Disability Flashcards
LTD
Disability Definition
- First 24 months = Own Occupation
- Month 25+ = Any Occupation
LTD
Elimination Period
Aligns with STD + Sick leave to avoid coverage overlaps
LTD
Benefit Period
- Set # of years
- “To Age 65”
LTD
Taxes
- ER-paid premiums = taxable benefit
- EE-paid premiums non-taxable
LTD
Benefit Offsets (Goal and List)
Goal = Offset other income sources to ensure total doesn’t exceed pre-disability earnings
- Social Security benefit offsets
- Reduced LTD benefits by disabled EE earnings
LTD
Purpose of Limits and Exclusions
- Manage antiselection
- Avoid administration of subjective claims
LTD
Limits and Exclusions
- Special conditions limitation clause
- Preexisting condition exclusions
- Other
- War
- Intentional Injury
- Felony
LTD
Optional Benefits
- COLA
- Survivor benefit
- Childcare reimbursement
- Pension benefit
- Portability
- Conversion Option
- Spousal Benefits
- Catastrophic benefits
LTD
Method to Reduce LTD Benefits by Disabled EEs Earnings (List and Define)
-
Proportionate Loss Formula
- % of lost work earnings is applied to benefits
-
50% Offset
- Benefit reduces by $1 for every $2 earned
-
Work Incentive Benefit
- Ignores earnings during initial period as long as earnings + benefit < pre-disability
- After period benefit is reduced by one of the other methods
LTD
Why is Voluntary LTD increasing in popularity?
- Rising medical costs
- Greater recognition of need of disability plans
- More access through cafeteria plans
STD
Differences between STD and LTD
- STD benefits are paid out weekly vs. monthly
- Smaller STD benefit amounts
- STD benefit period is shorter
- Higher STD claim frequency, but lower claim duration
STD
Disability Definition
Own Occupation
STD
Elimination Period
Very short (Common = 8 days)
STD
Why is the STD benefit amount smaller than LTD?
- EEs have other sources of funds to meet short-term needs
- ER sick leave program supplements STD plan
- Not integrated with SS benefits
- Not as many exclusions
STD
Optional Benefits
- 24-hour Coverage
- First Day Hospital Coverage = EP is waived if confined to hospital
- Survivor benefit
Paid Family and Medical Leave (PFML)
Definition
- New legislation implemented in a few states
- Similar to STD benefits
- Paid to EES that take time off work for variety of reasons (sickness, maternity)
Paid Family and Medical Leave (PFML)
Benefit Amounts
Tiered benefit that replaces higher % of income for EEs with lower wages
Paid Family and Medical Leave (PFML)
Impact on STD plans
Some ERs may not need to have both private STD and state-mandated PFML plans
