Short Term Disability

Short-Term Limited-Duration Insurance – In a Nutshell | North Carolina Benefit Advisors

On August 3, 2018, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (the Departments) published a Final Rule to expand the availability of short-term medical policies. Called short-term, limited-duration insurance (STLDI), the policies are marketed to individuals as an alternative to ACA-compliant plans. Currently a short-term policy is limited to less than three months, but the new rule will allow carriers to issue the policies for longer periods.

What is short-term limited-duration insurance (STLDI)?

Short-term, limited-duration insurance is a specific type of health coverage that is exempt from the ACA’s market reform rules. STLDI policies may exclude entire categories of benefits, such as prescription drugs, maternity, or mental health care, may impose coverage caps, and may reject applicants with pre-existing conditions. STLDI policies offer lower premiums than ACA-compliant plans because they provide less coverage and typically only accept healthy applicants.

Note that STLDI is not minimum essential coverage and does not satisfy the ACA’s individual mandate. The individual mandate (i.e., the requirement for individuals to have some form of minimum essential coverage) expires at the end of 2018, after which persons without adequate health coverage will no longer be exposed to potential IRS tax penalties.

What is the purpose of the new federal rule?

The existing rule defines “short term” as less than three months and limits the policy’s duration by prohibiting renewals that would go beyond the three-month period. The new rule, on the other hand, will allow carriers to issue STLDI policies for an initial term of up to 364 days, and allows extensions or renewals for up a total of 36 months. This is a significant change that is intended to expand access to low-cost limited-coverage options for individuals.

The new federal rule takes effect for STLDI policies issued October 2, 2018, or later. There is a catch, however. Insurance is subject to state insurance laws, and many states appear reluctant to adopt the new rule for policies issued in their state. Some states even prohibit short-term policies under the current federal rule. At last weekend’s National Association of Insurance Commissioners (NAIC) meeting, several state regulators expressed concerns about “junk insurance” or deceptive marketing practices that may lure consumers into purchasing substandard coverage.

Are employers affected by STLDI policies or the new rule?

No.

Employers are not directly affected by STLDI policies. The policies are marketed to individuals, where permitted by state insurance law; they are not group plans.

Some workers may consider STLDI options, or ACA-compliant individual insurance options, as an alternative to their employer’s group plan. In most cases, though, persons who buy individual insurance do so because they do not have access to an employer’s plan. Workers whose employment ends may also consider individual options as an alternative to COBRA.

What’s Next?

Over the coming weeks and months, state insurance regulators and state legislatures are expected to review their existing laws and regulations on short-term, limited-duration insurance and consider whether to adopt changes. Some states likely will choose to implement rules to support the new federal rule, while other states certainly will impose restrictions or continue to prohibit the sale of insurance products they consider to be substandard.

Originally published by www.thinkhr.com

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Disability Insurance and why you need it! | North Carolina Employee Benefits

“Your most valued asset isn’t your house, car, or retirement account. It’s the ability to make a living.”

No one foresees needing disability benefits.  But, should a problem arise, the educated and informed employee can plan for the future by purchasing disability insurance to help cover expenses when needed.

When you ask people what is the number one reason disability insurance is needed, most will answer that it is for workplace related injuries. However, the leading causes of long-term absences are back injuries, cancer, and heart disease and most of them are NOT work related.   In addition, the average duration of absences due to disability is 34 months.  So how do you prepare for an unplanned absence from work as a result of an injury or illness? Disability insurance is a great option.

Disability insurance is categorized into two main types.

Short Term Disability covers 40-60% of the employee’s base salary and can last for a few weeks to a few months to a year. There is typically a short waiting period before benefits begin after the report of disability.  This plan is generally sponsored by the employer.

Long Term Disability covers 50-70% of the employee’s base salary and the benefits end when the disability ends or after a pre-set length of time depending on the policy. The wait period for benefits is longer—typically 90 days from onset of disability.  This plan kicks in after the short-term coverage is exhausted. The individual purchases this plan to prevent a loss of coverage after short-term disability benefits are exhausted.

While the benefits of these disability plans are not a total replacement of salary, they are designed for the employee to maintain their current standard of living while recovering from the injury or illness. This also allows the individual to pay regular expenses during this time.

There are many ways to enroll in a disability insurance plan. Often times your employer will offer long-term and short-term coverage as part of a benefits package. Supplemental coverage can also be purchased.  Talk with your company’s HR department for more information on how to enroll in these plans.  Individuals who are interested in purchasing supplemental coverage can also contact outside insurance brokers or even check with any professional organizations to which they belong (such as the American Medical Association for medical professionals) as many times they offer insurance coverage to members.

As you begin planning for your future, make sure you research the types of coverage available and different avenues through which to purchase this coverage. For more information on disability and the workplace, check out:

·      Americans with Disabilities Act

·      The National Organization on Disability

·      Council for Disability Awareness

·      Social Security Administration

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