Life Insurance and Long Term Disability Plan Changes

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• Life Insurance and Long Term Disability Plan
  Changes
• Effective July 1, 2005
• Life Insurance Changes
• Long Term Disability Changes
• Questions

2

• Life Insurance Changes

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• Legislation

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House Bill 119

• Prior to July 15, 2005
• State employees on military leave could keep
  their own life insurance and dependent coverage
  for a period of 12 months
• Effective July 15, 2005
• State employees on military leave can keep their
  own life and dependent coverage for the duration
  of their deployment

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• Legislation
• Waiver of Premium

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Waiver of Premium

• When an employee applies for Long Term Disability
  coverage and is under 60 years of age, he/she
  automatically applies for waiver of premium while
  on disability
• the insurance company pays the premiums

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Waiver of Premium

• Prior to July 1, 2005
• When a qualified LTD recipient retired, the
  Waiver of Premium could continue into retirement
  until the retirees death.
• Effective July 1, 2005
• Waiver of Premium will now end at retirement.
  LTD retirees will be treated the same as regular
  retirees who pay to continue Optional Life
  insurance coverage after retirement.

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• Legislation
• Waiver of Premium
• New Life Insurance Rates

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Lower Optional Life Insurance Rates 45Effective
July 1, 2005
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Lower Optional Life Insurance Rates 45Effective
July 1, 2005
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Optional Life Insurance in Placeas of January 1,
2005

• Employees 36,562
• Coverage 2,562,126,500.00
• Premiums prior to 7/1/05 994,002.83
• Premiums after 7/1/05 964,828.66
• Savings 29,174.18 X 12 350,090.16

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• Legislation
• Waiver of Premium
• New Insurance Rates
• Portability/Conversion

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Conversion

• Prior to July 1, 2005
• Only one option Terminating employees could
  convert both Basic and Optional Term Life
  Insurance to a whole life policy directly with
  Standard insurance

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Portability

• Effective July 1, 2005
• Terminating employees will now have a second
  option Taking the Term Life Insurance coverage
  along in amounts equal to or less than the total
  of both the employees Basic and Optional
  coverage, dependent and child coverage included

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Term Portability RatesEffective July 1, 2005
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Portability

• Stipulations
• Continuously employed for at least 12 months
• Under the age of 65 and not retired
• Not disabled
• Must purchase coverage on self before purchasing
  dependent or child coverage

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Portability

• What, Where, and When
• Two-part document with an employee statement and
  an employer statement
• The forms can be downloaded from www.mosers.org
• Like Whole Life Insurance, no proof of
  insurability needed and must be done within 31
  days of termination

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• Long Term Disability Changes

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• Definition of Disability

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Definition of DisabilityPartial Disability?

• Effective July 1, 2005
• No specific status will exist for partially
  disabled
• Claimants may work and still be considered
  disabled
• Benefits will be offset by earnings
• a person will either be considered disabled or not

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Definition of DisabilityOwn Occupation(first 24
months)

• Prior to July 1, 2005
• The employee is unable to perform with
  reasonable continuity the material duties of
  his/her own occupation
• Effective July 1, 2005
• Same as above, but the employee must suffer a
  loss of income of at least 20 of pre-disability
  earnings

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Definition of DisabilityAny Occupation(After 24
months)

• Prior to July 1, 2005
• The employee must be unable to perform with
  reasonable continuity the material duties of any
  gainful occupation for which he/she is reasonably
  fitted by education, training and experience
• Effective July 1, 2005
• Same, but the employee must suffer a loss of
  income of at least 40 of pre-disability income

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Definition of DisabilityOwn/Any
OccupationClarification

• Standards assessment will now include
  considerations for the national economy Those
  with a residual capacity to work will not be
  eligible for benefits solely because there
  happens to be no labor market in their
  geographical location

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• Definition of Disability
• Loss of License

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Loss of License

• Effective July 1, 2005
• The loss of a professional license or
  occupational certification is not considered a
  disability

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• Definition of Disability
• Loss of License
• Pre-Existing Conditions

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Pre-Existing Conditions

• Prudent Person clause
• Standard will not waive pre-existing condition
  exclusion for claimants that elect not to receive
  necessary treatment for a known condition in
  order to receive LTD payments

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• Definition of Disability
• Loss of License
• Pre-Existing Conditions
• Foreign Residency

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Foreign Residency

• Effective July 1, 2005
  An employee who moves to a location outside the
  U.S. or Canada, will be limited to Long Term
  Disability benefits for 12 months

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• Definition of Disability
• Loss of License
• Pre-Existing Conditions
• Foreign Residency
• Work Earnings Definition

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Work Earnings Definition

• Prior to July 1, 2005
• The employees gross monthly earnings from work
  performed while disabled, from the employees
  employer, any other employer, or self-employment
• Effective July 1, 2005
• Same as above plus any sick leave payout,
  vacation pay, annual or personal leave pay,
  salary continuation earned or Shared Leave payouts

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• Definition of Disability
• Loss of License
• Pre-Existing Conditions
• Foreign Residency
• Work Earnings Definition
• Reasonable Accommodation

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Reasonable Accommodation

• Any expenditure directed toward workplace
  modification with the purpose of facilitating a
  return to work for a disabled employee

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Reasonable Accommodation

• Effective July 1, 2005
• The benefit for Reasonable Accommodation has
  increased from 5,000 to 25,000
• Ms. Maureen Addington
• Vocational Case Manager
• 1-800-628-8600 Ext. 8545
• E-mail maddingt_at_standard.com

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Personnel Advisory Board (PAB) Rule Update

• CSR 20-3.070(6)(C) Resignations/LTD
• Purpose of revision provide appointing
  authorities some flexibility in retaining
  employees approved for long-term disability
• Paragraph (C)1. allows the appointing authority
  to approve a leave of absence for the employee
  returning to work in the foreseeable future
• Paragraph (C)2. provides that employees who are
  approved for disability may continue to work
  part-time when such work schedule can be
  accommodated by the appointing authority

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Review
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Life Insurance Changes

• Legislation
• Waiver of Premium
• New Insurance Rates
• Addition of Portability

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Long Term Disability Changes

• Definition of Disability
• Loss of License
• Pre-Existing Conditions
• Foreign Residency
• Work Earnings Definition
• Reasonable Accommodation

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Why All the Changes?

• Maintain industry standard plan design
• Stay price competitive
• Save money
• Renegotiated contract including state-provided
  Basic Life insurance, member Optional Life
  Insurance costs, and LTD insurance has been
  estimated to
• save nearly ¾ million dollars annually

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Questions?