The Hidden Value of Social Security Disability Insurance: Why It’s Important During Benefits Enrollment
In a recent podcast discussion [click here to listen to the live recording], Carol Harnett, President of The Council for Disability Awareness and Phil Bruen, VP, Group Life and Disability Products at MetLife, talked openly, honestly and directly about the best way for employees to make choices during the annual enrollment period for employee benefits.
Why is open enrollment important? Because, for many employees, employee benefits are equal to approximately 30 percent or more of their base salaries. Given that employee benefits add to a worker’s compensation, we want to make certain that employees make the best choices they can, and that employers offer benefits that are valuable to their staff.
As you read the transcript below or listen to the recording, you will understand key issues for how to design and position the annual enrollment process.
Carol Harnett:
Good morning. This is Carol Harnett. I am the President of the Council for Disability Awareness. Welcome to our show, which is called the The Financial Health and Income Network. Our discussion today is going to be around open enrollment, and how consumers and employees can make the best choices possible during this process, which so many people find intimidating. I’m pleased to have a long time friend and colleague as my guest today.
Phil Bruen is the Vice President of Group Life and Disability Products at MetLife. MetLife is a founding member company of the Council for Disability Awareness.
The Council for Disability Awareness is a non-profit organization, primarily educating employees, consumers and employers about issues around employee benefits with a particular focus on what we would call income protection products. This Is a name that’s probably meaningless to consumers. What income protection actually means is insurance that helps people protect their income stream, whether it’s through disability insurance or critical illness insurance, accident insurance, and an assorted group of products.
So, welcome Phil, and thanks so much for being on the show today.
Phil Bruen:
Thanks, Carol. Glad to be here.
Carol Harnett:
So with no further ado, let’s get started. Both of us have been around a long time. We’ve been working a long time. We’ve been through open enrollment, or what some people will call annual enrollment, both personally and professionally for decades. And I’m curious, because I feel like in my career the process has actually changed a lot. How have you seen it evolve over time?
Phil Bruen:
Thanks Carol. It has evolved over time. The way we think about it we actually use the term annual enrollment. So it’s a way for everyone at least one time a year to take a look at how the enrollment process works for benefits for employers. Once a year there’s an update or an annual refresher, if you would, of the benefit package. And so thinking of it in the context of a one time a year annual enrollment is one way that I think it’s changed.
So that opportunity for employees to step back and take a look at what’s changed: How their goals and objectives may have evolved or do evolve over time, and what does that mean in terms of the benefits they have available to help them meet those goals? And really with a mindset of really refreshing this. Almost like a tune up every year, once a year. It’s certainly important all year long, but at least on an annual basis to take a look at it.
I think the other change here is that — and II can speak to this personally — I think I only cared about looking at the health care plan. What’s happening to my medical benefits? What’s happening as it relates to my deductible and my co-pays, or the network that my providers are in? So a lot of focus I think historically on the medical plan. And then how that’s evolved. I think almost all the focus was on the medical plan. I think what’s changing now is (and I’m going to speak to it again) is that one aspect of all of our goals and needs is around our health, but there’s more beyond the medical plan. And so I think that’s what’s also changed: stepping back to take a look at overall benefits and how those help an individual achieve their long-term goals and objectives.
Carol Harnett:
Thank you. I think that’s a really good point. I mean, we could certainly talk about things like how the technology has changed in the years since we started doing benefits. I remember when I first started working, I didn’t have to choose my benefits. They were just given to me by my employer, and believe it or not, paid for by my employer. And then we evolved into this point where we have to make a lot of choice, and I know in my career, I largely have worked for employers. But I’ve had a good span of time, probably about seven years where I was in my own business and fully providing my own benefits. And I think, for me, that was one of the most helpful experiences as to how you think about what you actually need.
And to your point, I certainly started with medical. I worked in healthcare in the beginning of my career, and I worked at some outstanding facilities; including the Kessler Institute for Rehab, which is still the number two rehab hospital in the country. So I knew what outstanding care was, and for me, I always wanted to make sure I had access to that very best care. My parents really raised us with great respect for trying to find the best medical care. So I certainly started there, but skinnying down, for lack of a better term, of my benefits because now I was providing them was an interesting process to go through. And I found I focused on my health first. And then I thought about how whatever selections I made would impact the people who love me and care about me and were going to be taking care of me if something bad ever happened. And I think the next thing I actually thought about was my income.
I was very fortunate that I had disability insurance already. I did expand my disability insurance coverage. And the other thing I did, which is not necessarily something we’re going to talk about today, but it’s also in many ways income related, is I bought a long-term care policy. So I said, “Well, if I get sick, I want to still make sure I have yet another way to get some income and help with medical.” And then frankly, the last thing I did is I’ve always had retirement through employers, but I developed a process to continue to plan for retirement as a single business owner.
So I think those things are important, too. Because I think in benefits, and I don’t know what your experience has been, but as benefits have evolved, we’ve given people more and more and more options, and I think sometimes that can be really confusing.
Phil Bruen:
Absolutely, you’re right. It’s kind of interesting. Early on, as you said, the enrollment process lived in a world of paper. And it may have been cumbersome, but I think one of the benefits of paper is that individuals had something in front of them. They usually had to fill it out, step back and think about the benefit choices they had. Then we moved on to more of a technology platform. I’ve seen more of what we would think of as more of a passive process, where individuals would have to go to a portal or a website. And that can create confusion if there’s so many choices — which can be a good thing — to give employees choices in the benefits they can elect. But what’s really important is: What choices are important to me individually and how do those choices change over time?
So I think you’re spot on, Carol. What we’ve found is that putting it [benefits] in a personal context is what we think is really where the future is in terms of an annual enrollment exercise for individuals. So stepping back and taking a moment to think about — on an annual basis: What are my dreams and how have they changed? And how do I protect those dreams in the event of something that might happen? So this concept around income protection, I think, becomes a byproduct of stepping back to think about what an individual’s aspirations and dreams are.
A lot of individuals spend time talking about the future and what their dreams are, but they rarely put it in the context of a benefit that can help them fulfill those dreams. And so we’re spending more time thinking about how to help individuals in that conversation. One of the ways we suggest doing that is anyone who’s looking at their benefits this year to talk to their friends and coworkers. To have some meaningful conversations about their dreams and really how others think about that in some benefits, to help them take action. Because there’s no question there’s information overload.
So we do know that individuals talk to their colleagues when they’re trying to decide benefits to choose. We’re also helping those individuals and educating them around think about what “people like me” need. Guidance around what type of benefit choices help with objectives they have around their future in terms of retirement, their income protection needs, certainly asset protection as well, and their health. Health is always very important. But putting them all in context. And then also how the benefit package can help support those objectives over time.
Carol Harnett:
I really love that concept of what your dreams are. That’s a really interesting way to do it. And also some of the things you’ve been eluding to or referring to when you talk about benefits is something we hear more now: this idea of life stages. Change happens in your life. When you’re young, you might be moving in with someone, or in a committed relationship, or getting married and buying a home. Maybe you’re having kids (or maybe not having kids) which is a choice more people are actively making. And then your kids leave, and you’re in yet another life stage.
And then there’s a new trend, particularly in what we’re calling the millennial generation, where they’re trying to develop a plan to retire earlier and do something different. So I think those are two great tips. One is to identify dreams and talk about them with others, and then to relate those dreams to your benefits. Is there something I can do — through the benefit choices I make — to allow that to happen? And, not to denigrate any benefits, but if one of your dreams is to retire earlier in your career than maybe your parents did, or some of your friends are going to do, is to make sure you’re choosing benefits that help with that plan. So I think that’s a great tip.
Another thing I wanted to talk with you about, because I think we’ve had a lot of personal experience in navigating open enrollment (and also in helping employers figure out how to set up open enrollment) at least related to some benefits is: In your personal experience, do you have one or two tips you’ve learned as an employee for how to make the most of open enrollment? Or, tips for what some people would say: How to successfully get through open enrollment?
Phil Bruen:
Yes, there are a couple of tips. I think the first one is to step back and pause, and to look at what’s available, not just what’s changed. So I think we all read in annual enrollment what’s changed, what’s new? That’s helpful, right? But also to go a little deeper to see, okay, what are my benefits that are available to me, and how do those line back up to my dreams? I think quite often (I do this personally) we start with what’s happened with medical. There’s a new benefit being provided, or an enhancement to the dental plan, or some change to the disability plan. But I don’t actually step back and say, “Well what do I already have for coverage, and what might I want to do to change or adjust those?”
So spending a little bit more time, just a couple more steps to do that, and then to think through that. Maybe pause, talk to a loved one and spouse about those options, and then to come back to finalize enrollment. That’s probably the second tip, would be to definitely complete the enrollment. To make that an active exercise, individually. And maybe also think about and take a look at the overall plan that an individual has, and then come back and take some action in a more meaningful way. It sometimes can be hard to do that all in five minutes online, if you would, during the middle of a work day. Or take it offline after work and think through those benefit choices.
Carol Harnett:
I think that’s a really good tip, because I know in my time of doing online enrollment at various employers, the pattern that seemed to repeat itself year over year over year is the far majority of employees waited until the last week of the open enrollment period.
Phil Bruen:
Right.
Carol Harnett:
And some of them have waited until the last day. And I can remember several times at one employer we’d get a note, because then the system would pretty much get locked up or crash, and we’d get this note saying: “We’re going to extend it [open enrollment] by two more days. Can some people please come off [the online enrollment system]?” And that sense of it being a chore instead of this opportunity.
I think people lose sight that [benefits enrollment] is really valuable. Employers spend about 30 to 35 percent of what your base salary is on your benefits. And so, it’s about a third more of your salary, and we just kind of cram it in, to your point, to like five or 15 minutes. Just checking the box.
Phil Bruen:
Absolutely. Yes, I’m guilty as charged, as well.
Carol Harnett:
Me, too!
Phil Bruen:
We just wait until the last minute. And then, quite often, if there’s no action, individuals default into a set of benefits that may likely not be appropriate for their circumstances. So, spend a little time as soon as those communications come out, and print the material off or read it online and step back and think about that. That would be my suggestion.
Carol Harnett:
I like the idea of taking a pause and talking with the people who are impacted by your choices, such as your spouse. Or, if you’re a single person, talk ingwith your family members who might wind up in a situation of having to help you if you ever did have something odd happen to you from a health perspective that would impact your ability to work, or a need you might have to travel someplace to get care. Those are really important things.
You and I have both spent a good part of our career working in the area of disability and disability insurance. I did it from the healthcare perspective, the insurance perspective, and the consultant perspective. And I know you’ve done it on multiple levels. The Council for Disability Awareness did a consumer survey a couple years ago, and there was really only one thing that jumped out at me, and I loved the question. And the question was, “Other than your family and your friends, what are the three things that are most important to you?” And this is a group of people who are consumers of working age.
And, by far, there were three choices people made that stood out, and all the other ones dropped off. People said their health, their income, and their home (where they live) were the three things that were most important to them. And the secondary or follow up question to that was: “Of these three things, do you have insurance to protect those things?” More than 90 percent of people had health insurance. Part of that high percentage was related to the impact of the Affordable Care Act.
And then when we looked at people who either owned or rented homes. Again, the far majority of them had either homeowner’s insurance or renter’s insurance. Because if you have a mortgage you’re required to have homeowners insurance, and then hopefully if you don’t have a mortgage, you would still have that coverage because it’s important. The same with renter’s insurance. More and more landlords require evidence of renter’s insurance.
The disturbing thing for me was the income question. The number two topic that was most important to people other than their family and their friends was their income. And less than 30 percent of this particular group of people had any form of income insurance or disability insurance. I know you’ve worked in this space even longer than I have, how would you tell people to think about their income and what protecting their income means from an employee benefits perspective?
Phil Bruen:
It’s a great question, and I’ll bring it back to the enrollment conversation. I would suggest that folks might think of disability protection as a card that serves as your proof of insurance card — similar to the auto insurance card you have in your car. If something happens you always can pull out that proof of insurance. If we can create a mindset around disability that we need that proof of insurance; that it’s a baseline need that we all have to protect our incomes, because it truly protects everything else.
I think what can get in the way sometimes is an individual can think, “Well, that’s never going to happen to me.” When in fact we all know individuals who may be out of work for a period of time. The good news is most people actually do return to work, but they need that safety net. As we all know individuals live paycheck to paycheck. So what would happen if that paycheck wasn’t coming in? So I think understanding this proof of insurance concept is helpful.
But to get started is to again go back to that benefit package and see what the employer is providing. There can be paid time off and paid leave. There can be some benefits that the employer would provide to supplement income if an employee can’t work. But more often than not, there will be a need to supplement or augment those benefits. And more often than not, the benefit package will have choices that individuals can take to help provide income protection. And I’d suggest that comes in a few different ways. There’s a baseline of income protection to help cover for day-to-day living expenses, and that’s typically short-term disability and long-term disability insurance. That’s a baseline core benefit to look for. If it’s something your employer is providing, that’s great. If it’s not, look to see if there’s an option to purchase some basic levels of short-term and long-term disability protection through the workplace or from an individual broker.
The second aspect I think of around income protection would be to also provide levels of protection for what might be a more severe event, even if it’s a temporary event, that can help augment that income protection plan. For critical illness or certain accident scenarios that might happen, where that individual is going to have additional expenses above what they normally would have on a day-to-day basis. It could be transportation. It could be day care. It could be to cover costs that aren’t covered under the medical plan. And I’d suggest that’s another layer of income protection. So think of it like that short-term or long-term disability solution. And then also look to see if there are some benefit options for accident protection or critical illness coverage would be a couple of examples to supplement short- and long-term disability insurance.
You know, I’d also point out, it’s a little complicated. There can be state-mandated leaves as well, so having an understanding if an individual lives in a state where that’s available. These leaves can be for both employee income protection and also income protection in the event for family bonding time off. So it’s helpful to understand if you live in one of those states; if there’s a baseline or mandated level of protection that the individual person would have. I’d also suggest, even in that circumstance, and I know I’m getting a little complicated here, I apologize.
There can be a need to actually supplement what the state-mandated plan would be. so, for individuals in those states, it’s helpful to take a look and understand what’s being provided. If a person lives in California, New York, New Jersey, Rhode Island, Hawaii and certainly in the future: Washington state, Washington DC, as well as Massachusetts. I probably missed one in there, but those are all states that have some form of a state-mandated plan. It gets a little complicated, but again, I think that’s what’s most important is think of it as proof of insurance. That everyone should have disability insurance. There’s a basic level of protection that’s critical for folks when they’re into a period of time of disability; to help essentially meet those daily living needs and to protect everything else that they work for.
Carol Harnett:
Phil, thank you so much. I really appreciate that overview. And as you were talking I was being reflective again of my own choices. Not that they have to be other people’s choices, but when I was still in graduate school full time, I was on a research assistantship. So I had a small salary. They paid my medical benefits, my health insurance premiums, which they needed to, because we didn’t make a lot of money. So I actually was a low wage earner. When I was in school, I had an opportunity through my professional association to get disability insurance. And my dad said to me (and I’m 23 years old), “Your scholarship is both a job and a free education, but it also has benefits. And if you get sick, you could risk losing those things.” So I took this opportunity to sign up for an association disability policy. At that time the only option was a one year, short-term policy, but it would cover my expenses.
And then I went to my first job. I happened to work in New Jersey, which has state-mandated disability insurance, but the employer offered us an opportunity to buy what we would now call worksite insurance. So I had a worksite policy that supplemented both what I already had and the state-mandated coverage. Then I switched employers and wound up with a long-term disability policy that was paid for by the employer. And then as my career was growing I added individual disability coverage. So at one point in my life, I actually had four forms of disability insurance, and five if you count the years I worked in New Jersey and in California. But I felt that need to supplement, because I could not have paid my bills if I couldn’t work. In one case I couldn’t have paid my rent if I just relied on one of those forms of coverage. So I think that’s a great analogy.
I’m looking at the clock, and I think it’s a good time for us to summarize. Phil, first of all, I want to thank you. In another part of my life I’m a writer and a journalist, and I took some key notes on what you said. And this is what I’d love to leave people with as they think about going through the annual benefits enrollment process and actively participating, instead of just ultimately winding up with what the system will default for you.
My favorite quote, Phil, is yours of thinking about what are my dreams, how have they changed, and how could your employee benefit selection help you with your dreams? What a great way to think about annual enrollment. Secondly, to talk to your friends, your colleagues and your coworkers about what their dreams are and about how they might be thinking about making benefits choices that would help them with that. And then, as you look at your benefits, to not necessarily look at just what’s changed, but to look at what’s available, and again, how is that going to help you relative to where you are in your life and in your family’s lives? And to try to think about benefits a little bit earlier than the last day or two of open or annual enrollment. And to pause and talk with your spouse or you significant other,or your loved ones about the choices you’re thinking about making.
And then certainly, I think, for both of us, and certainly The Council for Disability Awareness and MetLife as a major player in the disability insurance and income protection markets is: How do you think about insuring the thing that consumers do tell us is the second most important thing to them, which is their income? I love thinking about that idea of proof of income, and to think about short and long-term disability as a baseline, and critical illness and accident as another layer or protection for those severe events that we don’t always think are going to happen to us. And then to finally be curious about your income protection related to the state where you live. What is potentially available around what’s being called paid leave, or parental leave, or caregiving leave, or state-mandated benefits, and understanding those.
So again, Phil, thank you so much for being our guest. You provided so much information and a great conversation, and we hope that you’ll return to our show another time.
Phil Bruen:
Thanks, Carol. Glad to be joining you. Look forward to the next conversation.
Carol Harnett:
Thank you. And for our listeners, if you have any other questions feel free to go to our consumer site: realitycheckup.info. Thank you everyone.
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