Costs to staff members who currently have deductions for Long-Term Disability (LTD) insurance will rise effective April 1, affecting deductions in April paychecks. Staff members who do not have a deduction will not be affected.
The rate increase is prompted by a 50 percent increase in the number of disabled persons receiving benefits in the past two-to-three years, according to Craig Jorgeson, manager, Benefits Office.
The plan currently is under-reserved, which means that there are not enough funds to pay present and future disability plan costs.
When the plan was introduced in September 1981, the cost was $6.50 per $1,000 of annual salary per month. Because of good experience, the rate was reduced to $2.90 in July 1985. It increased to $4 in April 1992. We now need to assess rates closer to the original. To cover the deficit, increases of a smaller nature will occur for the next several years, Jorgeson adds.
The University cost for the basic plan will increase by 100 percent. However, there is no staff member contribution required for this plan.
For those in the Expanded and Physicians LTD Plansindividuals who choose to insure more than $30,000 of their salaries or have less than four years of service, the increase amounts to approximately 80 percent.
Rates are calculated in one of two ways, as shown in this hypothetical example:
Staff member earning $42,000 annually with less than four years of service: $42,000 : 1,000 x $7.14 : 12 = $24.99 staff member cost per month.
Staff member earning $42,000 annually with a 50 percent or greater appointment with four or more years of service: $42,000 - $30,000* : 1,000 x $7.14 : 12 = $7.14 staff member cost per month. (*The University pays the premium for the first $30,000 of annual base salary.)
Staff members who may wish to drop their long-term disability coverage should contact the Staff Benefits, 763-1214, to discuss the impact of such action before making arrangements to cancel the coverage.