Understanding Your Long Term Disability (LTD) Benefits

Some parts of your group plan are easy to understand because you probably use them regularly. Health and dental coverages are like that. They're the most frequently claimed group benefits by far.

But what about disability benefits? How does disability coverage compare to the benefits you're most familiar with?

Long Term Disability coverage (LTD) pays a monthly benefit to an employee who's away from work for a significant length of time, because of an illness or accidental injury. To pay disability benefits, the insurer compares the individual's circumstances to the employer's contract. To learn about the circumstances, the insurer asks for a detailed description of the individual's job. Typically, the employee's doctor is also asked for a report, describing the medical condition and how it affects the individual's ability to work.

As soon as the insurer has the information, it can determine whether the injury or illness qualifies for the benefits provided under your company's plan. The items below play a key role in that decision.

Definition of Total Disability

Your Chambers Plan will specifically cover one of these two possible definitions of disability.

  • Own occupation coverage considers employees to be disabled if they can't perform all the duties of their regular occupation.
  • Any occupation coverage means employees are eligible for benefits if they can't perform any occupation for which they are or could reasonably be qualified, based on their training, education or experience.

"Elimination Period" or "Waiting Period"

On the day an employee has an accident or becomes ill, and sees the doctor, the clock starts on what's called the elimination or waiting period. To be eligible for benefits, the employee must meet the definition of disability in your contract for 120 days in a row, while under the regular and personal care of a physician. Under the Chambers Plan, Long Term Disability payments to eligible employees start on day 121.

Benefit Reductions / Offsets

Chambers Plan benefits may be reduced when other income replacement is payable because of the disability. These include payments from employment and government plans like Canada Pension Plan or Workers Compensation. For example, if an employee receives $500 a month in CPP disability benefits, Chambers Plan benefits will be offset by $500. This means the coverages, in total, can replace the employee's lost income but that the employee is not paid more than before the disability occurred. If you have disability coverage, please review your contract so you understand when benefits are payable, and how the key terms above apply to your plan

When you talk about salaries with your employees, do you use a total compensation approach? Do your employees know the value of all the benefits you provide, over and above their base salaries?

Many employers produce Salary and Benefit statements for their employees annually. You can use such a statement to highlight the group benefits premiums you pay on their behalf, company pension contributions, other retirement programs, continuing education support, and even non-monetary items such as free parking.

When people understand the total package, they may be less likely to change jobs - especially to make a move for a modest increase without the same benefits. Why not share exactly how much you really invest in your people, so they can appreciate the worth of the value-added benefits you provide?

You can't turn the pages of the newspaper today without reading about the difficulties companies have finding employees. Recently, Human Resources and Social Development Minister Monte Solberg stated that the biggest challenge facing Canada is a shortage of workers, a shortage that totals hundred of thousands across the country. From 1956 to 2006 the country's labour force increased by nearly 200%, but over the next 50 years it is expected to increase by just 11%.

So how can you keep your current employees and attract potential new employees to join your company? Employee training and development is key. If you spend time creating a training and development program, it can help increase employee productivity, and help keep your valued employees, through increased job satisfaction and career advancement. Even smaller firms can take steps to help their employees grow.

Here are a few suggestions:

  • Where possible, cross train your employees so they can move among several jobs. Cross training means employees learn new skills, allowing them to grow professionally. For your company it means a more knowledgeable and flexible work force. You may even discover talents or skills you didn't know people had.
  • In your performance reviews, ask employees what they think they are good at and what they like to do.Understanding your employees' needs can help you provide training in areas that excite them. That kind of connection makes it easier for people to see a future for themselves within your organization.
  • As your employees take on more responsibilities, recognize their successes. It will increase employee confidence and self-esteem, and show all employees that your organization has a positive work environment.

There is no short cut to this process: a good employee training and development strategy takes time and effort. But the payoffs can be huge, providing your organization with a stable work force, employee loyalty, and people who offer an ever-expanding skill base to meet your company's needs - today and in the future.

"Disabled Parking" by Taber Andrew Bain, used under CC 2.0 Generic / Cropped from original.

Author: Dennis Chamney

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Dennis Chamney has been in the financial services industry since 1987 and associated with the Chambers Plan since 1988. He has spent 8 years on the board of various Chambers of Commerce in his marketing area. Dennis Chamney Insurance Services Inc. specializes in customized group benefit plans for small to medium size businesses, as well as financial planning for business owners.

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