Open enrollment for a new, more affordable supplemental disability insurance plan is taking place until Oct. 31.
The new plan--provided by Liberty Mutual--bridges gaps in coverage provided by the state for employees enrolled in the state retirement system, said Nora Robbins, senior director of Human Resource Services.
"The major advantage, in my view, is that for most employees the new plan is much more affordable, particularly, for employees who really need it--those who have less than five years of service," Robbins said. Employees with five or more years of service also will benefit.
The new plan provides coverage of salaries up to $180,000, whereas the cap is $72,000 under the state plan.
Another advantage of the new plan is that employees who enroll during this open enrollment period will be covered for disabilities resulting from pre-existing conditions, after a 12-month waiting period, Robbins said.
All permanent University employees working at least 30 hours a week and contributing to the state retirement system are eligible for the plan. Faculty members enrolled in the Optional Retirement Plan have a separate supplemental disability insurance program.
The primary objective of the disability plans offered by the state and through Liberty Mutual, Robbins said, is to provide replacement income while an employee recovers from a disability.
"Liberty Mutual's and the University's focus is to get employees back either to their job or some other job for which they are suited," she said.
Bridging gaps
Until now, to bridge some of the gaps in the state's disability coverage, employees contributing to the state retirement system could buy supplemental plans offered by Jefferson-Pilot--the short-term Blue Plan and the longer-term White Plan.
The new Liberty Mutual plan is the result of the work of a panel of benefits officers from UNC system campuses led by Kitty McCollum, assistant vice president and benefits officer for the UNC system. The panel designed specifications for a plan that would do a better job of filling the gaps of the state disability program. After taking bids, the panel awarded the contract to Liberty Mutual.
While Jefferson-Pilot no longer is offering its Blue Plan, employees may continue their White Plan coverage. Jefferson-Pilot no longer is offering new White Plan contracts.
Robbins said any employee with a White Plan contract should think carefully before canceling it.
White Plan contracts are customized individual policies with varying lengths and amounts of coverage. Advantages of White Plan policies are that they are portable, non-cancelable, premiums are guaranteed never to rise and benefits are not taxable and are not reduced by disability payments received from the state, Social Security or other employer-sponsored sources, Robbins said.
Lower cost
The biggest advantage of the Liberty Mutual plan--its lower cost--results from having a larger pool of employees, Robbins said. Ten UNC campuses and UNC Hospitals will be offering the plan.
The Liberty Mutual plan comes with two premium rates, depending on the length of time an employee has contributed to the state retirement system. Employees with less than five years of contributory service would pay a premium that amounts to $3.80 per each $1,000 in gross monthly salary. To calculate the monthly premium, divide your gross annual salary by 12 and multiply that amount by .0038.
Employees with more than five years of service would pay $1.40 monthly for each $1,000 in gross monthly salary. To calculate that premium, divide your gross annual salary by 12 and multiply that amount by .0014.
For example, an employee with less than five years of service and a gross annual salary of $24,500 would pay $7.76 a month for the coverage. With more than five years of service, the premium would be $2.86 per month.
Other important features
Beyond cost, the Liberty Mutual plan offers other important features, Robbins said.
It provides disability insurance coverage in the first year of an employee's service, a period not covered at all by the state's disability insurance plan. The Liberty Mutual plan also provides replacement income for disabled employees with less than five years of service.
"Generally, employees with less than five years of employment are at earlier stages in their careers and their salaries are not that high," Robbins said. "Money is very tight for them and they often will bypass these products because they seem so expensive--even though they may really need this coverage."
Without any supplemental insurance, employees with less than one year of service have no disability coverage. By purchasing the Liberty Mutual plan, those employees would get coverage for 66 and two-thirds percent of their salary if they became disabled. The payments would continue until retirement age, provided the employee was not capable of returning to a position for which he or she is suited because of their education, training and experience.
Once they attain one year of service, employees become eligible for coverage under the state retirement system's disability insurance plan. An employee disabled during the next four years would receive from the state disability plan 50 percent of his or her salary with a monthly limit of $3,000. Those payments would last no longer than one year, unless the disability is of a temporary nature. If the disability is considered temporary, the short-term disability period may be extended up to an additional 12 months.
By purchasing the Liberty Mutual coverage, an employee would receive benefit payments not only for the short-term disability period, but until retirement age, provided he or she is not capable of returning to work. The benefit payments also would be boosted to 66 and two-thirds of the employee's salary.
Once employees attain five years of service, the advantages of purchasing Liberty Mutual coverage are smaller, but significant for a short-term disability and for employees making more than $72,000, Robbins said.
She explained that when an employee reaches five years of service, the state retirement system begins covering 65 percent of an employee's salary after the short-term disability period. Also, at the five-year mark, the state plan provides that its benefits would be paid until retirement age in the event of a disability that prevents the employee from returning to his or her occupation, she said.
Liberty Mutual will benefit longtime employees during the one-year short-term disability period, where the state pays only 50 percent of your salary with a maximum payment of $3,000 per month after a waiting period of 60 calendar days.
The state plan covers salaries up to $72,000 a year. Anyone making more than that should consider purchasing Liberty Mutual coverage to bridge that gap, Robbins said.
Figuring Social Security
Under the state disability plan, an employee who has been receiving long-term benefits for more than three years begins to have his benefits reduced by the amount of Social Security for which he is eligible, even if no Social Security payments are being received.
However, Liberty Mutual benefits are reduced only by other disability payments and the amount of Social Security benefits the disabled employee and his dependents actually receive.
Other provisions
Among other important provisions, the Liberty Mutual plan:
*Provides a minimum monthly benefit payment of $100 or 10 percent of the total disability payment, whichever is greater.
*Covers increases in salary aAutomatically, without the employee having to answer medical questions, Robbins said.
*Provides coverage during approved leaves of absences, provided the employee continues to pay the plan's premiums. The state retirement system's plan does not cover an employee on leave, but the White Plan does.
*Uses the definition of disability used by the state retirement system for the first three years. The plan pays benefits to a disabled employee who cannot return to his or her own job for a rehabilitation period of 36 months. After that point, the coverage continues only if the employee cannot return to a job for which he or she is suited by education, training or experience.
*Has non-taxable benefits.
More information
Employees should consider their options and their needs carefully when thinking about whether they need disability insurance, Robbins said.
"Eighty-nine or 90 percent of our employees bought life insurance, but you're eight times more likely to become disabled during your career than you are to die," she said. "The Liberty Mutual program would help provide more security for employees facing a disability."
To request material concerning the plan or the card used to discontinue White Plan coverage, call the Benefits Department forms hotline, 558-5050.
For other information, call Liberty Mutual, 1-800-852-6662.
For questions about the White Plan, call Martha or Nancy Dosher, 929-0301.
Enrollment forms
A letter about the Liberty Mutual plan was sent to eligible employees last week, but the enrollment form and a booklet describing the new plan were not enclosed. They are being mailed this week. If you do not receive yours by the end of this week, contact your human resource facilitator or call the Benefits Department, 2-3071.
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