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Life and Disability Program Management

Every Dollar Matters and Every Effort Counts
In today’s competitive environment, there’s no room for waste.  With tighter budgets and fewer human resources personnel, every dollar and every effort counts—particularly when it comes to your employee benefits.

Rules for Smooth Administrative Transitions and Ongoing Life & Disability Program Management
By:  Brian Orsinger, Consultant

While often taken for granted, group disability and life programs impact everyone in your organization. If you are considering changing vendors, it’s important to remember that this is not a commoditized market—despite what the pricing tells us.  A small effort invested in the following areas will save headaches down the road:

1. Clarify how plan provisions are handled by competing vendors
Carriers attempt to make their contract language as clear as possible, but how an employer interprets carrier’s administrative responsibilities can vary from the vendor’s intent.  It is important to understand that standard contract language varies among carriers and a thorough review of this language is important when contemplating a vendor change—in addition to simply verifying that benefit parameters are identical. 

2. Ensure eligibility for coverage is properly defined
At times there may be special rules an employer constructs for employees to be eligible for life and disability benefits.  These often differ from other coverages like medical, prescription drug, etc. 

3. Guarantee that the salary to be covered is properly defined
Some employees earn income in addition to their basic rate of pay—for example, bonuses, shift differentials, commissions, overtime payments, etc.  These additional forms of pay are often not included in the insurer’s definition of “salary/earnings,” unless specifically requested.  Even when requested, some employers fail to incorporate the correct pay types when calculating covered volumes. 

4. Ensure everyone is clear on the billing method and process
Is the billing self-administered or list billing?  If self-administered, the individual responsible for the insurance billing function within your organization will need to be advised on several items:

• How is covered volume determined? (Covered Payroll or Covered Benefit)
• What is included in covered volume: base pay, bonuses, commissions, differentials, overtime, etc.?
• How is covered volume capped? (What are the benefit percentage, covered volume basis, and benefit maximum?)
• If applicable, how is a Core/Buy-Up Program Billed?  (Are Buy-Up employees covered in the Core rate?)
• On step rates, when an employee ages into a new bracket, when is s/he reported? (January 1st on year of birthday? First of month of birthday? First of month following  birthday?)
• How should rounding apply when reporting salaries for covered volumes?
• Are rates reported in two or three decimal places?  

5. Understand when disability is truly a disability
Knowing how the carrier defines disability, and the incentives in place to restore a-bility, are acutely important.

• How do own-, any-, or specialty-occupation definitions impact claimants?
• Does your disability contract motivate disabled employees to get well and return to work?
• If a disabled employee does return, but is unable to stay, how does your coverage handle the situation?  

6. Buyer Beware - Don’t terminate prior coverage until absolutely certain that new coverage is what was expected
Spend time upfront guaranteeing that the low-bid passes muster.  If not, it may be worth a premium to retain more valuable coverage. 

Working with a trusted advisor, seasoned in life and disability market nuance, will ensure that your interests and the welfare of your covered employees remain the top priority.  Banyan would be happy to review your current programs and processes to determine if any gaps exist.  It’s your investment; we want to help protect it.