4 Long Term Disability Administration Issues to Watch For
By: Benefits by Design | Thursday September 6, 2018Updated : Friday June 17, 2022
As much as we like to think we are invincible, many individuals do become disabled. In 2012, almost 14% of the Canadian population over the age of 15—a whopping 3.8 million people—reported living with a disability.
A disability can result from several causes, including an injury, severe illness, or a mental health-related issue. Many group insurance plans provide coverage options to assist employees with a disability, including Long Term Disability insurance (LTD) and/or Short Term Disability (STD) insurance.
Short Term vs. Long Term Disability Insurance
Both STD and LTD insurance are a source of income replacement. They take care of providing the employee with a portion of their income while on disability leave.
You never know when someone is going to need a disability leave. That’s why it’s crucial employees are set up correctly to receive the benefit.
Issue #1: The employee does not enroll in their benefits plan on time.
With everything that needs to happen when a new employee starts, it’s sometimes easy to overlook the importance of completing the insurance forms. Including that they need to be completed correctly and promptly when an employees’ benefit coverage starts. Failure to complete the insurance forms on time could result in delayed coverage for the employee.
Issue #2: Failure to notify the employee to apply for coverage beyond the No Evidence Maximum.
Perhaps the biggest issue we’ve witnessed at Benefit by Design (BBD) Inc. around Long Term Disability (LTD) claims is the employer failing to notify or encourage the employee to apply for coverage beyond the No Evidence Maximum (NEM).
The NEM is the maximum benefit available to an individual without the submission of Medical Evidence.
Every year at renewal, BBD provides your Advisor with information about the employees who are eligible for excess coverage. Once an eligible employee decides they would like the coverage, BBD can provide you with the relevant forms.
Issue #3: Forgetting to update salary information.
Long Term Disability (LTD) coverage is related to an employee’s salary. If an employee receives a raise during their time at your organization, that information needs to be updated promptly. This is how insurers know what coverage amount to provide the employee.
Failure to update the employee’s salary could result in them receiving less coverage than they are entitled to.
Issue #4: Changing insurers and grandfathering coverage.
If your organization changes insurance carriers, you’ll need to ensure that the new coverage takes into account employees that are grandfathered by this change in coverage. Failure to do so could result in grandfathered employees’ claims being denied.
By addressing these issues, your employees can have the coverage and protection they need.