Improved long-term disability coverage on the horizon
More faculty and staff will be fully covered by U-M's Expanded Long-Term Disability (LTD) plan, and employees will see a shorter wait time for automatic enrollment when two key changes to the plan go into effect on Jan. 1, 2014.
"These are positive changes to an important benefit designed to provide income when an employee becomes totally disabled," said Ted Makowiec, senior director for benefits. "For faculty and staff with coverage, the university pays the monthly premiums for benefits during the time of the disability."
That includes the health plan, dental plan Option 1 and life insurance. The plan also makes contributions to an employee's retirement savings account while disabled.
Associate Vice President for Human Resources Laurita Thomas charged a committee of faculty and staff from academic and nonacademic units to recommend changes to the Expanded LTD plan to ensure it was competitive with peer institutions without increasing overall costs. Dr. James Leonard, professor of physical medicine and rehabilitation, chaired the committee.
Makowiec said Expanded LTD is an important benefit to replace income during a serious disability, and faculty and staff should review their coverage during this fall's Open Enrollment period when they will be able to enroll or increase their coverage without submitting a health statement.
UHR will communicate the changes to faculty and staff in detail before a rate reduction occurs in July. There will be additional communications before the Open Enrollment period. The changes will provide:
More salary replacement coverage from the university
Currently, university contributions provide coverage for the first $30,000 of salary, and employees can purchase more to reach disability coverage for their full salary.
As of Jan. 1, 2014, the university contribution will be indexed each year to the median U-M salary. Right now, that is $56,100, and it will be adjusted in 2014 if the median salary changes.
The increase in the salary threshold means more faculty and staff will be fully covered without having to buy additional coverage. And those employees who choose to buy up to cover their full base salary will have a smaller gap.
If an employee is disabled, the policy coordinates with Social Security disability income to provide employees with 65 percent of their covered salary as replacement income.
A shorter waiting period
The current four-year waiting period before new employees receive university contributions toward coverage will be reduced from four to two years.
Cost projections for the premiums necessary to fund this benefit are reduced, so rate reductions will take effect on July 1, saving money for employees and campus units contributing to the cost of benefits.
Change to retirement contribution
The university will contribute 15 percent of salary to the employee's retirement savings plan when disabled, up to a salary of $56,100. Employees who earn more will need to elect additional LTD coverage to receive a contribution equal to 15 percent of their full salary.
Easier methods for enrollment
Expanded LTD enrollment will be part of the 2013 Open Enrollment process this fall, and no health statement will be required for enrollments made during this initial enrollment period.