouse gas emissions and accounts for about 23 percent of all global water used in agriculture. You don’t have to become a vegetarian or vegan, but by simply cutting down on the amount of meat you consume can go a long way.

What you can do:

  • Consider substituting one meal day with a vegetarian option. And if you are unable to think of how to substitute your meat-heavy diet, websites such as Meatless Monday and Eating Well offer numerous vegetarian recipes that are healthy for you and the environment.

Making small changes and adopting sustainable practices, for instance, ride sharing, buying local,  turning off the lights, or recycling can make an enormous impact on the environment over the long term. 

Click here for more on Earth Day 2019 and ideas for change.




All In Together: Engaging Employees on Sustainability

recycling at the workplace can boost employee morale

Why is a Sustainable Workplace Important?

In a lifetime, it is said working Americans spend more time at their place of work than at their own homes, and over the years, this has put the onus on employers to create healthy and sustainable work environments, along with compiling competitive benefits to attract and retain workers. A healthy and sustainable work environment makes a long workday more enjoyable and correlates to happier, more engaged employees. Studies have shown this helps boost employee productivity and morale, and results in fewer work-related illnesses, injuries, and accidents. Ultimately it has a positive effect on a company’s bottom line.

Nearly 40% of millennials have chosen a job because of company sustainability. Less than a quarter of gen X respondents said the same, and 17% of baby boomers.

Swytch Survey: the result of conversations with 1,000 employees at large U.S. companies

With the rise of the millennial workforce and its demand for socially conscious workplaces, it is no wonder that employers are taking notice. While it might seem frivolous to some business owners, that fact is integrating social causes into business operations, like building a sustainable workplace, is a good investment for the future. And according to a January 2008 survey by the Society for Human Resource Management (SHRM), 61% of employees were more likely to stay at a company because of the organization’s sustainability program. As a result, a sustainable workplace helps companies save thousands of dollars in hiring, training, compensation, benefits, etc.

Recycling as a Way to Begin

One common and low barrier to entry into the sustainable workplace movement is that of a recycling program.  Because workers generate the most waste in an office environment, the sustainability effort starts with them.  According to the Environmental Protection Agency (EPA), in the average workplace, about 80 – 90 percent of solid waste is actually recyclable.  More and more businesses and employees are realizing the importance of recycling and the difference it can make.

  • Cost and Time Savings
  • Help with universal participation and compliance
  • Effective way to track overall green progress
  • Reduces the amount of waste that goes into landfills
  • Reduces company’s carbon footprint
  • Builds Morale Among Staff

Before pushing a conservation program like recycling forward, it is vital for companies to keep track of the amount of waste that they produce every year. Above all, with this information, employers can make real sense of the meaningful impact it can have.  While at first, it might seem like an insurmountable task, when broken down it really is manageable. Certainly, engaging employees in the form of Green Teams to help out can easily make a program up and running in a few weeks. There are many resources out there to help support these efforts, but here is a summary of an action plan to get you and your employees thinking and motivated to take the first step in a more sustainable workplace.

Recycling 101

Make the Commitment

Assemble a (Green) Team

Conduct a (Waste) Audit

Develop a Plan

Make It Easy

Launch Your Program

Monitor Progress

Publicize Program Success

Purchase Recycled Content

Encourage and Engage Others

It’s easy to update your sustainability goals on your company website, but changes in the office can be difficult. Make sure to recognize your Green Team colleagues and reward positive change. A small present like a reusable water bottle, coffee cup or canvas bag could also help kickstart your efforts. When it comes to sustainability, leaders’ actions speak louder than words and play a vital role in reaffirming company values to employees.

“From my perspective, it’s a competitive advantage for large enterprises to really align themselves with employees’ ideas about creating more environmentally sustainable choices.”

Evan Caron, co-founder of Swytch, the blockchain-based clean energy platform




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


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


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


Pay Down Credit Card Debt

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

Set Up An Emergency Fund

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

Time for Home Improvements

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

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

Share Some Goodwill – Make a Donation

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

Reward Yourself

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

Review and Adjust Your Withholding

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

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





An Employer’s Guide to Understanding Social Security Disability Insurance



Introduction

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

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

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

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


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


Introducing Ted Norwood from IBI, Inc.

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

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

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

What is SSDI?

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

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

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

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

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

What is Elligibility for SSDI?

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

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

Applicant Profile

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

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

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

Clarify the Inability to Work

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

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

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

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

Job Function Differentiation

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

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

Accommodations for Work: Private vs. SSDI

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

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

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

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

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

Payments

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

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

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

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

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

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

Attorney Required

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

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

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

The Application Process

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

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

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

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

Evaluation

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

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


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


Reconsideration

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

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

Building a Case

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

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

Appeals in Federal Court

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


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


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

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

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

Associated Attorney Fees

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

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

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

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

Final Word to Employers

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

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

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

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

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

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


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




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

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

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

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

The Relationship Between SSDI and Private Group Insurance


  • According to the Council for Disability Awareness, half of those who don’t work for the government have some form of employer-paid disability insurance. This could be short-term disability only, long-term disability only, or both STD and LTD. These benefits are important because 25 percent of today’s 20-year-olds will at some point miss a year or more of work due to medical problems.
  • As companies become leaner, employees become even more vital to the organization’s success and more difficult and expensive to replace. In the long term, losing employees is difficult. Certainly, an increasing number of employers recognize the value of employee well-being. In fact, many companies now recognize the value of caring for employees as people, not just assets.  Therefore, private disability insurance benefits in the workplace is an important way for employers to care for employee financial health.
  • About half of workers in the private sector do not have income-replacement benefits. If they’re unable to work for an extended period of time, they must rely on the Social Security Administration’s Disability Income (SSDI) program – if they qualify – to partially replace their salaries.


Facts About SSDI


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


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


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


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





How Supplemental Benefits Complement an Employer’s Benefits Package


How Supplemental Benefits Work and How Employers Can Maximize Them


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

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


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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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


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

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

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

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

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

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

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

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