The University Record, March 25, 1997

LTD plan rates increase this month

By Vivian Byrd
Benefits Office

The Benefits Office has released new rates for the long-term disability (LTD) plan, effective March 1, 1997.

"In 1996, we projected an annual rate increase for LTD over the next several years. Rate increases are expected to continue," says Bonnie Marttila, supervisor, long-term disability.

"Prior to 1990," Marttila explains, "the plan had unusually good experience---that is, a very low number of people became disabled each year, and the rates reflected that good experience."

However, between 1992 and 1996, there was a 50 percent increase in the number of disabled individuals who receive benefits through the plan. Moreover, the plan is currently under-reserved, which means there are insufficient funds to pay present and future disability plan costs. The reserves must be increased.

Because of concerns regarding the amount of anticipated increases, Alexander and Alexander, benefits cosultants, have recently completed a review of the plan provisions and structure at the request of the Benefits Office. A committee will be working on a plan redesign based on the conclusions from the study, and revisions may be announced later this year.

The University pays the expanded LTD plan premium for the first $30,000 of annual base salary for staff:

(1) after they have completed four years of continuous service and have a 50 percent or greater appointment lasting eight months or longer; or

(2) after five years of continuous service and less than a 50 percent appointment lasting eight continuous months or longer.

Faculty or staff members considering dropping long-term disability coverage due to this rate increase should first contact the Benefits Office, 763-1214, to discuss the impact of that decision before they actually cancel their coverage.

The rates are set out in the accompanying table. Deductions taken in March paychecks will be based on the new rates. Here's an example to help you calculate your cost.

An employee earning $42,000 per year with a 50 percent or greater apointment:

If less than four years of service: $42,000 ÷ $1,000 ÷ 12 = 3.5 x $8.68 = $30.38 per month.

If more than four years of service: $42,000 - $30,000 ÷ $1,000 ÷ 12 = 1 x $8.68 = $8.68.



LTD Plan Rates


               1996 rate/$1,000 of           1997 rate/ $1,000 of 

               covered monthly salary          covered monthly salary

   Basic                 $19.08                       $20.03

   Expanded                8.27                         8.68

   Physicians              8.27                         8.68