Life insurance and disability income protection plans should be reviewed periodically to assure they are still are serving the needs of all your employees and in compliance with both federal and state guidelines and reporting requirements. Some of the major items to review:
Group Life Insurance & Accidental Death & Dismemberment Plans
- Schedule of benefits, what is the guarantee issue amount versus the scheduled amount, especially for older newly hired employees?
- Waiver of premium clause for employees disabled prior to age 60
- IRS Table I notification of value of life insurance amounts over $50,000. This exclusion is not available for groups that are considered discriminatory in their plan design.
- What is the allowable time period from the date of an accident to the date of a loss
- Review available supplemental life plans that include long term care benefits.
Short Term Disability
- Coordinate short term disability with employer leave program, including FMLA absences
- Usually provide 60% benefit after a 7 day waiting period from 13 to 26 weeks
- States that mandate short term disability coverage:
- Confirm the preparation of year-end tax reporting for recipients.
- Voluntary supplemental plans available, benefits are non-taxable.
Long Term Disability
- Confirm highly compensated and bonus eligible employees are appropriately covered. Check the maximum benefit against the person’s compensation.
- Review plan limitations, including pre-existing conditions for new hires.
- Voluntary plans or plans with employee contributions are non-taxable to the extent of the employees’ contributions.
The information and opinions expressed are those of the author. TeBG, LLC provides general information and background on selected topics. Please seek professional legal and tax advice from your own advisors.