Disability insurance: shifting to new plan

By Matt Kelly

About 250 University employees will lose their optional long-term disability insurance coverage from UNUMProvident as of midnight March 31. The University will offer the state’s sickness and disability plan instead, plus a stopgap option.

The Maryland-based insurer is dropping the University’s group plan due to low enrollment, said Linda Way-Smith, director of employee benefits at Human Resources. The company lost business when the Medical Center shifted its disability coverage to Liberty Mutual as an employer-provided benefit.

NUMProvident also alienated its customer base last fall with stiff premium hikes, she said.

“UNUM raised its rates outrageously in the fall,” said Way-Smith. “In some cases it dsoubled and tripled them.”

Way-Smith said Human Resources sought a permanent alternative carrier, which has thus far proven difficult because the relatively small pool of employees seeking coverage does not adequately spread the risk of claims.

The state legislature recently approved a new open-enrollment period for the state-sponsored Virginia Sickness and Disability Plan, giving long-term employees not previously enrolled another chance to sign up. If the legislation is agreed to by Gov. Mark Warner, the VSDP will accept new members in the fall, with coverage effective Jan. 10.

Under that plan, first introduced in 1999, employees receive short- and long-term disability coverage as employer-paid benefits, as well as sick time and personal and family leave. In exchange, employees may not carry over sick or family leave balances from year to year.

For disability coverage between March 31 and Jan. 10, Colonial Life and Accident Insurance Co., which is already providing some short-term disability coverage to University employees, will offer a stopgap, short-term disability plan for both new enrollees or existing customers, Way-Smith said. Its cost will depend on the duration and options. Colonial representatives will be on hand to calculate an employee’s cost, based on pay and options, at scheduled sign-up times, Way-Smith said. Employees will be covered from the time they sign up.

Company representatives will be available on seven days in the coming month at various places on Grounds. Way-Smith suggested employees bring their pay stubs to facilitate calculations.

The University is also seeking to advance the VSDP enrollment period, but Way-Smith was not optimistic that such arrangements could be made.

When the VSDP was introduced, employees with accumulated sick leave balances from the previous system were able to bank them to supplement future disability benefits, or to cash in 25 percent of them, not to exceed $5,000, when leaving the University.

At the time, some employees —mostly long-time employees with large sick-leave balances — opted not to enroll in the VSDP, instead keeping their balances. Many sought group disability coverage from UNUMProvident.

Under the new legislation, all current state employees who remain outside the VSDP will automatically be enrolled unless they opt out in writing.
Since 1999, new hires have automatically been enrolled in the VSDP.