Date: April 5, 2013
From: Michelle Berner, Director, Total Compensation, Human Resources
To: CUPE 116 Staff Who Are On Leave
Subject: Long Term Disability Plan Change to Fully-Insured effective January 1, 2013 and Plan Design Changes effective April 1, 2013
The UBC long term disability plan has been referred to as the “Income Replacement Plan” (IRP), and is funded by staff members through contributions deducted from their pay cheques. It provides a monthly income for those who meet the definition of disability, and who have been unable to work for a period of six months (the elimination or qualifying period) or more as a result of the disability.
Historically there have been seven sub-groups within UBC’s long term disability plan, and you are in the sub-group called “CUPE 116”.
Over recent months the University and its employee representatives (i.e., unions and associations) have been engaged in a “governance review process” of the IRP. CUPE 116 was the representative body for your IRP sub-group. The IRP governance review has resulted in the decision to make some changes to the underlying nature of the plan.
The primary change for the “CUPE 116” sub-group is that the plan is now “fully insured” for actively employed members effective January 1, 2013, as opposed to the previous “self-insured” plan structure. The plan continues to remain with Sun Life due to the competitive premium rate structure provided.
The primary difference between fully insured and self-insured plans pertains to who holds the legal and financial risk, ensuring the plan has sufficient capacity to meet its obligations for benefit payments, etc. Under a self-insured arrangement, the risk is carried by the plan itself and the plan members. Under a fully insured arrangement, the insurance company carries the risk.
Plan Design Changes, effective April 1, 2013
Most aspects of the CUPE 116 self-insured plan that you were previously part of are the same as the new fully insured “disability benefits plan (DBP)” that you are now part of. The DBP benefit payments that claimants receive will continue to be non-taxable income.
There is no change to the benefit amount paid to DBP claimants (70% of the first $500 of basic salary; 60% of the next $500 of basic salary; and 40% of the balance to a maximum of $3,500).
One of the changes to the DBP plan for the “CUPE 116” group is that there is no longer a 12 month waiting period for DBP coverage to be reinstated upon your return to work from a leave of absence (if you decided not to maintain your coverage during your leave). The primary implication of this for you is that you will be enrolled in the DBP plan upon your return to work.
There are some changes to the following aspects of the DBP, which are more consistent with industry standards, and should assist in keeping premiums stable.
[a] All Source Maximum. The current 100% “all source maximum” will change to 85%. Income received from other sources will be added up. Any income over 85% of pre-disability earnings will be reduced from the DBP income benefits paid by Sun Life. Note, however, that the all-source maximum for those in an approved rehabilitation program remains at 100%.
[b] Interrupted Periods of Disability during the Qualifying Period. The “qualifying period” will now allow for interrupted periods of disability instead of the employee having to be continuously disabled in order to qualify for DBP benefits.
[c] Recurrent Disability after DBP Benefits Begin. The period for “recurrent disabilities” will be changed from 3 months to 6 months. This means that if you returned to work from disability, and then the disability re-occurred within 6 months of that return-to-work, you are placed back on DBP claim without having to serve another elimination period.
[d] Eligibility for Coverage & Pre-Existing Condition. The waiting period to start DBP coverage has been eliminated, such that employees are eligible for mandatory enrollment in the DBP plan on date of hire or return-to-work date from leave if coverage is not maintained (rather than the current 12 month waiting period). This comes with the following pre-existing condition clause:
Pre-Existing Condition – an employee is not eligible for DBP if the employee’s disability results directly or indirectly from a condition which existed on or before the date the employee’s coverage began. However, the pre-existing condition clause will not apply if the employee has been covered for at least 13 weeks during which the employee has been actively working continuously (up to 3 days absence does not count) and the employee has not been treated by a doctor, or any medical personnel under the direction of a doctor, for the condition, or the employee became totally disabled more than 12 months after the employee’s coverage began.
[e] Subrogation Clause Wording. The “subrogation” language of the plan will be changed to improve the ability of the insurance company to collect from other sources, such as ICBC.
If you have been actively working since April 1, 2013, the above new plan design changes will apply in the event you become disabled. If, however, you are currently away from work due to an accident, illness or injury, and have not been at work since April 1, 2013, the old plan provisions will continue until your return to active employment. However, some exceptions may apply in the event of a reoccurring disability over the transition period.
For staff members who were members of the CUPE 116 IRP, and who are now members of the fully insured CUPE 116 DBP, the primary implication of the change is that there will be less risk.
There will be no increase to premiums, which will remain at the current rate of 2.30% of monthly gross salary. This rate is the same as your current deduction under the self- insured CUPE 116 IRP plan.
The DBP premium rate will be reviewed by the insurance company each year, and may increase or decrease, although relative stability over time is anticipated. The University and CUPE 116, with assistance from our benefits consultant, will review any proposed rate changes to ensure that they are reasonable and justified including the additional administrative expenses required to operate the plan.
The DBP plan, like the former IRP plan is mandatory which means you are automatically enrolled if you are eligible for coverage. This means that you are unable to opt-out of the plan.
For Additional Information
Detailed information about the CUPE 116 DBP can be located on the UBC Human Resources web site: http://www.hr.ubc.ca/benefits/irp-dbp/cupe-116/.
If you have any questions, please contact Stephanie Mah at 604-822-6823 or firstname.lastname@example.org.