For working-age individuals, disability refers to a medical condition that reduces your ability to perform your job duties.

What is long-term disability insurance (LTD)?

LTD is a type of disability insurance coverage that pays employees a set percentage of their regular income after a specified waiting period. For example, if a worker is covered under short-term disability (STD) insurance as well, the LTD insurance would kick in once the STD policy is exhausted, typically after 3 to 6 months.

LTD insurance protects workers in the event they become disabled for a prolonged period prior to retirement. LTD policies are often offered through employers as part of a standard benefits package.

The length of LTD plans vary, some may be limited to a period between 2 and 10 years, while other plans continue paying out until age 65.

Why is disability insurance so important?

The risk of disability is greater than most employees realize. When you become disabled and lose time at work, your source of income is eliminated. In addition to lost income, you are most likely experiencing an increase in medical expenses to deal with your disabling injury or illness.

What is supplemental disability insurance?

Traditional medical insurance doesn’t cover every expense related to an injury or illness. Bills and expenses can continue to add up, especially if you have to stop working and lose your income.
In addition, the policy offered by your employer may not be enough to cover your financial needs in the event of a disability. Supplemental insurance is additional coverage that can help you pay whatever expenses may not be covered by your medical plan or employer’s disability policy.

If you decide that the coverage offered through your employer-sponsored group plan does not adequately fill your personal needs, you should contact an independent agent such as Broad Reach Benefits to inquire about individual disability insurance coverage.

Pregnancy Discrimination Act

Under this act, which amended Title VII of the Civil Rights Act of 1964, pregnancy is considered a temporary disability, and should be treated as the employer would treat any other short-term disability. The act applies to any companies with 15 or more employees, and prohibits any kind of discrimination based on pregnancy, childbirth or related medical conditions. For example:

• Employers may not refuse to hire a pregnant woman based on her pregnancy.
• In granting sick leave, disability leave or modified job duties, employers must treat pregnant women as they would any other employee with a disability.
  • For instance, if short-term disability is generally granted without making the employee exhaust their sick leave or vacation days, then the same must be allowed for maternity leave.
• While an employee is on maternity leave, her job status and seniority must remain secure, including all health insurance, retirement and other benefits.

• While on maternity leave, employees should continue to receive the same fringe benefits, compensation, vacation calculation and seniority accrual as any employee on short-term disability leave.
• Pregnancy-related medical expenses should be reimbursed exactly as expenses for any other medical condition.

Length of Maternity Leave

There is no federally mandated minimum amount of time required for maternity leave, but the courts state that the leave must be reasonable in length. The Pregnancy Discrimination Act holds that the leave should be at least comparable to any other short-term disability leave. For employers with 50 or more employees, the Family and Medical Leave Act (FMLA) also applies, which grants the employee 12 weeks of unpaid maternity leave. Generally, employers also allow employees to use vacation or paid sick time to supplement their allotted time off. This is not always ideal though, since employees would like to have that time off available in case of illness (their own or their child’s) down the road.

Companies may choose to simply comply with those federal acts, or craft their own plan. They may offer maternity leave as a separate benefit (if they don’t offer short-term disability, for instance). In that case, the company must ensure they are not discriminating against pregnant employees, but rather are treating them reasonably and as if they had any other disabling condition. Employers also may choose to offer maternity benefits above and beyond their short-term disability allowances or FMLA requirements.

While allowing significant time off for an employee can be burdensome, especially if it is paid time off, offering maternity leave can still benefit the employer. Providing a workplace that is sensitive and accommodating to employees’ work-life balance is a great recruiting and retention tool for employers. The cost of recruiting, hiring and training a mid- to top-level employee generally far outweighs the short-term cost of allowing generous maternity leave and flexible time scheduling after the birth of a child.

What Employers Can Do

There are steps employers can take to protect themselves from liability and prepare their company in case of a future lawsuit.

• Keep Job Descriptions Detailed and Accurate. It is important that job descriptions are kept up-to-date and always include essential functions of a job. Remember that employers have a responsibility to at least attempt to reasonably accommodate an employee who cannot perform an essential function. Essential functions in a job description can be one factor in legally proving that the task is indeed essential to the job; these functions can include physical requirements like lifting or standing and stamina requirements like working long hours or weeks.

• Develop an Accommodation Policy. Creating and distributing a reasonable accommodation policy can demonstrate your commitment to honoring ADA. The policy should direct all reasonable accommodation requests to HR rather than supervisors, as HR professionals are more equipped to deal with the nuances and legal risks of handling such a request.

• Train Supervisors. Even if you direct employees to HR, supervisors still need to know how to handle the situation if a reasonable accommodation is requested of them. They should not respond either yes or no to the request, regardless of how feasible it may or may not be, but should instead refer the situation to HR. In addition, supervisors must be trained to handle potential ADA situations that may arise during a job interview or in their daily work with employees.

Common Mistakes

In navigating ADA, HR professionals should be careful to avoid these common mistakes.

1. Ending accommodation dialogue with an employee if no reasonable accommodation can be found to help the employee perform an essential job function. In this situation, employers should consider other accommodations such as working part time, reassigning the employee or providing an unpaid leave of absence.

2. Taking a manager’s word that a function is, in fact, essential. This will be contested if the issue goes to court, so employers should investigate themselves to determine if a function in question is essential or not.

3. Using the “undue hardship” provision too liberally. For instance, reasons such as cost or other employees’ reactions will generally not be accepted by the court as an undue hardship for providing a reasonable accommodation.

4. Discussing details of a disability with the employee’s manager. The manager should generally only know the nature of the accommodation being provided. An exception is if the disability affects how the manager will interact with the employee, such as a hearing impairment.

5. Failing to consider other laws applicable to an employee’s disability. For instance, a disability under ADA often also qualifies as a serious health condition under FMLA, so FMLA laws and provisions might come into play.

6. Rejecting an employee’s request because it seems unreasonable or impractical. Employers should still engage in a dialogue with the employee to see if a solution can be reached. Even if you still determine that the request is not feasible, it is important to follow the full process to reach that decision (and document it completely).

7. Eliminating essential functions as an accommodation, even for a limited period. Though sometimes this is a feasible solution, it can also make it harder to argue later that the function is essential for this or any employee. In addition, other employees may argue that the function should not be essential for them either, or claim discrimination. To do this safely, emphasize that suspending or relaxing the essential function is temporary and document the specific reasons for this action to avoid discrimination claims from other employees.

8. Failing to properly document a denied accommodation request. Documenting the process followed and the reason for denial will help your defense in the event of litigation.

9. Taking performance into account when deciding if an accommodation is reasonable. All workers should be treated the same in this process, whether high performers or underachievers.

10. Not considering reasonable accommodations just because the employee doesn’t offer any specific ideas. If an employee tells HR that he or she needs an accommodation, it is the employer’s responsibility to investigate potential accommodations.

Now more than ever, the burden has shifted to employers to provide reasonable accommodations when possible and show care in handling disability-related issues in the workplace. It is important that you are familiar with the nuances of ADA and the ADA Amendments Act, to keep your company in compliance and avoid costly lawsuits and penalties.

This Broad Reach Benefits, Inc Legislative Brief summarizes the court’s ruling and provides some information on what it means for employers that offer wellness programs. 

ADA Requirements

The ADA prohibits employers from discriminating against employees based on disability. As part of this prohibition, the ADA limits when an employer may obtain medical information from applicants and employees. Once employment begins, as a general rule, an employer may make medical inquiries or require medical examinations only if they are job-related and consistent with business necessity. However, according to the Equal Employment Opportunity Commission (EEOC), an employer may conduct medical examinations and activities that are part of a voluntary wellness program without violating the ADA, as long as medical records are kept confidential. A wellness program is considered voluntary if the employer neither requires employees to participate nor penalizes employees who decline to participate. Informal EEOC guidance suggests that a wellness program may not be considered voluntary if it includes a mandatory health risk assessment (HRA) or a penalty for non-participation.

Additionally, the ADA includes a safe harbor exception to many of its requirements, including the restriction on obtaining medical information, for bona fide benefit plans. The exception provides that the ADA does not prohibit or restrict an employer “from establishing, sponsoring, observing, or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law.” The bona fide benefit plan exception may not be used as a subterfuge to avoid the ADA’s requirements. The EEOC has not formally addressed whether wellness programs that require participation or penalize employees for non-participation may fall under the ADA safe harbor exception for bona fide benefit plans.

The Court Ruling

In this case, the employer established a wellness program for its employees that included an HRA and a biometric screening. Participation in the wellness program was not required for health coverage through the employer. However, any employee who did not complete the wellness program incurred a $20 charge per pay period. The employer received de-identified aggregate data from the wellness program to consider in creating future benefit plans. Employees who completed the program and who were identified by the employer’s insurer as having certain risk factors were given the opportunity to participate in disease management programs.

A group of former employees sued the employer in federal court, alleging that the employer violated the ADA by offering a non-voluntary wellness program that required employees to participate to avoid paying the penalty. In its defense, the employer argued that the wellness program fell under the ADA’s safe harbor for bona fide benefit plans.

The federal district court in the Southern District of Florida held that the wellness program did not violate the ADA because the program was a bona fide benefit plan under the ADA’s safe harbor and was not used as a way to evade the ADA’s requirements. Because the court concluded that the wellness program was protected under the ADA’s safe harbor for bona fide benefit plans, the court did not address whether the program was permissible under EEOC guidance as a voluntary wellness program.

In concluding that the wellness program was a bona fide benefit plan, the court made the following conclusions.

• The wellness program was a term of the employer’s group health plan because (1) the health plan insurer administered the program, (2) eligibility for the wellness program was limited to health plan enrollees and (3) a description of the wellness program was included in health plan handouts.
• The wellness program was “designed to develop and administer present and future benefit plans using accepted principles of risk assessment.” Also, the employer initiated the wellness program for financial reasons rather than an altruistic desire for healthy employees.
• The wellness program was not designed to evade the purpose of the ADA. The program was beneficial to all employees, disabled and non-disabled.

What the Ruling Means for Employers

Wellness programs must be carefully structured to comply with various federal and state laws, including the ADA.  Employers offering wellness programs that require medical information or otherwise penalize employees for non- participation will need to determine whether their program complies with the ADA.

The EEOC has indicated that a wellness program may not be considered voluntary if it includes a mandatory component or a penalty for non-participation. Although the Florida court in this case held that such a program was protected under the ADA’s safe harbor for bona fide benefit plans, it is not clear whether courts in other jurisdictions would arrive at the same conclusion given a similar set of facts. It is also unclear whether the EEOC agrees with the Florida court’s application of the ADA’s bona fide benefit plan exception or will issue additional guidance regarding the interaction between wellness programs and the ADA.

 Broad Reach Benefits, Inc will continue to monitor ADA developments and potential impacts on wellness programs.

As with any voluntary benefit, there are advantages to purchasing LTC through the workplace: premiums are typically lower due to the power of group purchasing; underwriting may be less stringent; marketing comes to the employee, who does not have to take the time to seek out information; enrollment will be easy and payment convenient through payroll deduction. Given these advantages, why don’t more employees opt to enroll when offered the chance?

A study from AARP indicates misconceptions among Americans about long-term care needs, costs and services, and this may be one factor contributing to the low number of individuals who decide to purchase LTC insurance coverage. According to this survey, “Americans age 45-plus know less about long-term care than they think they do.” Some specifics from the survey indicate a sobering lack of knowledge about issues involving long-term care-

• Only 8% of respondents correctly estimated the monthly cost of a nursing home within 20% of the national average cost, and only 23% made a similarly correct estimate for the monthly cost of an assisted living facility.

• Close to a quarter didn’t know the cost of an in-home visit from a skilled nurse or an aide.

• A majority (59%) thought Medicare pays for extended nursing home stays, and 52% thought Medicare covers assisted living costs.

• Almost 30% said that they have purchased LTC insurance, a figure considerably higher than industry estimates about the number of policies that have been sold.

Clearly, more work needs to be done to educate individuals about the issues involving long-term care. Employers that make LTC coverage available agree with this assessment. The HHS study cited above reveals that employers found educating employees about the LTC benefit to be very important, but also very challenging. When asked what they would have improved about their LTC offering, most named education and communication during the initial offering period.

Looking back at the employee misconceptions about LTC, overcoming them indicates several key communications components:

• The cost of long-term care services. According to a 2007 study from Genworth Financial, the national average for a private room in a nursing home runs almost $205/day or almost $75,000/year; a stay in an assisted living facility costs more than $2,700/month; and hourly rates charged by certified home health agencies average more than $32.

• The funding sources for long-term care services. As noted above, many people think that, once they hit age 65, Medicare will pay for any long-term care needs that may arise. However, Medicare does not cover extended long-term care stays.

• The chances that long-term care services will be needed in one’s lifetime. According to figures from the government, currently, about 9 million people over the age of 65 need assistance with their long-term care needs. By 2020, this figure will likely rise to 12 million. According to one government study, individuals who reach age 65 have a 40% chance of entering a nursing home, and about 10% of people who do enter a nursing home will stay there for five or more years.

• The advantages of purchasing coverage through a voluntary workplace-based offering.

The EBRI study cites surveys showing that communications is the most important determinant of participation in a long-term care program; one survey noted found that 38% of employers making LTC coverage available wished, in retrospect, that they had communicated the plan more effectively. Thus, when contemplating an LTC offering-or when looking at an existing program-do not underestimate the importance communication and education will play in the program’s success.

 Many employee benefits brokers simply don’t bother to perform the due diligence and shop the market in a given year because the clients’ rate was either locked in or renewed with no rate change.    Receiving a renewal with no rate increase is great.  But how do you know that the reason you didn’t get a rate increase was because you were over paying based on your better than expected claims history? 

It is essential to not only review the underwriting assumptions the carrier is using but also to go out into the marketplace and acquire competitive quotes.  Your broker can then evaluate the incumbents’ numbers and benchmark them against the competition to ensure you have the best programs in place.  Make sure your employee benefits broker is carefully evaluating your plans each and every year.

GINA applies to employers with 15 or more employees. Its definition of “genetic information” includes not only genetic tests, genetic services and genetic research involving an individual employee and/or family members, but also the manifestation of a disease or disorder in an individual’s family medical history. Specifically, GINA prohibits the use of genetic information in employment decision making, restricts an employer’s deliberate acquisition of an employee’s genetic information, requires employee genetic information to be maintained as confidential, and strictly limits employers from disclosing such information.

The regulations create a number of exceptions, including situations in which genetic information is acquired “inadvertently.” So, for example, if an employee’s supervisor overhears a conversation in which genetic information is discussed (the “water cooler” exception), or learns genetic information during the course of a casual conversation with an employee, this would be considered “inadvertent” and not amount to a GINA violation. However, the exception would no longer apply if the supervisor pursued the conversation by asking follow-up questions. Also, while a casual, general question about an employee’s health that elicits genetic information might be considered inadvertent, more pointed health inquiries that delve into an employee’s family health history (such as, “Does cancer run in your family”) are not permissible under GINA.

There are situations in which an employer may need to solicit health-related information from or about an employee, such as when an employee seeks a leave of absence. GINA provides safe harbor language for such lawful requests for health-related information; this language specifies that the employee or other individual from whom information is sought (such as a health care provider) should not provide genetic information in response to the employer’s request for health-related information.

For employers that offer wellness programs, the EEOC guidance says that employers may acquire genetic information about an employee and/or family members for these programs, so long as participation in the program is voluntary, and employees must give prior, voluntary, knowing and written authorization. Any information acquired this way may be made available to the employer only in an aggregate format, and not be identifiable to any individual employees. Also, employers may offer financial incentives to encourage participation in wellness programs, but they may not offer an inducement for individuals to provide genetic information. Thus, for example, if a health risk assessment is part of program participation, and the assessment includes some questions about family medical history or other genetic information, those questions must be identified and it must be clearly stated that an employee need not answer them in order to receive the incentive. Disease management programs, and incentives for participation in them, must be available to all workers with the targeted health condition and those whose lifestyle choices put them at risk, and not only to those who voluntarily provide health and genetic information.

GINA provisions are complex and should be reviewed with a company’s human resources and legal advisors. However, the following are a few of the steps employers should now be taking to avoid running afoul of its prohibitions:

• Update Family and Medical Leave forms, fitness-for-duty forms and request for accommodation paperwork to include the safe harbor language.
• Train managers, supervisors and human resources personnel on GINA provisions, especially as regards casual conversations with employees about their health or the health of family members.
• Review and update employee handbooks and other communications to include genetic information in any appropriate references to employee protections. Obtain and post the revised EEOC “EEO is the Law” poster, which the agency has updated with information about GINA.
• Review wellness programs with the considerations noted above in mind.

This type of life insurance covers two individuals (most often spouses) through a single life insurance policy. The premium for survivorship insurance is usually much less expensive than other individual life insurance policy options and the policy respects martial estate tax deductions that defer estate taxes until both insured spouses are deceased. The benefit will not be paid out until both individuals on the policy are deceased.

Survivorship life insurance can be very beneficial in a number of estate transfer circumstances. Here are five scenarios where survivorships might be considered:

Avoiding Taxation Eating Away Retirement Account Assets

Many are surprised to learn that the 401 (k), IRA, or other retirement account that they’re planning on leaving to their children, grandchildren, or other loved ones can be cut in half by the time all the applicable taxes are applied to the money. In order to avoid tapping into this money to pay these taxes, you may buy a survivorship policy equal to the estimated taxes on your retirement account assets. This way the survivorship policy negates the tax burden.

Ensuring Charitable Contributions Are Dollar-For-Dollar

Just as with retirement accounts, you may use a survivorship policy to ensure that your charitable donations to qualified non-profit organizations are received dollar-for-dollar upon your death. In the meantime, if you name the non-profit organization as the owner and beneficiary of the policy, then you’ll be able to deduct the survivorship policy premiums from your annual taxes.

Keeping Non-Liquid Assets Intact

You might have assets that aren’t liquid, such as a family business or real estate, and that your beneficiaries don’t want to sell to pay the estate taxes. The benefit from a survivorship policy can be used to pay the estate taxes and keep your non-liquid assets intact. The survivorship policy can also be useful in cases where you have multiple children or grandchildren, some of whom might not be interested in ownership of the involved real estate or business. Those interested in the asset(s) can use their portion of the life insurance benefit to buyout the other involved parties.

Gaining Insurance For A Spouse With Poor Health

Your spouse might have been told he/she is uninsurable due to a poor health condition. A survivorship policy can generally be obtained so long as the other spouse is in relatively good health.

Caring For Children With Special Needs

Ensuring that your child with special needs is cared for after you and your spouse die is a daunting process to say the least. A survivorship policy is one cost-effective way that you can ensure your special needs child has a large death benefit to provide for their care once you and your spouse are deceased. This is usually done aside a special needs trust to ensure that the funds are properly managed and to retain the child’s ability to receive government funds like SSI.

In closing, for the survivorship policy to have the desired impact, it must be excluded from the estate of the insured parties. If you and your spouse have separate estates, then it must be excluded from both. Neither spouse can have ownership rights on the policy. You may choose to assign the rights of the policy to an adult child, setup a trust, or such. At Broad Reach Benefits we work with estate lawyers to ensure the structure is congruent with your estate planning needs and goals.

While you might not be considered a standard risk any longer, there are still life insurance programs that can provide you with the coverage you need. One such option is called impaired risk coverage. This is a special form of life insurance designed to provide coverage for individuals that are no longer a standard risk. An impaired risk is life insurance underwriting terminology used to describe an individual that has some factor making him an above average risk to insure, such as an unfavorable health history or current health condition. Most underwriters consider an individual an impaired risk if any of the following statements are answered with a yes:

* Do you have cancer?

* Do you have diabetes?

* Do you have heart disease or cardiovascular disease?

* Do you have rheumatoid arthritis?

* Do you have chronic asthma?

* Do you have a chronic liver, lung, or kidney disease?

* Do you have AIDS or HIV?

* Do you abuse any substance – alcohol, tobacco, or illicit drugs?

* Are you employed in a dangerous occupation?

* Do you participate in any dangerous leisure activities?

The good news is that even if you answer yes to these questions, Broad Reach Benefits can still find you affordable life insurance coverage. One of the most important steps is working with the right insurance agent. At Broad Reach Benefits we are experienced with impaired risk insurance and have an excellent working knowledge on what carriers will cover what conditions most favorably, at a reasonable price; and what carriers are best avoided. For example, some life insurance carriers are now using clinical underwriting. This method of underwriting is a fairly new process for insuring those exceeding the normal risks. It looks beyond your current health condition(s) and takes your overall health into account by considering elements like how well you’re managing your condition, if you live a healthy lifestyle, and if you take medications as prescribed and follow your doctor’s guidelines

In today’s life insurance market, it’s very possible to find adequate and affordable coverage, even if you aren’t a standard risk. There might be a few rejections before you find the right coverage, but just remember that one insurer viewing you as an unacceptable risk doesn’t mean that all insurers will share their viewpoint.

Here are four reasons why a growing number of employers are instituting Voluntary Benefits plans for their employees:

1.       Voluntary benefits offer employers a solution for beefing up their benefit package without adding cost to the bottom line.

Rising health care costs and a difficult economy have driven employers to re-evaluate the way they provide and fund benefits to their employees.  As with the retirement market, where defined-benefit pension plans have given way to employee-funded retirement accounts, responsibility for benefits decisions and funding is shifting to employees.

Voluntary benefits give employees options for additional coverage beyond a group offering without impacting an employer’s bottom line.  And to show how impactful this trend has been, despite a tough economy, sales of voluntary benefits industry-wide grew 3.3 percent between 2008 and 2009, with some insurers reporting 14 to 34 percent increases.

2.       Voluntary benefits allow employees to choose coverage that suits their needs.

Today’s workforce is a diverse group of widely varying ages that has redefined family, brought an array of cultural backgrounds to the workplace and ended the era of the “one-size-fits-all” benefits package.  Offering a broad, flexible range of benefits is critical to meeting the needs of this workforce and maintaining a competitive edge in the marketplace.

Voluntary products allow employees to customize their benefits packages to create this flexibility.  For example, they allow younger employees to select accident insurance, and expectant mother to access more life insurance, and a mid-career or older employee to pick critical illness coverage.  Supplemental health plans offer employees an affordable way to help protect their finances from the high cost of an illness or injury.

3.       With voluntary benefits, employers can offer an integrated approach to a suite of products.

As cost-shifting has accelerated, many employers who are looking for ways to share benefits costs with employees have been hesitant from trying worksite products because of the perceived complexity.  Broad Reach Benefits can help by utilizing an integrated approach to group and voluntary benefits that helps to address this perception.  Instead of “selling” benefits to employees, we educate your employees to understand the benefits and the needs that these products can fill.  Then, your employees can make an informed decision about their families particular needs.

We can put a suite of products on a single platform that helps with simplicity by combining common benefits enrollment, education, billing and life changes across all products.  But it also provides a blend of funding options that gives employers even greater flexibility in controlling and predicting costs. 

Broad Reach Benefits can provide more than just a list of carrier and product options.  In an environment where employees may be making their own benefits decisions, employers not only need product recommendations, but also need help identifying the carriers that have the right education, technology and service infrastructure in place. 

4.       Employers like the value-added benefits of voluntary products.

An additional benefit of the voluntary solution is the value added by quality benefits education.  Education is a simple and truly effective way employers can show employees that they value the energy and effort they give their work, and adding voluntary products is another opportunity to communicate to employees about benefits.  In addition, research shows that employees who feel valued by their employer also feel loyal, have positive perceptions of their company and have higher levels of workplace satisfaction and productivity.

Please let us know if you’d like to explore how employer sponsored, yet employee funded voluntary benefits offerings can improve the safety net for your employees without adding to the your company’s benefit costs.