It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
By Cyril Tuohy
An analysis of disability claims by the Council for Disability Awareness (CDA) has found that more employers offered long-term disability (LTD) insurance benefit plans last year as compared with 2012, but that fewer employees were insured by such plans last year as compared with 2012.
The CDA survey found more than 214,000 employers offered LTD plans to workers in 2013, a “slight increase” over the number of employers offering LTD coverage in 2012.
The number of employees insured by LTD plans was 32.1 million, down 1.5 percent compared to 2012, the survey found.
“It is a concern that while more employers offered long-term disability benefit plans for 2013, fewer workers were actually protected,” Barry Lundquist, CDA president, said in a news release.
The data was reported in the 2014 CDA Long Term Disability Claims Review, an analysis of claims data from 19 of the nation’s largest disability insurance companies.
One reason for the anomaly — more employers offering LTD but fewer employees covered — is that more employees may be choosing LTD coverage on a voluntary basis, the CDA said.
Premiums in the voluntary benefits marketplace grew to $6.64 billion last year, a 10 percent increase over 2012, as employees turned to the voluntary market to supplement their employer-sponsored health care coverage.
Employers are shifting a larger burden of the cost of health care onto employees by raising deductibles and charging more for office visits. The increases have forced many employees to look to the voluntary market to fill the gaps.
LTD plans offered on a voluntary basis mean that employees, not the employer, incur 100 percent of the premium. Employees last year saw fit to put off the coverage.
“Despite increased consumer confidence, many employers and wage earners seem to have adopted a wait-and-see attitude toward benefit expenditures, a possible result of economic uncertainty and the fear of continually rising health care costs,” Lundquist said.
LTD coverage replaces a portion of an employee’s lost income due to a disability. Large employers offer the coverage.
Compared with regular health insurance premiums, disability insurance premiums are a bargain. Offered to employees at group rates, LTD premiums amount to just a few dollars a month.
Last year, insurance carriers paid out $9.8 billion in disability claims payments, a 1.6 percent increase over 2012, the survey also found.
Just under 150,000 new individuals were approved for LTD benefits in 2013, the analysis found, with 54 percent of new LTD claims coming from these diagnostic categories: musculoskeletal, nervous system-related, cardiovascular/circulatory, and cancer and neoplasms, the CDA said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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