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INSURANCE UPDATE

MANAGING LONG-TERM

DISABILITY BENEFITS:

START WITH POLICY

HUB INTERNATIONAL LIMITED

THE ONE MINUTE TAKEAWAY disability status. There may be specific benefits the organization is
rganizations are struggling to manage continuation of employee obligated to provide.
Obenefits as long-term disability (LTD) claims have risen. A formal • Determine financial obligations: Whether it’s contributions to a
policy to better support employees on LTD and manage costs is the pension plan or insurance premiums, organizations need to know
first step to making sure you’re doing what’s best for employees while the cost of these benefits. As employees on disability may have
meeting your obligations. higher claims than the employees not on leave, it’s important to
Starting with the COVID-19 pandemic in early 2020, disability determine an estimated cost of their benefits and the effect on
claims began to rise 1 , and there’s little evidence that they are slowing benefits organization-wide.
down. • Organizational-wide buy-in: As the policy is being formulated,
That presents a benefits dilemma for employers: Continuing health it’s important to solicit input from representatives throughout the
and dental benefits while on long-term disability (LTD) — even when organization, including executives, HR managers and employees.
it’s clear an employee won’t be returning to work — is an expensive This buy-in includes agreement of the organization’s moral and
proposition. However, eliminating benefits for vulnerable employees financial responsibilities in continuing coverage for employees
can feel morally questionable and has the potential to result in an HR benefits while on LTD.
complaint. • Communicate effectively: Use clear, concise language in developing
There’s no single solution to this problem, but there are steps HR benefits policies for employees on LTD. For example, if an
professionals can take to find a balance between doing what feels right organization transfers some of the premium costs to the employee,
and doing what’s best financially for the organization. it’s critical to specify the start and end dates of this arrangement.
And the way to start is clear: Develop a benefits policy that aligns Also, employers need to implement and communicate policy
with your organization’s values while helping control costs. changes with the entire workforce, not just with those out on long-
term disability. This will ensure employees are treated fairly and
A framework for long-term disability benefits for employees consistently.
To establish a framework, start with the intention of writing policies
that will set parameters for benefits coverage while employees are New policies should conform with the organization’s values and
on LTD, including premium obligations and eligibility for retirement internal policies. Ultimately, you will have to determine the right
matching programs. course of action. Before making changes, it’s important to review with
Here are several things organizations need to examine in building a your benefits advisor how policies governing benefits for employees
framework for long-term disability benefits for employees: on long-term disability will affect the organization and employees.
Also, consider having a legal advisor review the policies.
• Existing precedents: Look at what benefits coverage the organization HUB International’s employee benefits specialists consult with
has provided employees on LTD and evaluate it with a fresh eye, employers of all sizes and in all industries on every aspect of employee
taking into account current market conditions and the organization’s benefits program planning and management.
values. It’s important to be open to changes, dispensing with a
mentality of “that’s how we’ve always done it.” 1 Statistics Canada, “Mental health-related disability rises among
• Determine contractual obligations: It’s essential to review benefit employed Canadians during pandemic,” March 4, 2022.
plan contracts, employment agreements and collective agreements
to identify contractual obligations for employees with long-term
8 LBMAO Reporter - July-August 2023 www.lbmao.on.ca