New Employee Benefit Short Term Disability 8-11-2016 (updated 8-16-2016) Holly Nelson, Sr. Account Specialist, Standard Insurance Company Becky Goins, Director of Employee Benefits, UAMS Human Resources Brad Loften, Senior Benefits Consultant, UAMS Human Resources
How did we get here? Over a year ago, began to explore ways to replace catastrophic leave program with a fully insured short term disability insurance plan. Goals: – Provide a benefit to a larger number of employees than cat leave – Without increasing UAMS cost – And provide a benefit that employees have requested for years
First, a review of Cat Leave • Rules are set by the State and are fairly stringent, subject to decisions of campus committee • Eligible recipients must be off at least 6 weeks and have worked at UAMS for at least 2 years • Cat leave is reserved for non-faculty employees for life threatening illness • Employees “donate” unused sick time (primarily sick leave they lose anyway when leaving UAMS) • Use of cat leave represents an added and unbudgeted cost to departments since there are no real dollars attached to donations • Average of 100 employees are awarded cat leave annually at cost of $1.2 mil.
Transition from cat leave to STD • Current cat leave recipients as of Aug 31 will continue, being phased out • No new cat leave applications for medical absences beginning Sept 1 or later • Cat leave donations end
NEW Short Term Disability + Projected to pay benefits to 500 employees per year, 5 x that of cat leave + Faculty are eligible + Will cover illnesses that don’t meet “catastrophic” criteria, including maternity + Makes us more competitive with local hospitals that offer short term disability - STD doesn’t replace 100 % of salary that cat leave provided - STD only covers the employee’s illness. Loss of benefit for ~ 25 employees each year who use cat leave for spouse/child’s serious illness - 12 weeks max STD benefit may not be enough to cover gap before Long Term Disability kicks in
Short Term Disability • Effective 9-1-2016 • Fully insured group plan • Underwritten by The Standard Insurance Company (same company that handles the UA life and disability plans)
Short Term Disability Who’s eligible? Benefit-eligible employees covered in the group Basic Long Term Disability plan (for which UAMS pays the premium) • YES - Staff working 50% or more • YES - Faculty working 50% or more, including FGP • NO – Temps, student employees, grad assistants • NO – Housestaff/physician residents
Protection from the Unexpected
Disability Overview • What is your biggest asset? (Hint: It’s you.) • Think of short term disability insurance as insurance for a portion of your paycheck • It provides a monetary weekly benefit if you’re unable to work because of a qualifying illness or injury 9 August 11, 2016
Disability Statistics One in four 20-year-olds Top 6 Causes of will become disabled Short Term Disability Claims % of New Leading Claims Disablers 1 Pregnancy 30 Musculoskeletal Condition 18 2 Circulatory/Heart 9 3 Back Condition 8 4 Mental Disorder 5 5 Reproductive/Urinary 4 6 & Respiratory (tied) Source: 8/9/16 Short-Term Disability claim data from Source: Social Security Basic Facts, April 2, 2014 University of Arkansas Fayetteville Campus. Average age of a STD Claim at the Fayetteville campus is 44.7 years old. Age range is 20-71 years old. 10 August 11, 2016
Common STD Medical Conditions • Maternity • Musculoskeletal Conditions • Circulatory Problems/Heart Conditions • Back Conditions • Mental Disorders • Hysterectomy and other reproductive or urinary conditions • Respiratory Conditions • Fractures • Cancer • Diabetes • Digestive Conditions Company Confidential 11 August 11, 2016
Disability Insurance Features • Workplace Possibilities SM Program • Return To Work Incentive allowing a part-time gradual RTW • Reasonable Accommodation Expense Benefit • Telephonic Claim Submission 12 August 11, 2016
Short Term Disability What is the benefit? 60% salary replacement (same as Long Term Disability) when: – Your doctor states you will be unable to work for more than 2 weeks – And after you have exhausted your personal leave and are in LWOP (leave without pay) status ( Maternity exception: per state law, women on maternity leave can begin LWOP without first exhausting all accrued leave)
Difference between STD and LTD Long Term Disability Short Term Disability 6 month waiting period 2 week waiting period Paid for duration of disability, up Paid for 12 weeks maximum to age 65 Benefits paid monthly Benefits paid weekly
Two Short Term Disability Plans • Basic STD : UAMS will cover first $45,000 of salary. You pay zero. Max weekly benefit is $519 . How benefit is calculated: $45,000/52 = weekly salary of $863.38 x .60 = $519.23 • Optional STD : Employees who make over $45,000 and up to $216,000 can buy-up additional coverage in a special open enrollment. Raises max weekly benefit to $2,492 . How benefit is calculated: $216,000 - $45,000 = $171,000/52 = weekly salary of $3,288.46 x .60 = additional $1,973.08 max weekly benefit. Added to $519.23 Basic = $2,492.31 total max weekly benefit.
Premium Cost • Basic STD: .00348 x salary • Max premium UAMS (your department) will pay per employee is $13.05/mo • Optional STD: .00802 x salary above $45,000 • Cost to employee making $55,000 = $6.68/mo • Cost to employee making $100,000 = $36.76/mo • Cost to employee making $216,000+ = $114.29/mo
How do I enroll? • HR will automatically enroll you in Basic STD . You don’t have to do anything. • If you make over $45,000, you may enroll in Optional STD during the special open enrollment period, Aug 1-19 . Coverage will take effect Sept 1, 2016. – Enroll on-line via ESS, Employee Self Service • TIP: Enroll now. If you wait and enroll in November when we have annual open enrollment, you run the risk of pre-existing exclusion
How is pre-existing treated? • Only applies to claims filed in the first 12 months of coverage • If you file a claim in the first 12 months, Standard will look back 3 months to see if your condition already existed. This “look back” period means the 90 days before your coverage began. • Any condition already existing in that 90 day look back period will be excluded. • But, current employees will be treated differently than new employees
For current “grandfathered” employees – those already working before Sept 1 Salary under $45,000 Salary over $45,000 No exclusion for pre-existing If you enroll in Optional STD conditions effective 9-1-2016, no exclusion for pre-existing conditions Remember, you will automatically be enrolled in Basic STD effective 9-1-2016. But if you wait until later to enroll in Optional STD, pre-existing conditions will be excluded in the first year of coverage
For NEW employees who start work Sept 1 or later Salary under $45,000 Salary over $45,000 Pre-existing condition exclusion will apply to all new employees, whether enrolled in Basic STD only, or Basic + Optional STD. Again, this only applies during their first year of coverage.
Let’s look at some examples
Mary Mary has worked at UAMS since 2012. Her salary is $26,000. She has a baby on Sept 15. She has 3 weeks + 2 days leave time saved up and will off for 6 weeks, Sept 15-Oct 27. She wants to save 2 days sick leave for when she comes back to work. • What is Mary’s benefit for weeks 1 -3? – Paid leave • What happens weeks 4-6? – Placed on LWOP in SAP – Receives Basic STD benefit of $300 per week (60% of $26,000) Mary receives the full 60% STD benefit because she was actively at work on Sept 1 when the Basic STD policy took effect… and because her salary is under $45,000.
Joan Joan has worked at UAMS since 2014. Her salary is $52,000. She finds out she is pregnant in Oct 2016. She waits to enroll in Optional STD during November open enrollment for additional coverage effective Jan 1, 2017. She has a baby on April 5 and will take off a full 12 weeks FMLA (6 weeks of which are medical leave, rest are for bonding with the baby). She has 3 weeks leave time and she wants to use all of it. • What is Joan’s benefit for weeks 1 -3? – Paid leave • What happens week 4? – Placed on LWOP in SAP – Starts to receive Basic STD benefit of $516 per week (60% of $45,000) If Joan had enrolled in Optional STD in August, so it would be in effect 9-1-2016, her weekly benefit would have increased to $600 (60% of $52,000). • What happens after week 6? – Not eligible for STD benefits because she is taking off 6 additional weeks to be with baby; she is not disabled any longer. No pay because did not have enough leave to cover FMLA protected absence of 12 weeks.
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