KNOWING WHAT YOUR LONG-TERM DISABILITY DOLLAR IS BUYING AND CONVEYING COVERAGE TO EMPLOYEES

When considering multiple offers of employment, or any employment for that matter, company benefits are usually a major consideration. Workers seeking employment changes based heavily on healthcare coverage availability is a growing phenomenon due to the rising cost of medical insurance and care. Employers are also finding that the overall quality of their benefits is an essential element in keeping existing employees and attracting new employees.

Long-term disability benefits are one area that seems to be especially important to many potential employees. The purpose of long-term disability coverage is to protect a worker should he/she become disabled and are no longer able to work. Although this is the premise of any long-term disability plan, employers should understand that all contracts are not equal in quality.

Of course, most employers are usually concerned with cost control. Many turn to the carrier to come up with a plan to manage risk. This most often entails benefit limitations for certain circumstances and/or incentives for the employee to speedily return to work. These two techniques are popular for a reason - they work to control premiums effectively and address risk exposure. That said, restriction and limitation techniques can have disastrous consequences for affected employees. For example, the plan description might read as though benefits are available until the employee reaches 66-years-old. However, if the contract limits the exact condition the employee is suffering from, then benefits could be cut short.

Considering the current economic state, many employers don’t have a choice but to keep premiums low if they want to offer coverage. In this case, it’s actually more sensible to go with a contract featuring lower plan maximums and benefit percentages, but fewer restrictions. The main concern should be to avoid surprises by making sure that employees know and understand the benefits before they actually need to use them.

One common source of employee confusion about their benefits is in the definitions. Employers should make certain that definitions, especially those of covered income and eligible employee classes, are written concisely. For example, an employer that’s planning to only cover certain grades or levels of their management team shouldn’t use catchall terms, such as management, to define covered employee classes. This might cause some employees to assume falsely that they’re covered. An employer should never make it so that an employee only finds that they’re ineligible for benefits at their time of need. The same should be said as far as earnings go. The employer should state exactly what employee earnings are and aren’t covered by the plan. For example, will bonus pay, incentive pay, and commission pay be covered?

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