Benefits Plans - Long-Term Disability Plans: frequently asked questions
What is the difference between Expanded LTD and Basic LTD?
The Basic LTD plan is now available to AFSCME members only, after four years of service, and provides a different level of salary replacement income. If you are a regular faculty or staff member hired before 9/1/1981, or a Trades member hired before 8/1/1986, and you did not switch to the Expanded LTD Plan, you are covered under the provisions of the Basic LTD Plan.
How does the LTD Plan define disability?
University disability plans define disability as a time when you are totally disabled, no longer able to engage in any occupation or employment for which you are suited by education, training or experience, and the disability is expected to last at least 12 months from your last day of work. If you are a practicing physician, the Expanded LTD Plan, under a special provision, will provide partial disability coverage.
Is LTD the same as the extended sick benefit that the university already provides to faculty and staff members after 2 years of service?
No, the extended sick benefit is a separate plan and is only offered to you if you have at least 2 years of eligible service. The extended sick plan provides salary replacement for up to 1 year for staff (6 months full pay, 6 months half pay) and up to 2 years for tenured faculty (1 year full pay, 1 year half pay.) Please see the Standard Practice Guide 201.11-0 for staff and 201.11-1 for faculty for specific eligibility criteria.
If your disability is expected to continue beyond 12 months, LTD benefits would provide income replacement and benefits continuation until age 65 in most cases.
When do benefits begin?
Your LTD benefits will begin after you have exhausted all your sick time pay (including extended sick time benefits), your vacation accrual, and/or PTO accrual. However, if you have less than two years of service, there is a six-month waiting period that begins from the last day of work.
I’m enrolled in a Long-Term Care plan, is that the same as LTD?
No. Long-term care insurance is designed principally to provide a daily cash benefit to cover the costs of health care services provided in a nursing home, your own home, an assisted living facility or an adult day care facility.
What is the Expanded Long-Term Disability Plan?
If you become disabled as defined by the Plan, the Expanded Long-Term Disability (LTD) Plan provides income replacement of 65% on your covered salary. This income is coordinated with Social Security disability/retirement, or any other source of disability income, to provide a total of 65% income replacement (before any tax or benefit deductions are taken).
There are two levels of Expanded LTD coverage – maximum coverage on your full salary available upon your date of hire, or university-paid coverage up to $57,500 after two years of service. If your annual base salary is over $57,500, and you qualify for Expanded LTD benefits, your 65% salary replacement benefit will be calculated based on your level of Expanded LTD coverage. For example, if your annual salary is $90,000 per year, but you only enrolled in university-paid Expanded LTD coverage after two years of service, your maximum LTD income would be equal to 65% of $57,500.
While on LTD, the university also pays the monthly premiums to continue the benefits that you are enrolled in as of your last day of pay including health insurance, dental plan Option 1, and employee group life insurance. The LTD Plan also provides basic retirement savings contributions.
What is "covered salary?"
Covered Salary is the amount of salary that you have insured based on your level of Expanded LTD coverage. If you are enrolled in maximum Expanded LTD coverage (EXPLTD Salary Cov’d up to Max on Wolverine Access), this amount is equal to your full annual base salary. If you are only enrolled in university-paid Expanded LTD coverage (EXPLTD Salary Cov’d up to U-Paid on Wolverine Access), this amount is equal to $57,500 (or your annual base salary if less than $57,500) for 2014.
What are other sources of disability income?
Any benefit and/or lost wages you receive or are entitled to receive from:
- Workers' Compensation. However, if you receive a Worker's Compensation Lump Sum Redemption while you are participating in the Basic or Expanded Long-Term Disability Plan, all cash benefits from the Basic or Expanded Long-Term Disability Plan will be suspended for one month.
- Social Security (including Medicare) disability or retirement programs, including payments to your dependents, regardless of who actually receives the payments because of your disability;
- any other government disability programs;
- any Veterans Administration benefits payable because of your current disability;
- any other public program for any related disability or disability-related retirement benefit to you and your dependents;
- the University's Travel Accident Program or other University benefit plans;
- earned income received as a disability beneficiary under partial disability benefits as a practicing physician.
Note: "Other disability income" does not include earnings from personal savings or benefits from individual disability policies.
What’s changing with the Expanded LTD Plan for 2014?
- Lower premium rates went into effect in July 2013: Favorable investment returns on the plan’s assets have enabled a reduction in the monthly premium rate from $9.48 to $5.95 per month for each $1,000 of covered salary.
- More faculty and staff will be fully covered: Currently, the university pays for Expanded LTD coverage on the first $30,000 of annual base salary. As of Jan. 1, 2014, the university will pay for Expanded LTD coverage on the first $57,500 of annual base salary. Many more faculty and staff members will be fully covered without having to pay a premium.
- Wait time is reduced for university contributions: New employees will receive university contributions toward coverage at 2 years of eligible service, reduced from the current 4-year wait.
- Change to the basic retirement savings contribution: For those who become disabled and receive LTD benefits, the university will provide basic retirement savings plan contributions on annual salary up to $57,500 beginning Jan. 1, 2014. Employees who earn more must elect maximum Expanded LTD coverage in order to receive basic retirement savings plan contributions on their full annual base salary.
- Open Enrollment and the Expanded LTD plan: For this year only (2013 Open Enrollment period 10/28-11/8), Expanded LTD was available as part of the benefits Open Enrollment process and no health statement was required. If an employee previously submitted an application with health statement for enrollment in the Expanded LTD Plan, but was denied due to a health condition, they were still able to participate in this year’s Open Enrollment period and make an Expanded LTD election.
Why change the Expanded LTD Plan?
When indexed against other employers, U-M’s current plan offers a richer plan design, but lower university contributions. These enhancements bring U-M more in line with peer employers without incurring additional costs to employees or to the university.
What is the cost to the university for these changes?
In combination with the July 1 rate reduction, the 2014 cost for the university will remain about the same as it was prior to 7/1/2013.
Who is eligible for Expanded LTD coverage?
All regular faculty and staff who meet the requirements are eligible for coverage, except AFSCME, HOA, graduate students, research fellows, and supplemental faculty. The Benefits Office will automatically notify employees when they become newly eligible.
Can employees get more coverage if they earn more than the median salary ($57,500 for 2014) covered by the university?
Yes, employees can elect additional coverage up to their full base salary (up to a maximum covered salary of $424,615).
What is a Statement of Good Health?
A form or forms specified by the Claims Administrator that you complete and submit to show the state of your health. This may include information supplied on forms specified by the Claims Administrator. When you apply to increase your coverage in LTD outside your newly eligible enrollment period, you must submit a statement of good health.
What does "base salary" mean?
Your normal annual earnings—not to exceed 2,080 hours. Base salary includes administrative differential and incentive pay. It excludes summer pay for university-year appointees as well as overtime, shift premium, longevity, and non-University earnings.
I have over four years of service and I am paying to cover my full salary over $30,000. Does the change in base salary for the LTD plan in 2014 mean I will pay less to cover my full salary after January 1?
Yes. The covered university base salary is increasing from $30,000 to $57,500, decreasing the amount you need to pay to cover your full salary. For example, if you are currently paying to cover $75,000 in annual salary, from July through December, 2013 you will pay:
$75,000 (annual salary) - $30,000 (U-M covered base salary) = $45,000 / 12 x .00595 = $22.32 per month
To cover the same amount in salary beginning January 1, 2014, you will pay:
$75,000 (annual salary) - $57,500 (U-M covered base salary) = $17,500 / 12 x .00595 = $8.68 per month
If you have been paying for coverage on your full salary over $30, 000, but your salary is less than the new threshold of $57,500, you will still have coverage on your full salary. Your employee contribution will decrease to $0 and you will not have to pay any LTD premiums unless your salary exceeds $57,500 in the future.
The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.