Employee Benefits

Short Term and Long Term Disability Protection

Each time a productive employee misses work because of illness or injury, your company experiences a major impact - directly, in terms of the cost of disability claims, medical expenses and replacement workers - and indirectly, in terms of morale and customer service. It is imperative to get your ill and injured employees back to productive work as quickly as possible.

Your disabled employees want a quick and safe return to work as well. For most Americans, work is much more than a source of income. It provides a sense of identity, a structure for accomplishment, and a source of social interaction. If illness or injury suddenly makes work impossible, we face a major personal challenge - to get back to productive work, back to our careers, and back to our everyday lives. All of your employees understand the need to insure their homes and cars, but surprisingly few insure the asset that makes all the others possible… their income. Disability insurance supplies your employees with an income when injury or illness prevents them from working and earning their regular income.

Short and long-term disability plans are usually purchased under different policies. Both are available with a wide range of "elimination" (waiting) periods, payment periods, and benefit levels.

Short-Term Disability (STD) Insurance provides coverage where sick pay programs end. Some of these plans are provided in lieu of sick pay and supplement a company's salary continuation plan. Coverage applies to disabilities with a relatively short duration, typically 30 days to 6 months.

Long-Term Disability (LTD) Insurance provides a reasonable replacement of monthly earnings to an insured employee who becomes disabled for an extended period of time due to injury or sickness. They can use the benefits to help pay for food, housing, or any of their usual monthly expenses.

These products feature flexibility and varied coverage choices, so they can meet the needs of most employers and employees. Policies can be written with a variety of terms, giving the employer choices in the earnings definitions, income replacement percentages, and benefit maximums. Both integrate easily with a group plan to provide comprehensive protection.

Medical

More and more employers are looking for ways to control and cut costs and more plans are being designed with not so rich benefits, more catastrophic type coverage. A large percentage of all claims are for the co-pays such as office visits, emergency room and drug card reimbursements - which in turn affects rates and renewals.

HMO- Health Maintenance Organization - As a rule, HMO's provide the most comprehensive health care such as routine office visits, physical exams, well baby care, immunization and infertility. HMO's also feature low office visit co-payments and usually do not require the filing of claim forms, and most have no deductible for services obtained by network providers.

Advantages: Claim forms usually are not necessary. Your out of pocket expenses are far lower and more predictable.

Disadvantages: Services provided by healthcare professionals outside the network are usually not covered. Services provided by specialists require a referral from your primary care physician.

PPO - Preferred Provider Organization - Combines elements of Major Medical and HMO plans. There is a list of doctors and hospitals to choose from, but you are free to choose an out of network doctor or hospital (employee will incur increased percentage of the cost). You will usually have to pay a deductible and a co-insurance payment with a PPO plan.

Advantages: You have more flexibility than you would in an HMO.

Disadvantages: It is more difficult to predict your out of pocket expenses and premiums are usually higher.

POS - Point of Service - plans combine HMO primary care physician coordination with the PPO out-of-network benefits. Treatment authorized by a primary care physician is covered at high, HMO-like benefit levels.

Advantages: You can get your medical care anywhere you want without getting referrals or prior approvals.

Disadvantages: To control costs, insurance companies shift more costs to you, making POS plans more costly to you than HMOs and PPOs.

Indemnity or Fee-For-Service Plans - Also known as Traditional Major Medical Plans - do not have a network of doctors that you must use. By selecting higher deductibles, the premiums will be lower. The plans typically require you to pay a portion of the costs after meeting the deductible, usually a pre-determined percentage like 80/20, often referred to as co-insurance. These plans provide the most flexibility, but are getting harder and harder to find.

Advantages: You can get your medical care anywhere you want without getting referrals or prior approvals.

Disadvantages: To control costs, insurance companies shift more costs to you, making indemnity plans more costly to you than other plans. Your healthcare provider may expect you to pay up front and submit a claim to your insurance company for reimbursement.

Life and AD&D

Group Life Insurance and Group Accidental Death and Dismemberment are normally companion benefits. Group Life Insurance usually does not require medical examinations on a group of people under a master policy. It is typically issued to an employer for the benefit of their employees, or to members of an association, such as a professional membership group. The individual members of the group hold certificates as evidence of their insurance.

Your plan may pay benefits in the event of:

  • Your death
  • Your accidental loss of a limb, or the sight in either eye, or both
  • The death of a covered dependent

You may designate a beneficiary - the person who is named to receive the insurance benefits - when you enroll, and may change this designation at any time by filing the appropriate form. You may choose to have multiple beneficiaries and specify how to divide the benefits between them. Benefits are normally paid in a lump sum or checkbook type accounts can be set up. Many Life and AD&D plans offer a conversion option, where if you leave the company or the coverage ends, the policy may be converted to an individual policy.

Voluntary Products

Voluntary products is one of the fastest growing areas of the insurance industry today and is becoming more attractive to employers. Why? As benefit costs continue to rise, employers look for ways to help contain those costs, while at the same time offering quality benefits that appeal to their employees. Many voluntary products feature the following benefits:

  • Voluntary means that the employee may elect to enroll or not to enroll in a program and that the employee is going to be responsible for 100% of the cost.
  • Most voluntary insurance products are available on a guaranteed issue basis. Guaranteed issue means that there are no medical questions asked and an employee is guaranteed coverage at standard rates up to certain limitations.
  • Simplified issue means that some medical questions may need to be answered in order to offer coverage.
  • Standard rates means that an employee with an adverse medical history is going to pay the same rates as an employee who is perfectly healthy.
  • Voluntary insurance premiums are generally paid on a payroll deduction basis. Typically, the only cost to the employer is the cost of the payroll administration.
  • Portable - if an employee leaves employment, they can often take their life insurance, long-term care or disability with them at the same rate and coverage amount as when they were employed.
  • They can provide coverage for dependents - spouse, children, and grandchildren.
  • Affordable rates to the employee.
  • Portable - if an employee leaves employment, they take their annuity with them with no changes to plan design.
  • Generally, eligible employees are those employees working at least 30 hours or more. However, so long as an employee is working at least the minimum hours prescribed by the insurance carrier, the employer can determine the minimum number of hours it wishes to mandate as the hourly minimum. For example an employer could say that in order to be eligible for group benefits, an employee must be working at least 30 hours per week.

Dental/ Vision

Dental plans are usually either a traditional Dental Indemnity plan, Dental Preferred Provider Option (PPO) plan or a Dental Maintenance Organization (DMO).
Under the indemnity plan you are completely free to seek covered services from any dentist. You make your own payment arrangements, and submit a claim to the insurance company. Once the covered expenses in any year exceed a specific deductible, you will be reimbursed for subsequent covered expenses, less any co-insurance.

In a Dental PPO, the freedom of choice is still yours to seek treatment from any dentist, but your out-of-pocket expenses are less when using one of the dentists in the network. When using a network provider:

  • With a DMO, generally care must be received from a participating provider to be covered.
  • You may be charged the co-pay for preventive services such as regular check-ups and cleanings.
  • Your annual deductible or your co-insurance percentage (or both) will be lower for network than out-of-network providers.
  • Network providers discount their charges to PPO participants.
  • The paperwork and expense outlay may be reduced, network providers file a claim with the carrier and bill you for the portion of charges not paid.

Vision Plans are quite simple. You receive quick, direct access to vision care when you visit a participating doctor, there typically is no preliminary paperwork.

Medicare Part D Summary

  • Medicare Part D, or Medicare prescription drug coverage, is part of the Medicare Modernization Act. Medicare prescription drug coverage is insurance provided through a variety of carriers who have been approved by Medicare.
  • Beginning January 1, 2006 , the new Medicare prescription drug coverage plan will be available to everyone with Medicare.
  • Employers that sponsor retiree or employee prescription drug coverage for individuals covered under Medicare Part A or B will have to provide information to those employees that compare the benefits of the employer's prescription drug plan with Medicare Part D plans. This Notice of Creditable Coverage must state whether the employer's prescription drug plan is “as good as” the standard prescription drug coverage under Medicare Part D. The notice must be provided to employees and retirees as a decision-making tool no later than November 15, 2005 and every year thereafter by November 15.
  • The initial enrollment period is November 15, 2005 to May 15, 2006. Anyone enrolling through December 31, 2005 will have coverage effective January 1, 2006. If a Part D-eligible participant does not register by May 15, 2006, they must wait until November 15, 2006 to join and potentially pay an additional premium of at least 1% per month for each month of deferred enrollment.
  • Employers who do not provide prescription drug coverage for retirees must still provide employees or spouses of employees who are Medicare-eligible with the same notice of creditable coverage that retirees would receive. No subsidies (see below) would apply to these employers.
  • Congress has created a subsidy program to encourage employers to maintain retiree coverage plans
    • Subsidy application is September 30, 2005.
    • Tax-free subsidy amounts to 28% of actual drug expenses incurred by plan beneficiaries. In 2006, the estimated drug expenses range from $250 to $5000 which would equate to an average subsidy of $668 per retiree.
    • This is not a cost-effective solution for employers with fewer than 40 retirees and Medicare-eligible spouses as the average cost for small to medium-sized employers is estimated to be about $25,000.