Disability

Question 1

LTD

Disability Definition

Answer 1

• First 24 months = Own Occupation
• Month 25+ = Any Occupation

Question 2

LTD

Elimination Period

Answer 2

Aligns with STD + Sick leave to avoid coverage overlaps

Question 3

LTD

Benefit Period

Answer 3

• Set # of years
• “To Age 65”

Question 4

LTD

Taxes

Answer 4

• ER-paid premiums = taxable benefit
• EE-paid premiums non-taxable

Question 5

LTD

Benefit Offsets (Goal and List)

Answer 5

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

Question 6

LTD

Purpose of Limits and Exclusions

Answer 6

• Manage antiselection
• Avoid administration of subjective claims

Question 7

LTD

Limits and Exclusions

Answer 7

• Special conditions limitation clause
• Preexisting condition exclusions
• Other
  
  • War
  • Intentional Injury
  • Felony

Question 8

LTD

Optional Benefits

Answer 8

• COLA
• Survivor benefit
• Childcare reimbursement
• Pension benefit
• Portability
• Conversion Option
• Spousal Benefits
• Catastrophic benefits

Question 9

LTD

Method to Reduce LTD Benefits by Disabled EEs Earnings (List and Define)

Answer 9

• 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

Question 10

LTD

Why is Voluntary LTD increasing in popularity?

Answer 10

• Rising medical costs
• Greater recognition of need of disability plans
• More access through cafeteria plans

Question 11

STD

Differences between STD and LTD

Answer 11

• 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

Question 12

STD

Disability Definition

Answer 12

Own Occupation

Question 13

STD

Elimination Period

Answer 13

Very short (Common = 8 days)

Question 14

STD

Why is the STD benefit amount smaller than LTD?

Answer 14

• 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

Question 15

STD

Optional Benefits

Answer 15

• 24-hour Coverage
• First Day Hospital Coverage = EP is waived if confined to hospital
• Survivor benefit

Question 16

Paid Family and Medical Leave (PFML)

Definition

Answer 16

• 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)

Question 17

Paid Family and Medical Leave (PFML)

Benefit Amounts

Answer 17

Tiered benefit that replaces higher % of income for EEs with lower wages

Question 18

Paid Family and Medical Leave (PFML)

Impact on STD plans

Answer 18

Some ERs may not need to have both private STD and state-mandated PFML plans