Are Disability Benefits Adequate? (Business Brief).New types and increased frequencies of disabilities are being created as a result of today's working conditions, and employee needs -- especially those of high-income high-in·come adj. Of or relating to individuals or groups, such as families, that are supported by or earn income considered high in comparison with that of the larger population: high-income taxpayers. executives -- are often being neglected. So says Don Gray, vice president of executive benefit services at Redwood City Redwood City, city (1990 pop. 66,072), seat of San Mateo co., W Calif., on San Francisco Bay; inc. 1868. Manufactures include commmunications, electrical, electronic, and medical equipment. , Calif.-based ABD ABD n. A candidate for a doctorate who has completed all the requirements for the degree, such as courses and examinations, with the exception of the dissertation. [a(ll) b(ut) d(issertation).] Insurance and Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , a privately held insurance brokerage and employee benefit consultant. He said in an interview that while long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. disability benefits go a long way to help employees, typical group long-term disability (LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability ) programs replace only 60 percent of an employee's salary. And, a bigger issue is "reverse discrimination" for high-income individuals. He said the problem stems from the practices of most insurance companies requiring 100 percent employee participation, while benefits do not cover the highest paid adequately. There are four specific problem areas, Gray says. The first is taxability. In almost all cases, premiums for group LTD programs provided by employers are paid by the employees, making benefits received by a disabled person subject to income taxes. Second, in many cases, not all incomes are defined in the group contract as being covered. So, while salary and commissions may be covered, incentive compensation or bonuses are not. A disabled person would not have access to a specific amount of bonus or performance pay that may have become a part of his or her every day lifestyle. Third, insurance companies set caps that maximize the amount of benefits. Thus, depending upon the company philosophy, incomes of staff and other factors, a benefit may range from $6,000 per month to $15,000 per month. For an executive salary of, say, $25,000 per month, this becomes a form of reverse discrimination. "Just about every plan that I look at has one or more of those top executives who are subject to reverse discrimination," says Gray. Fourth is the lack of insurance for retirement contributions to 401(k) profit-sharing plans Profit-Sharing Plan A plan that gives employees a share in the profits of the company. Each employee receives into an account, a percentage of those profits based on their earnings. Also known as "deferred profit-sharing plan" or "DPSP". , or deferring income through non-qualified deferred-compensation plans. For a disabled 45-year-old, not only does salary stop, but additional retirement contributions that would compound also stop, making it necessary for someone on long-term disability during high-income years have to live off whatever he or she had accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. until the date the disability started. Gray says effective programs can be designed and adjusted to meet employee needs in today's workplace. Plans can be developed that work in concert with the group by, for example, layering solutions for individual problems. Often, this involves offering "extras" on a voluntary basis, where executives pay for additional coverage through payroll deductions. RELATED ARTICLE: Facts on the Decade's "New" Disabilities [check] Epstein-Barr syndrome up 800% [check] Carpal tunnel syndrome carpal tunnel syndrome: see repetitive stress injury. carpal tunnel syndrome (CTS) Painful condition caused by repetitive stress to the wrist over time. up 520% [check] AIDS up 169% [check] Severe back pain up 120% [check] Psychiatric psy·chi·at·ric adj. Of or relating to psychiatry. psychiatric adjective Pertaining to psychiatry, mental disorders conditions up 85% [check] 30% of working individuals between age 35 and 65 disabled for 90 days or longer [check] Nearly 1 in 7 individuals will become disabled for 5 years or more prior to age 65 [check] Chances a 42-year old will be seriously disabled prior to age 65 are 3-[1/2] times greater than his/her dying [check] 48% of mortgage foreclosures result from a long-term disability Source: ABD Insurance and Financial Services |
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