October 23,2015

Those Boring “Pooled” Employee Benefits

Ask a typical employee which Group benefits they value most, you are bound to get a wide range of answers.  For a typical employee the ranking would probably be something like this:

  1. Dental
  2. Massage Therapy
  3. Vision-Care.  Usually glasses or contacts.
  4. Prescription Drugs
  5. Out of Country Emergency Coverage
  6. Life Insurance
  7. Long Term Disability (LTD)

Sound about right?  Depending on the age of the employee, whether or not they have a spouse, children, etc. we will probably see some adjustments in these rankings.  After hundreds, if not thousands, of employee education sessions we have had with employees over the years, the vast majority of questions do not seem to focus on ‘pooled’ benefits.  Often times there does not appear to be any interest for these benefits, with the exception of out of country care – people still like to travel.

However, it can be strongly argued that, if anything, this list should be in reverse order. We are not suggesting that a good Dental plan is not important. That routine eye exams and being able to see on the job is not important.  Or that getting a massage to work out the tension from those high stress areas in your body is not beneficial from time to time.  A sound Dental plan, the ability to receive treatment for physical pain and stress – these types of benefits will help attract and retain good employees.

But … let’s zero in on the last 2 on the list. Remarkably, many people are rather flippant when it does come to Life Insurance. I’m not talking about young, single employees – rather, those that are married with children. Oftentimes, the only Life Insurance they may have is the group life through an employer plan. There never seems to be enough left over at the end of the month to buy that Life contract that their Advisor has been urging them to consider. Fortunately, at least, Group Life is just as valid as Individual Life when it comes to a potential claim – in other words, upon death, Group Life will pay a beneficiary. While it may not be enough to support the dependents for the proper length of time … something is always better than nothing.

Then we come to LTD.  Losing the ability to earn an income from a disability is the most catastrophic event that can happen in a person’s lifetime. Think about it – household expenses continuing, often with additional expenses related to the disability – and, with 85% of pre-disability income coming in. It certainly does take some financial juggling. While difficult, it can be done, though. But, what would happen if that disability income does not come in? Or, stops suddenly because of contractual limitations? Certainly, this is a distinct possibility. While Group LTD contracts will adequately cover off dire situations, they are designed to potentially stop if the situation improves. What then? Does the employee ‘suck it up’ and go back to work? Not likely. Does the employer ‘owe’ the employee something? No, not at all. Can something be done before this eventuality? Yes. It is absolutely imperative that today’s employers pay more than lip service to this crucial benefit. Historically, during troubled economic times, the incident of disability claims rises. Judging by our current  interest rates – at record lows in an attempt to ignite a stalling Canadian economy – and the bottoming out of oil prices in a country who’s economic fortunes rely heavily on that industry…I think it is safe to say that we possibly find ourselves in troubled times.

Today’s employer must do 2 things. First, examine the LTD program in place, and ask if this is the best that can be done (considering budgetary constraints). Second, a sound communication conduit must be implemented with all employees – explaining all facets (good and bad) about the current program. If employees are not aware of any possible limitations contained within the program – well, when it’s too late … it’s too late.

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