Surgeon

We've written on voluntary disability benefits packages in the past. The idea is simple: by giving employees choices of how much or what type of coverage to take, the employee has more control of the cost of their disability insurance policy and the employer is able to trim benefit costs.

A recent study by Prudential Insurance on Employee Benefits on benefits cost management is impressive, as most insurance company studies usually are.

It's a nice concept, but the pitfalls are large. If companies are providing their employees with a complete education on the pro's and con's of their decisions to take a larger or smaller disability policy, then we're all for the flexibility. If an employee truly understands the implication of selecting a disability insurance policy with a very small benefit, that is their choice and their risk to take in this type of a program.

However - we find it hard to believe that an HR department or benefits consultant whose primary aim is to trim the cost of employee benefits will focus their efforts in such a personal way. The net result is more likely to be more employees with less coverage than they need if they are unable to work because of an illness or injury.

Some examples of coverages which serve to lower costs are those which contain limited benefit periods for claims due to mental health, or other types of "subjective" claims such as Chronic Fatigue Syndrome or Fibromyalgia. These claims are already challenging to pursue, but with built in limited benefit periods, are even worse to employees, who typically don't learn of the limited benefits until they are well into the claim period.

We work with long term disability claimants every day who struggle to pay bills and maintain their pre-disability lifestyle. It's a struggle in the best of circumstances. From our perspective, this is only a good idea for insurance companies and the employers who purchase their policies.