February 13, 2007, Volume 53, No. 22
The Division of Human Resources has compiled some answers to questions that have been asked so far on the Supplemental LTD Plan. Personalized materials on this plan were recently mailed to eligible faculty and staff. Questions on the plan can be addressed to Income & Benefit Solutions, 1-877-321-4427 or firstname.lastname@example.org.
Supplemental Long-Term Disability (LTD) Plan
Questions and Answers
Q1: What is the supplemental LTD plan?
A: The supplemental LTD plan is an individual disability insurance policy that you may purchase to supplement the benefits provided by the University group LTD plan.
Q2: How do I qualify for benefits under the supplemental LTD plan?
A: This policy pays a benefit if you cannot work in your own occupation due to an injury or sickness and you suffer a loss of at least 20% of your pre-disability income.
Q3: When are benefits paid?
A: If you qualify for benefits, they will begin after 180 days of disability and are payable to age 65 for disabilities that begin before age 62, with a graded benefit period for disabilities incurred at age 62 or older.
Q4: Are the payments under this plan offset by Social Security and similar benefits?
A: No, unlike the University group LTD plan, there are no offsets to your benefit for anything other than earned income.
Q5: Are the benefits under the plan taxable?
A: No, unlike the University group LTD plan, benefits under this plan are tax-free because you pay the premiums with after-tax dollars.
Q6: Am I covered for pre-existing medical conditions?
A: There is no limitation or exclusion in coverage due to pre-existing medical conditions provided you apply during the initial enrollment period ending on February 28, 2007.
Q7: Are benefits limited for disabilities due to a mental disorder or substance abuse?
A: Benefits for disabilities due to mental disorders or substance abuse are paid for the full benefit period (See Questions 15, 16 and 17). There is no separate limitation for these types of disabilities.
Q8: What benefit limitations and exclusions are included in the supplemental LTD plan?
A: Payments are limited to 12 months for each period of disability if you are residing outside of the U.S. or Canada. No benefits are paid if you are able to work but choose not to do so. No benefits are paid if you are confined to a penal or correctional institution. Disabilities caused by war, intentionally self-inflicted injuries, committing or attempting to commit a felony, participation in a riot or disorder, engaging in an illegal occupation or loss of professional license are not covered.
Q9: Does the policy pay a survivor’s benefit?
A: Yes. If you die while benefits are payable, the policy will pay a lump sum survivor’s benefit equal to three times the maximum monthly benefit. The survivor’s benefit will be reduced by any overpayment of your claim.
Q10: What salary was used in computing the amount of coverage I am eligible to purchase?
A: The salary used in the computation of your eligible benefit under this program is your gross base salary as of December 21, 2006. Your gross base salary is before taxes and doesn’t include any bonuses or other variable pay. In addition, the salary used in the calculation does not include any raises that were effective after December 21.
Q11: How was the benefit amount I am eligible for calculated?
A: Your benefit amount was calculated as 75% of your monthly gross base salary from the University less the amount of your University group LTD monthly benefit. If you are a CPUP faculty member your benefit amount was calculated as 15% of your monthly gross base salary from the University. The amount you qualify for may be reduced by the monthly benefit amount of any individual disability insurance policies you already own.
Q12: What benefits are paid if I am disabled?
A: Benefit payments are based on your proportionate loss of income, with the full benefit amount paid if your income loss due to disability is greater than 80%.
Q13: May I elect an amount of coverage that is less than the amount for which I am qualified?
A: No, if you elect to participate in this program, you must purchase the amount that is provided in your enrollment materials.
Q14: Does my coverage automatically increase each year with my salary increase?
A: The application includes a separate Annual Benefit Increase Agreement. By signing this agreement, you are electing to have Standard automatically increase the coverage when they are notified by the University of your annual salary increases. The annual salary increase must be large enough to result in an addition of at least $200 of monthly benefit in order for an increase to be issued in a given year. If your salary increase in one year is not large enough to qualify for an additional $200, the increase will be carried over to the following year and combined with that year’s increase to determine if an increase of at least $200 is available. If you sign this agreement and decide later that you do not want the additional coverage you may opt out by submitting a policy change request in writing to Standard.
Q15: I read that coverage continues until age 65. Why is age 65 used?
A: Disability insurance is intended to replace earned income, and 65 is a common age when earned income stops due to retirement. The insurance industry uses this age in order to keep plans affordable for all policyholders.
Q16: Can coverage be extended past age 65?
A: Participants who have reached the age of 65 and are still working may continue their coverage if they certify that they are working full-time (minimum of 30 hours per week) and continue to pay the premiums.
Q17: If I elect to continue my policy past age 65, how long will the policy be in force?
A: Coverage may be continued for as long as you are working at least 30 hours per week and pay the premiums when due. There is no maximum age at which coverage ends.
Q18: If someone denies tobacco usage on the application form and later submits a claim for disability related to smoking, will the claim be denied?
A: Standard will not automatically deny the claim in this instance. They will, however, go back and determine if the participant did use tobacco at the time of application, and if so calculate the amount of premiums that should have been paid using the tobacco user rates. Standard will then reduce the benefits paid by the difference between the amount of premiums that should have been paid and the amount of premiums that were actually paid. There is a 25% premium surcharge for tobacco users.
Q19: If I apply for coverage in February, when is the policy effective? If I become disabled before the effective date, am I covered?
A: If your application is postmarked on or before February 28, 2007 your policy is effective on June 1, 2007. If you suffer a disability prior to this date, you will not qualify for benefits under the plan.
Q20: Can I keep this supplemental LTD policy if I leave the University?
A: You will own this policy and can take it with you even if you leave the University. You will need to contact Standard and arrange for the premium bills to be sent directly to you since premiums will no longer be paid through a payroll deduction.
Q21: If I enroll in this program, am I covered for disability during the “gap” period when my short-term disability period ends and my group long-term disability coverage begins?
A: This coverage is not intended to cover the gap between short-term and long-term disability benefits. It is a supplemental LTD plan subject to the same 6-month waiting period as the University group LTD plan.
Q22: If I am approved or denied benefits under the University’s group LTD plan, does that mean that I will be approved or denied benefits under this plan?
A: No, a decision one way or the other under the University’s group LTD plan does not affect the decision under this plan. The two plans have different policies and different providers (Aetna and Standard). It is likely, however, that the two companies will reach the same decision on claims.
Q23: How can I find out more about the University group LTD benefit?
A: The University group LTD summary plan description can be found at www.hr.upenn.edu/benefits/spd_healthwelfare.pdf.
Q24: Who pays for the supplemental LTD plan? How are premiums paid?
A: If you choose to participate in the plan, you will pay the premiums through a payroll deduction. If you are paid monthly the premiums will be deducted once a month, and if you are paid weekly a weekly deduction will be made.
Q25: When will payroll deductions start?
A: Payroll deductions will begin in May.
Q26: If I am out of work and my premiums are no longer deducted from my pay, can I continue the policy?
A: If your premiums are no longer deducted from your pay, you must contact Standard and request direct billing in order to keep your policy in force.
Q27: Will I have to pay premiums if I am disabled?
A: If you are continuously disabled for at least 90 days and benefits are payable under your policy, Standard will waive premiums due and refund any premium paid after the date your disability began.
Q28: Will my premiums ever change?
A: Your premiums are guaranteed not to change at any time before you reach age 65. Your premiums may change each year after age 65 based upon Standard’s rate structure in place at that time.
Q29: How do the premiums for the supplemental LTD policy compare to what I might pay for supplemental coverage if I bought it on my own?
A: The premiums for the supplemental LTD policy include a 25% discount.
Q30: Who is eligible for the supplemental LTD plan?
A: Full-time faculty and staff who are eligible for the group LTD plan, earn at least $15,000 per year and have been actively at work at the University or for another employer for the past six months are eligible for the plan. Employees who would otherwise qualify for the plan but have missed more than 10 days of work in the past six months due to a medical condition will be eligible for the plan once they have been actively at work for six consecutive months.
Q31: Do I have to prove that I am in good health in order to qualify for supplemental LTD coverage?
A: As long as you have been actively at work for the past six months, you qualify for the supplemental LTD coverage. You do not have to answer any other questions regarding your health.
Q32: I am currently on a Leave of Absence (LOA) from the University. Am I eligible to participate in this program?
A: Employees on LOA who meet the requirements for eligibility (full-time employees earning at least $15,000 per year) are eligible for the program as long as they sign the application while in the U.S. The application has a “Signed at” space next to the signature that must show a U.S. city and state.
Employees who are on LOA outside of the country during the enrollment period are eligible upon their return to the country. It will be their responsibility to follow up if they want coverage.
They will have 30 days upon their return to apply in order to be eligible for guaranteed issue.
Note: employees who are on a medical LOA are not currently eligible because they are not able to meet the requirement of not missing work due to a medical condition.
Q33: What is the deadline for enrolling in this program?
A: You must enroll by February 28, 2007 in order to be eligible for the program on a guaranteed issue basis. This is a one-time offer and you will not have any other opportunities to enroll with guaranteed acceptance.
Q34: Where are my enrollment materials being sent?
A: Enrollment materials were mailed to your home address.
Q35: How do I apply for coverage?
A: You need to complete the shaded items on the application and Automatic Benefit Increase Agreement that are included in the enrollment materials and return them in the enclosed pre-addressed envelope. Applications should be mailed to Income & Benefit Solutions, LLC, 4 Milk Street, Portland, ME 04101.
Q36: Whom do I contact if I have additional questions?
A: Contact the enrollment services firm, Income & Benefit Solutions, at 1-877-321-4427 or email@example.com if you have additional questions.