The University Record, March 12, 1996
Long-term disability benefits to cost more
From the Benefits Office
The Benefits Office has announced rate increases for the Long Term Disability Plan (LTD) coverage, effective March 1. The chart below shows how the changes will affect departmental cost or cost to the staff member.
Marty Eichstadt, director of Staff Benefits, notes that the increase is necessary because before 1990, the LTD plan had a low number of persons becoming disabled and the cost stayed well below the national average for plans of this type. But over the past four years, a 50 percent increase in the number of disabled persons receiving benefits has oc curred.
“When the Expanded LTD plan was first introduced in July 1985,” Eichstadt says, “the cost of the insurance was $6.50 per thousand dollars of annual salary. But due to good experience in the plan, the price was reduced to $2.90.
“We now need to charge rates closer to the original.”
For a hypothetical person earning $42,000 and with a 50 percent or greater appointment, Eichstadt notes, rates are calculated in two ways because the University pays the premium for the first $30,000 of annual base salary for employ ees who have given four years of continuous service and have a 50 percent or greater appointment lasting eight contin uous months or longer and for employees who have given five years of continuous service and have less than a 50 per cent appointment lasting eight continuous months or longer.
A staff member with less than four years of service:
$42,000 / $1,000 x $8.27 / 12 months = $28.95 staff member cost per month.
A staff member with four or more years of service:
$42,000 – $30,000 / $1,000 x $8.27 / 12 months = $8.27 staff member cost per month.
PLAN:……….OLD RATE PER $1,000 OF………….NEW RATE PER $1,000 OF
………………..COVERED ANNUAL SALARY……COVERED ANNUAL SALARY
Basic Plan……………..$18.17……………………………………….$19.08
Expanded………………$ 7.88………………………………………..$ 8.27
Physicians……………..$ 7.88………………………………………..$ 8.27
