Do you really know how the FERS Disability Retirement Plan works?

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1 2017 Life & Disability Income Insurance Open Enrollment Do you really know how the Disability Retirement Plan works? New Options Available & Added Benefits Guaranteed Issue Life & Disability Income Insurance Here are the realities of the Disability Retirement Program and the solutions provided by the NRLCA Long Term Disability Income Insurance Program! 1) To Be Eligible for Disability Retirement Benefits Your Disability Must be Expected to Last at Least One Year. 1 The NRLCA Disability Income Insurance Program has several plans to choose from to provide disability income benefits upon approval of your claim. 2) New federal employees must wait until after 18 months of service to qualify for disability retirement benefits. 1 With the NRLCA Disability Income Insurance Program, you are immediately eligible for coverage after becoming a member. Therefore, if you enrolled into the program and had a disability claim during the first 18 months, you would be covered after claim approval. 3) What happens when you are only partially disabled but still can t do your job as a rural carrier? In addition to other eligibility conditions for total disability retirement benefits, you must be unable to perform the critical or essential elements of your position. This means that if you are able to perform some, but not all, of the critical or essential elements of being a rural carrier, you may be ineligible for benefits. Although each claim must be evaluated individually, in many instances, a claimant under the NRLCA Disability Income Insurance Program will be able to obtain disability income benefits even if he or she is still able to perform some of the critical or essential elements of his or her position. 4) Disability Retirement Benfiet Payments are Taxable 2 Any federal disability retirement benefits are taxable income. The disability income benefits provided by the NRLCA Disability Income Insurance Program are not taxable to a member, which means a greater amount of income replacement for members when they need it the most. Please review the disability income examples on the following pages. 1. Information About Disability Retirement (), Standard Form , Office of Personnel Management, March 1996, available at sf pdf 2. Internal Revenue Service Publication 907 Tax Highlights for Persons with Disabilities, Retrieved from

2 Did you know that 67% of working Americans would find it difficult to meet their current financial obligations if their next paycheck were delayed for just one week. 3 What would you do if your disability lasts less than a year? 0% No disability retirement benefit if the disability is expected to last less than one year. If your disability is expected to last less than one year, you are not eligible for disability retirement benefits. With the NRLCA Disability Income Insurance Program, you may be eligible for disability income benefits even if your disability is expected to last less than one year. 60% 50% NRLCA Disability Income Insurance Program 50% or 60% Income Replacement* *Dependent on plan selected NRLCA Disability Income Insurance Program will provide 24- hour on and off the job coverage. What if you have 18 months or less of service? You have no Disability Retirement benefits! 0% No disability retirement benefit for federal employees with less than 18 months of qualifed service. Please Note You must have completed at least 18 months of federal civilian service which is creditable under in order to be eligible for disability retirement benefits. 60% 50% NRLCA Disability Income Insurance Program 50% or 60% Income Replacement* *Dependent on plan selected Extremely Important You are eligible for disability income benefits under the NRLCA Disability Income Insurance Program regardless of your federal civilian service time. What if you were partially disabled and could not do your job as a rural carrier? 0% There are no disability retirement benefits for partial disabilities. NRLCA Disability Income Insurance Program Partial disabilities are covered during the first 24 months of part-time work while disabled, you can receive full benefits as long as your combined income and disability benefits do not exceed your monthly pre-disability earnings. After 24 months of part-time work, your benefit will be the gross monthly benefit reduced by other income benefits and 50% of your disability work earnings. 3. National Payroll Week, 2013 Getting Paid in America Survey Results. Retrieved Nov. 15, 2013 from National Payroll Week 2013, Web site: documents/2013gettingpaidinamericasurveyresults_final.pdf

3 All examples below assume a member is age 49, earning $50,000 annually and selecting the 60% benefit plan design. NRLCA Disability Income prior to Disability Retirement & Social Security Disability Income being approved. This process can take several months to be approved. Not Covered $1,666 $2,500 Filing for Disability Retirement requires a disability to be projected to last at least one year. If this requirement is met, members can file immediately. Source: Filing for Social Security Disability Income requires a disability to be projected to last at least one year. There is a 5 month waiting period before filing for benefits. Currently, over 68% of first time filings are rejected. Source: How Disability Retirement and Social Security Disability Income are coordinated. Disability Retirement and Social Security Disability Income benefits were calculated using Federal Government online calculators. Go to for website links to calculate other examples. Year 1 After being approved for disability retirement benefits, the applicant would receive a 60% benefit for twelve months Years 2+ At the start of the thirteenth month, the Disability Retirement benefit is reduced to a 40% benefit. Not Covered $1,416 $1,035 SSDI $1,465 Total Net Monthly Income After Offsets SSDI Total/Month $1,035 $1,465 $250 $2,750 Total Net Monthly Income After Offsets SSDI Total/Month $250 $250 Please note: the previous insurance carrier would have only paid a minimum benefit of $100 per month. The new insurance carrier pays the greater of 10% or $100 minimum benefit per month. How the Catastrophic Benefit Rider provides additional income on top of disability income benefits. Catastrophic Benefit Rider Year 2+ Example Not Covered $1,663 $788 SSDI $1,465 $788 $1,465 $250 $2,503 Catastrophic Benefit $833 Not Covered $830 $788 SSDI $1,465 $250 Total Net Monthly Income After Offsets SSDI Catastrophic Total/Month $788 $1,465 $250 $833 $3,336 This benefit pays an additional benefit (20% monthly benefit up to a maximum of $5,000) on top of disability benefits, if a member is unable to safely and completely perform two of the Activities of Daily Living (i.e. bathing, dressing, toileting, transferring and eating, or suffer from a cognitive impairment).

4 Employee Catastrophic Benefit Included: Pays an extra 20% benefit up to $5,000 per month. Details below. Disability Insurance Benefit Summary Plan 1-50% Benefit Period: Waiting Period: Monthly Benefit: 5 years 180 days after a sickness or accident 50% of pre-disability income up to $5,000 per month Benefit Summary Plan 2-60% Benefit Period: Waiting Period: Monthly Benefit: 5 Years 180 days after a sickness or accident 60% of pre-disability income up to $5,000 per month Eligible Benefits and Amounts A member is eligible to receive benefits: When partially or totally disabled as defined in the policy When under a physician s care When the selected elimination period has been satisfied Benefits Begin After satisfying a waiting period for either a sickness or accident, the plan will pay the selected benefit amount for the stated benefit period or until the end of the disability whichever is sooner. Pre-Existing Condition Limitation Long-term Disability benefits will not be paid for a disability due to a pre-existing condition that begins within 12 months of your effective date of coverage. A pre-existing condition is an injury of sickness for which you received medical treatment, consultation, diagnostic measures, prescribed drugs or medicines, or for which you followed treatment recommendations during the 3 months prior to your effective date of coverage. Base Coverage Benefit Summary Plan 3-60% Benefit Period: Waiting Period: Monthly Benefit: Waiver of Premium - An insured member does not pay premiums while on an approved disability claim. Partial Disability Benefit - During the first 24 months of part-time work while disabled, you can receive full benefits as long as your combined income and disability benefits do not exceed your monthly pre-disability earnings. After 24 months of part-time work your benefit will be the gross monthly benefit reduced by other income benefits and 50% of your disability work earnings. Employee Catastrophic Benefit If you lose the ability to safely and completely perform two Activities of Daily Living* without another person s assistance or verbal cueing; or you have a deterioration or loss in intellectual capacity and need another person s assistance you will be eligible for an additional 20% benefit to a maximum additional benefit of $5,000. *Activities of daily living (ADL) means: bathing, dressing, toileting, transferring or eating. New Benefit Survivor Benefit - If you die while collecting disability benefits, a lump sum payment of 6 times your benefit may be paid to your eligible survivor. New Benefit Increase. Increased from 3 times. Additional Benefits Social Security Assistance, Vocational Rehabilitation Assistance and Employee Assistance Program. New Plan Design 5 Years 90 days after a sickness or accident 60% of pre-disability income up to $5,000 per month Mental Illness Limitation Disabilities due to mental illness (including drug and alcohol abuse), are limited to 24 months of benefits during your lifetime. Examples of mental illness include schizophrenia, depression, manic depressive or bipolar illness, anxiety, substance related disorders, and/or adjustment disorders. Minimum Monthly Benefit Pays the greater of 10% of gross monthly benefit or $100. New Benefit Increase, Increased from Only 10%. For More Information go to or call (877)

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12 The NRLCA Life and Long Term Disability Income Insurance Program really does help our membership. NRLCA Insurance statistics since 6/1/2011: Member Life Insurance Claim Payments = $5,500,813 Member Disability Insurance Claim Payments = $6,067, Disability Claims approved 96 Active Disability Claims & SSDI can take a while for approval. Break down of 44 members who have not been approved for disability retirement and/or Social Security Disability Income based on the July 2016 Cigna Claim report. 3 Years 4 members receiving LTD disability income for more than 3 years 2 Years 10 members receiving LTD disability income for more than 2 years 18 Months 9 members receiving LTD disability income for more than 18 months 1 Year 21 members receiving LTD disability income for more than 1 year Imagine being one of the above members and not having disability income insurance! You don t buy life insurance because you are going to die, but because those you love are going to live.