Long Term Disability Benefit

[Guest dmckee]

My company is considering offering a Long Term Disabilty Benefit.

We feel that this is a important benefit for employees to join so we want to offer a company paid Life Insurance Policy to all employees who join the LTD Benefit (at a 50% co-pay). Would this be considered discriminatory to employees who do not join the LTD Benefit?

[KIP KRAUS]

My response is that if an insurance company writes a non-contributory group life policy they will require all employees to be enrolled. I also find it hard to believe that any insurer would write a fully contributory LTD policy and not require at least 50% to 60% participation.

Why not just write the LTD policy and make it 50% employee paid and 50% employer paid?

Of course the way you posted your question I’m not sure what benefit is going to paid at 50%.

[mroberts]

Would it be discrimnatory? No, but as Kip points out, the insurance carrier is going to have to know how you are planning to administer the benefits ahead of time. Since it's probable that you're not going to get 100% participation on a 50/50 LTD plan (if I understood your post correctly), the carrier is going to increase the life rate since any employees not electing the LTD coverage are probably extremely healthy. Thus, there is a slight degree of adverse selection going on here.

Why not just offer the Life benefit to all your employees? While I do understand that you feel LTD is an important benefit, 100% of your employees are not going to think so. If you are worried about getting the necessary participation in order for the carrier to write the coverage, then I would work with the carrier to communicate this new benefit.