Long Term Disability Program
Overview and Recommendations
December 2007

Introduction
After a comprehensive review of the University’s long term disability (LTD) coverage it has been determined that alternative programs and plan designs may offer more appropriate benefits with rates that will not change based on employee participation.
These plan designs allow the University to eliminate need to subsidize the premiums contributed by the majority of employees and eliminate the need for contributions from the majority of employees.
The recommended coverage will provide a:
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Level of coverage that is consistent with peer organizations.
Larger guaranteed benefit to all employees.
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Basic level of coverage that provides a more “livable” benefit.
Comprehensive “own specialty/occupation” definition for all physicians and executives.
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Current Group LTD Coverage Overview
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Coverage is provided/offered to all employees after one year of active employment through a two tiered design.
The first tier of coverage, called the “Limited” Plan, is provided by the
University to all Full Time employees.
The maximum benefit amount provided by the University through the
“Limited” plan is $9,000/year.
The second tier of coverage, called the “Full” Plan, is offered to employees with contributory rates heavily subsidized by the University
(67% subsidy).
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Current Group LTD Coverage Overview
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The coverage offered through the “Full” plan will replace 60% of earnings up to $15,000/month ($300,000 of earnings).
Access to the “Full” plan is not guaranteed (requires satisfaction of the insurance carrier’s medical underwriting questionnaire).
Coverage is provided only in the event of a total disability.
Coverage offers an own occupation definition of total disability for the first 30 months (thereafter defined as the inability to perform any reasonable occupation).
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Current Coverage Participation and Monthly Cost
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Issues with Current Group LTD Coverage
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Does not provide a monthly benefit amount consistent with other
Universities identified in a peer group study.
Does not provide definitions of disability that physicians and executives would view as competitive and appropriate.
Does not include any partial income loss provisions to encourage a disabled employee to return to work.
Does not provide the majority of our population with a “livable” benefit.
Any attempt to purchase additional coverage through the “Full” plan will require the employee to satisfy medical underwriting requirements.
Any contractual changes that strengthen the terms of coverage are likely to increase participation in the ”Full” plan, and as a result, increase University’s cost.
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Recommendation
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Raise the level of coverage provided to the general population and physicians to a level that provides a “livable” benefit and more closely aligns with our peers.
Continue to provide a supplementary group program that will allow employees to cover a greater amount of income, without any subsidy from the University.
Add partial loss provisions to the contract and provide our physicians/executives with an “own specialty/occupation” definition that lasts for the entire benefit period.
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Suggested Coverage Thresholds
General Population:
Raise level of coverage provide by the University to provide 60% of income up to
$2,000/month or $3,000/month benefit (insuring $40,000 or $60,000 of annual income).
Offer voluntary group coverage to allow an employee to insure 60% of income up to
$10,000/month (insuring $200,000 of annual income).
Physicians/Executives
Raise level of coverage provide by the University to provide 60% of income up to
$7,500/month, $10,000/month or $15,000/month benefit (insuring $150,000,
$200,000 or $300,000 of annual income).
Offer voluntary group coverage to allow physicians and executives to insure 60% of income up to $15,000/month if this level of coverage is not provided by the University
(insuring $300,000 of annual income).
Offer voluntary individual coverage to all physicians and executives to raise the income replacement percentage to as much as 75% and the monthly benefit to as much $20,000/month for physicians and $30,000/month for executives.
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Recommended Program Advantages
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Allows the University to avoid any premium fluctuations caused by changes in participation in the current subsidized “Full” plan.
More closely matches the benefits provided by peer institutions.
Provides physicians with terms of coverage that protect their ability to perform their own specialty.
Provides the general population with a more “livable” and appropriate benefit.
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Impact on Employee Contributions
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Summary of Annual Premium Options
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Long Term Disability Program
Peer Institution Survey: Participating Organizations
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Dartmouth
Brown
Duke
Emory
Yale
Washington University of
Saint Louis
Vanderbilt
Massachusetts Institute of
Technology
John Hopkins
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University of Pennsylvania
Penn State
Michigan
Northwestern
Wisconsin
Harvard
Stanford
Ohio State
University of California
University of North Carolina
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Long Term Disability Program
Peer Institution Survey: Results
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