SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits--Compensation and Buy-Up...

SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage

In collaboration with and commissioned by MassMutual

September 18, 2013


• The 2013 Employer Perspectives on Disability Benefits survey, which was commissioned by MassMutual, is a collaboration between the Society for Human Resource Management and MassMutual.

• The survey was sent to a randomly selected sample of SHRM members from a variety of industries. A response rate of 10% was achieved with 4,402 responses.

• The main purpose of this research was to gain a better understanding of organizations’ needs and gaps regarding long-term disability and executive benefits. The 2012 data were collected from a sample including small-, medium- and large-staff-size organizations (see slide 26).

• The findings are divided in the following topics: Base Group Long-Term Disability Plans Compensation and Buy-Up Coverage Supplemental Plan/Individual Disability Income Carrier Satisfaction/Changes Executive Group Life Benefits

2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013 2

Introduction


• The results of each question are reported by the overall sample, and then, where applicable, statistically significant differences by organization staff size, industry and region are included. Only statistically significant differences with a sample size of 25 or more were reported.

• The results are based on respondents who indicated that they were either “extremely knowledgeable,” “very knowledgeable” or “somewhat knowledgeable” about their organization’s employee benefits plan. The results include respondents from publicly owned for-profit or privately owned for-profit organizations only.


Introduction (continued)

Industries Organization Staff Size Region

Accounting/architectural Computer and electronic

products/technology Energy, gas, oil Financial services Health care services Information services Law firms and legal services Manufacturing Pharmaceutical and medicine Physician and dental offices Professional, scientific and

technical services Telecommunications Utilities Wholesale and retail trade Other industries

1 to 99 employees 100 to 499 employees 500 to 2,499 employees 2,500 to 24,999 employees 25,000 or more employees

Midwest Northeast South West



Compensation and Buy-Up Coverage


• What percentage of organizations includes variable compensation in the income protected by their long-term disability plan? Almost one quarter (22%) of organizations indicated variable compensation is protected by their long-term disability plan. The law firms/legal services, financial services and wholesale/retail trade industries were more likely to include variable compensation in the income protected by their plan.

Among organizations with a plan protecting variable compensation, 93% indicated the compensation is protected at the same percentage as the base plan selection. Organizations with 100 to 499 employees were more likely to report protecting variable compensation at the same percentage as the base plan selection.

• Are organizations offering “buy-up” coverage through their group long-term disability program? Overall, 21% of organizations indicated offering this coverage: 16% of organizations offered this coverage to all employees, and 5% reported this coverage is provided to select employees.

Among organizations that offer “buy-up” coverage, 77% reported that less than 50% of their employees participate in this coverage.

• Are organizations concerned that their base long-term disability program does not fully cover employees who have income in excess of the plan limit? Less than one-third (29%) of organizations reported concern that employees with income in excess of the plan limit are not covered. Slightly more than one-half (51%) of organizations indicated that their benefits provider has discussed this with them.


Key Findings in Compensation and Buy-Up Coverage


• Are select employees being left underinsured with the organization’s long-term disability plan? Currently only a small portion of organizations cover variable compensation (e.g., bonuses and incentive pay) in their long-term disability plan. For employees, especially executives and employees working on commission who rely heavily on such methods of compensation, coverage under traditional long-term disability group plans may not be enough. HR professionals may need to assess if alternative coverage plans should be offered to select employees who may desire additional coverage.


What do these findings mean for HR professionals?



Is variable compensation, such as bonuses or commissions, included in the income protected by your base long-term disability plan?

Yes

No

22%

78%

Note: n = 3,243. Only respondents whose organizations offer a group long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis.

2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

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Note: Only statistically significant differences are shown.

Still thinking about your base plan, is variable compensation, such as bonuses or commissions, included in the income protected by your base long-term disability plan?

Law firms/legal services, financial services and wholesale/retail trade are more likely than manufacturing; professional, scientific and technical services; and energy, gas and oil industries to include variable compensation in the income protected by their base long-term disability plan.

Comparison by organization demographics

Law firms and legal services (37%)Financial services (33%)

Wholesale and retail trade (32%)>

Manufacturing (14%)Professional, scientific and technical services (14%)

Energy, gas, oil (13%)

Telecommunications (26%) > Manufacturing (14%)



Is this variable compensation protected at the same percentage as the base plan selection?

Yes

No

93%

7%

Note: n = 617. Only respondents whose organizations offer a group long-term disability plan and include variable compensation in the income protected by their base long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis.


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Is this variable compensation protected at the same percentage as the base plan selection?

Organizations with 100 to 499 employees are more likely than organizations with 2,500 or more employees to protect variable compensation at the same percentage as the base plan selection.


100 to 499 employees (97%) >2,500 to 24,999 employees (86%)25,000 or more employees (86%)



What percentage of employees are “capped” by the maximum monthly benefit amount of your group long-term disability base plan?

Zero

1% to 9%

10% to 19%

20% to 29%

30% to 39%

40% to 49%

50% to 74%

75% to 99%

100%

10%

39%

18%

10%

6%

4%

6%

2%

4%

Note: n = 2,525. Only respondents whose organizations offer a group long-term disability plan were asked this question. Percentages do not total 100% due to rounding. “Capped” indicates that employees earn more than the covered limit.


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What percentage of employees are “capped” by the maximum monthly benefit amount of your group long-term disability base plan?

Organizations with 100 to 2,499 employees are more likely than organizations with 1 to 99 employees to “cap” 10% to 19% of employees by the maximum monthly benefit amount of their group long-term disability base plan.


10% to 19%100 to 499 employees (20%)

500 to 2,499 employees (21%) > 1 to 99 employees (14%)



Do you offer “buy-up” coverage that is available through the group long-term disability program to all employees, some employees or none of your employees?

Not offered

Offered to all employees

Offered to some employees

79%

16%

5%

Note: n = 3,332. Only respondents whose organizations offer a group long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis. “Buy-up” coverage indicates that this program does not include any supplemental individual long-term disability plans that the organization may offer.


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Do you offer “buy-up” coverage that is available through the group long-term disability program to all employees, some employees or none of your employees?

Smaller staff-size organizations are more likely than larger organizations to not offer “buy-up” coverage to any of their employees. Larger staff-size organizations are more likely than smaller organizations to offer “buy-up” coverage to all employees. The energy, gas and oil industry is almost twice as likely as wholesale/retail trade to offer “buy-up” coverage to all employees.


Organization Staff Size Organization Industry

Not offered

1 to 99 employees (90%) 100 to 499 employees (86%) >500 to 2,499 employees (77%)

2,500 to 24,999 employees (65%)25,000 or more employees (52%)

-500 to 2,499 employees (77%) >2,500 to 24,999 employees (65%)25,000 or more employees (52%)

2,500 to 24,999 employees (65%) >25,000 or more employees (52%)

Offered to all employees

500 to 2,499 employees (17%)2,500 to 24,999 employees (27%)

25,000 or more employees (37%) >1 to 99 employees (8%)

100 to 499 employees (11%)Energy, gas, oil (25%) >

Wholesale and retail trade (13%)25,000 or more employees (37%) >500 to 2,499 employees (17%)

2,500 to 24,999 employees (27%)

2,500 to 24,999 employees (27%) >500 to 2,499 employees (17%)

Offered to some employees25,000 or more employees (11%) >

500 to 2,499 employees (6%)-



Approximately what percentage of employees participate in the “buy-up” coverage available through the group long-term disability program?

Less than 50%

50% to 59%

60% to 69%

70% to 74%

75% to 79%

80% to 99%

100%

77%

8%

5%

4%

2%

2%

2%

Note: n = 463. Only respondents whose organizations offer a group long-term disability plan and buy-up coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis.


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Approximately what percentage of employees participate in the “buy-up” coverage available through the group long-term disability program?

Organizations with 100 to 499 employees are more likely than organizations with 2,500 or more employees to have less than 50% of their employees participate in the “buy-up” coverage available through the group long-term disability program.


Less than 50% 100 to 499 employees (86%) >2,500 to 24,999 employees (70%)25,000 or more employees (63%)



What percentage of base salary is replaced by the base plan AND the buy-up amount combined?

Less than 50%

50% to 59%

60% to 69%

70% to 74%

75% to 79%

80% to 99%

100%

17%

6%

44%

13%

7%

5%

8%




What is the maximum benefit amount per month of your combined base and “buy-up” coverage?

Less than $2,500

$2,500 to $4,999

$5,000 to $7,499

$7,500 to $9,999

$10,000 to $14,999

$15,000 to $19,999

$20,000 to $24,999

$25,000 or more

6%

10%

14%

10%

28%

12%

8%

11%

Note: n = 391. Only respondents whose organizations offer a group long-term disability plan and buy-up coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to rounding.



Is the “buy-up” coverage paid for with . . . ?

Post-tax dollars

Pre-tax dollars

Option of either pre-tax or post-tax dollars

A combination of pre-tax and post-tax dollars

56%

36%

5%

3%




Is it a concern that your base long-term disability program doesn’t fully cover employees who have income in excess of the group base plan limits?

Yes

No

29%

71%

Note: n = 440. The only respondents asked this question were organizations that offer a group long-term disability plan and buy-up coverage, and the percentage of employees “capped” by the maximum monthly benefit amount of the group long-term disability base plan is greater than 0%. Respondents who answered “don’t know” were excluded from this analysis.



Has your benefits provider discussed with you that your base long-term disability program doesn’t fully cover employees who have income in excess of the group base plan limits?

Yes

No

51%

49%




Do you currently have plans to talk to your benefits provider about your concerns?

Yes

No

22%

78%

Note: n = 199. The only respondents asked this question were organizations that offer a group long-term disability plan and buy-up coverage and that have not discussed with their benefits provider that their base long-term disability program does not fully cover employees who have income in excess of the group base plan limits. Respondents who answered “don’t know” were excluded from this analysis.



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Demographics



Approximately what percentage of regular, full-time and part-time employees are eligible for employee benefits at your organization?

Less than 25%

25% to 49%

50% to 59%

60% to 69%

70% to 79%

80% to 89%

90% to 99%

100%

Full-time Employees(n = 4,182)

1% 1% 1% 1% 2% 4% 12% 78%

Part-time Employees(n = 3,470)

66% 3% 5% 1% 2% 3% 4% 16%



Which of the following is closest to your job title?

Manager

Generalist

Director

Chief Human Resource Officer

Vice President

Administrator

Supervisor

Associate Director

Specialist

Associate Vice President

Senior Vice President

Analyst

Chief Executive Officer

President

Chief Human Capital Officer

Senior Executive Vice President

Executive Vice President

Other

32%23%

19%9%

6%

2%

1%

1%

1%

1%

1%

1%

%

%

%

%

%

3%

n = 4,394



Demographics: Organization Staff Size

1 - 99 em-ployees

100 - 499 employees

500 - 2,499 employees

2,500 - 24,999 employees

25,000 or more employees

25%

33%

18%

17%

7%

n = 4,382



Demographics: Organization Profit Status

Privately owned for-profit

Publicly owned for-profit

72%

28%

n = 4,402



Demographics: Organization Region

Midwest

South

West

Northeast

35%

26%

22%

17%

n = 4,106



Demographics: Organization Industry

PercentageManufacturing 16%

Wholesale and Retail Trade 14%

Financial Services A 10%

Professional, Scientific and Technical Services 8%

Energy, Gas, Oil B 6%

Telecommunications 6%

Accounting / Architectural C 4%

Computer and Electronic Products/Technology D 4%

Health Care Services E 4%

Utilities 4%

Information Services F 3%

Pharmaceutical and Medicine G 2%

Law Firms and Legal Services 2%

Physician and Dental Offices 1%

Other industries 16%

n = 4,402

A Includes Banks, Insurance Companies, Securities and Commodities, Other Finance and Insurance Services categories. B Includes Energy Extraction and Refining, Gas and Oil, and Other Oil, Gas, and Energy Extraction and Refining categories. C Includes Accounting, Tax, Payroll Services and Architectural, Engineering categories. D In the survey labeled as Manufacturing: Computer and Electronic Products/Technology. E Includes Hospitals and Other Health Care Services categories. F Includes Publishing, Motion Picture, Broadcasting (except Internet) and Other Information Services categories. G In the survey labeled as Manufacturing: Pharmaceutical and Medicine category.



U.S.-based operations only 66%

Multinational operations 34%

Single-unit organization: An organization in which the location and the organization are one and the same.

26%

Multi-unit organization: An organization that has more than one location.

74%

Multi-unit headquarters determines HR policies and practices

64%

Each work location determines HR policies and practices

4%

A combination of both the work location and the multi-unit headquarters determines HR policies and practices

33%

Is your organization a single-unit organization or a multi-unit organization?

For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both?

Does your organization have U.S.-based operations (business units) only, or does it operate multinationally?

n = 4,387 n = 4,398

Note: n = 3,410. Percentages do not equal 100% due to rounding.

Corporate (companywide) 74%

Business unit/division 15%

Facility/location 11%

n = 3,407

What is the HR department/function for which you responded throughout this survey?

Demographics: Other


• Response rate = 10%

• 4,402 HR professional respondents from a randomly selected sample of a variety of industries in SHRM’s membership

• Margin of error +/- 2%

• Survey fielded: July 10, 2012 to August 3, 2012


SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage


Survey Methodology



32Disability and Executive Benefits Survey ©SHRM 2012

About MassMutualFounded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyholders. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyholders every year since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term.

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About SHRMThe Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India.

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