Questions & Answers for Your Ancillary Clients. September 2017

Transcription

1 Questions & Answers for Your Ancillary Clients September 2017

2 Agenda Short-term Disability / Long-term Disability What s in it for the Employee? Short-term/Long-term Employer Considerations Life Insurance, let s sweat the details! Contract Stuff? Page 2

3 Group Disability True or False: Men are more likely to become sick or injured & unable to work than women? Page 3

4 Group Disability True or False: Men are more likely to become sick or injured & unable to work than women? Page 4

5 Short-term Disability Insurance What s the leading cause of Short Term claims? Page 5

6 Short-term Disability Insurance What s the leading cause of Short Term claims? Page 6

7 Short-term Disability Insurance Accidents account for what percentage of all disabilities? Page 7

8 Short-term Disability Insurance Accidents account for what percentage of all disabilities? Page 8

9 Long-term Disability Insurance Let s say you and 99 others have just started your first jobs. Before you retire, about how many of your group will get sick or hurt so they can t work for at least 1 year? A. 0 people B. 10 people C. 25 people D. 80 people Page 9

10 Long-term Disability Insurance Let s say you and 99 others have just started your first jobs. Before you retire, about how many of your group will get sick or hurt so they can t work for at least 1 year? A. 0 people B. 10 people C. 25 people D. 80 people Page 10

11 Long-term Disability Insurance Source: council for disability awareness Page 11

12 Long-term Disability Insurance How long do you think the average LTD insurance claim lasts? A. 6 months B. 1 year C. 2-3 years D. Forever E. None of the Above Page 12

13 Long-term Disability Insurance How long do you think the average LTD insurance claim lasts? A. 6 months B. 1 year C. 2-3 years D. Forever E. None of the Above Page 13

14 Long-term Disability Insurance What % of private sector employees are protected by private disability insurance? A. 10% B. 20% C. 30% D. 40% Page 14

15 Long-term Disability Insurance What % of private sector employees are protected by private disability insurance? A. 10% B. 20% C. 30% D. 40% Page 15

16 Long-term Disability Insurance If you get sick or injured for an extended period of time, would the government help? A. Yes B. No C. Maybe Page 16

17 Long-term Disability Insurance If you get sick or injured for an extended period of time, would the government help? A. Yes B. No C. Maybe Page 17

18 Long-term Disability Insurance Mistake of counting solely on Social Security Disability Highly restrictive definition of disability Inability to engage in ANY substantial gainful activity due to disability, and disability must be expected to last at least 12 months and/or result in death. Any gainful activity in the general U.S. Economy whether or not that job is available to you. Page 18

19 EPIC Definition of Disability Loss of one or more material duties of occupation and a minimum 20% loss of income 12 month extension of elimination period Page 19

20 Long-term Disability Insurance Mistake of counting on Social Security Disability Average Social Security Disability Award? Page 20

21 Long-term Disability Insurance Mistake of counting on Social Security Disability Average Social Security Disability Award? Claimant in their 20 s = $660 Claimant in their 30 s = $829 Page 21

22 Long-term Disability Insurance Mistake of counting on Social Security Disability When is SSDI expected to run out of money? Page 22

23 Long-term Disability Insurance Mistake of counting on Social Security Disability When is SSDI expected to run out of money? 2020 Page 23

24 Employer Considerations Disability Coverage

25 Can employers discriminate on Group Disability? Page 25

26 Can you discriminate on Group Disability? Page 26

27 Can you discriminate on Group Disability? Page 27

28 How can you define a class system? 1 of 3 options or combinations are available Occupation Length of Employment Earnings Page 28

29 STD/LTD Plan Design Options How much income to insure? Flat Amount Plan % of Salary, i.e. 40%, 50%, 60%, 66 2/3rds, 70%, 90%? Base + Buy-Up Pick and Choose (used with some voluntary vendors) Page 29

30 Group Disability Is it taxable to the employee? A. Yes B. No C. It depends Page 30

31 Group Disability Is it taxable to the employee? A. Yes B. No C. It depends Who pays the premium and in what percentage? 3 Year Look Back Rule Page 31

32 Group Disability Pre Existing Conditions Discussion What does a 6/12 pre-ex clause mean? If you have a 3/6/12 pre-ex clause, what does the 6 mean? Page 32

33 Group Short Term Disability Maternity What benefit duration to you have for a routine pregnancy? What benefit duration do you have for a C Section? Page 33

34 Group Short Term Disability Is the Coverage 24 hour or non occupational? Page 34

35 Group Short Term Disability Is the Coverage 24 hour or non occupational? Page 35

36 Group Short Term Disability What about self funding? Page 36

37 Group Short Term Disability What about self funding? Page 37

38 Group Short Term Disability Self funded plan? What if it doesn t define who is eligible? Page 38

39 STD 3 rd Party Sick Payments (i.e. EPIC s Rapid Pay) Will they integrate/offset with paid time off/sick pay? Page 39

40 Group Long Term Disability Is the Coverage 24 hour coverage or Non Occupational? Page 40

41 Group Long Term Disability Is the Coverage 24 hour coverage or Non Occupational? Page 41

42 Disability Insurance What is the definition of income? Does your client have employees that receive incentive pay? Is the benefit based on reported income or actual income? Want a pay raise for your agency (and less service issues)? Have your clients regularly update salary information to vendors! Page 42

43 FMLA Could the employer benefit with an FMLA Vendor? Page 43

44 Significant trends affecting the LTD market Less employee loyalty Changes in work ethic Industries undergoing revolution Gov t benefit changes Downsizing, reduced job security Break-up of family unit Millennials delaying marriage Less family financial cushion Increase in Part time workers Improvements in medicine/ medical care Interest Rate environment Over insurance Page 44

45 Significant trends affecting the LTD market Less employee/executive loyalty? Nearly 40% of U.S. employees are considering leaving their current employer. What s more, among those considering leaving their jobs, nearly half of them report high satisfaction levels with their organization, their jobs, their pay and benefits. (Mercer Survey fall 2015) Among Sr. Execs, 94% are satisfied but they are the most likely group to be considering leaving their current employers (three out of five). Page 45

46 Significant trends affecting the LTD market Survival rates of three common illnesses Condition 1950 Today Heart attack 45% 67% 1 year survival rate 1 Cancer 30% 66% 5 year survival rate 2 Stroke 24% 77% 1 year survival rate 1 1 American Heart Association Heart Disease and Stroke Statistics 2 American Cancer Society Surveillance Research Page 46

47 Historical Trends The disability insurance market follows a cycle of expansion and contraction Today s market challenges include: The increasing subjectivity of disability claims including: Chronic fatigue syndrome Carpal tunnel syndrome Anxiety related Depression Other mental/nervous/emotional disorders Page 47

48 Employee Assistance Programs Can the Employer Use One? Family conflict and teen counseling Workplace problems Alcohol and drug abuse Financial problems Marital difficulties Legal matters Depression Career problems Senior care issues Page 48

49 It s becoming a mature voluntary market What are the questions to ask for take over groups? Page 49

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51 What about states with Statutory Disability Benefits? What to do if your client has employees in these states? New York New Jersey Rhode Island California Hawaii Puerto Rico Page 51

52 Traditional Voluntary Benefits Why offer? Growing market Individual carriers ignore mid market and lower Cost shifting by employer to employee Gaps in coverage (average out-of-pocket health expenses are $6,019) Employees can customize benefit elections Guarantees insurability Diversifies revenue for agency Block the door to competitors More difficult to replace Page 52

53 Attract and Retain Voluntary makes a difference! Employee satisfaction with an employers benefit package when voluntary benefits are included is 17% than without Overall satisfaction with Employer is higher when Voluntary Benefits are offered 4% greater than without Unum, Employee Education and Enrollment Education Survey, January Page 53

54 Non Traditional Voluntary/Worksite Benefits Critical Illness Cancer Hospital Indemnity Accident Pet Group legal Gunshot wound Page 54

55 Based on changing interests and priorities, Willis Towers Watson research predicts that the following voluntary options will experience dramatic growth over the next two years: Identity theft protection, offered by 35% of employers in 2015, could double to nearly 70% by Critical illness insurance, offered by 44% of employers in 2015, could grow to 73% by Student loan repayment programs, offered by just 4% in 2015, could increase to 26% by Pet insurance, offered by 36% in 2015, could rise to 60% by Page 55

56 How is the employer sponsored taxable group life benefit calculated? Time to review IRS Section 79, Table I Page 56

57 Is Voluntary Life ever Taxable to the Employee? Page 57

58 Is Voluntary Life ever Taxable to the Employee? Maybe IRS Straddle Rule may apply depending on the rate table used by the voluntary life vendor This will render all voluntary life coverage as a taxable benefit to all participants Do not let Voluntary Life rates straddle IRS Table I rates!! Page 58

59 What about Dependent Life Provided by the Employer? What is the age limit for dependent children? Is it a Taxable Benefit? Page 59

60 Employer Group Life Insurance What options are available to keep employee and/or dependent coverage upon termination from the group plan? Did you see the Benefit News Article last May? Page 60

61 Employer Group Life Insurance Thought about Company Owned Life Insurance Lately? Page 61

62 Financial Education and Tools Aon Hewitt Survey, January 2015 Page 62

63 Questions Page 63