Short Term Disability & Supplemental Insurance Proposal Wright State University Make the Wright choice Do the Wright thing

Contents  Why a Short Term Disability & Supplemental insurance Plan?  WSU Disability Policy  Actual WSU Employee Case Study  STD Plans and Recommendation  Insurance Providers, Selection Criteria and Analysis  Provider Recommendation  Payroll Process  Next Steps

Perspective Why a Short Term Disability Plan? 2006 U.S. disability statistics: - Someone who is 35 years old has a 50% chance of disability for 90 days or longer before the age of Approximately 375,000 people become totally disabled every year - 66% of disabilities are not covered under workers compensation - Without a paycheck, the typical American employee’s savings last less than 5 weeks - 46% of all conventional mortgage foreclosures are brought about by a disability - Social Security Disability requirements to receive disability benefits are so strict that only 35% of applicants actually receive benefits - The top three chronic disabling conditions are: back disorders, heart disease and arthritis Source: John Hewitt & Assoc., 2006

WSU Disability Policy: Key Points  No Short Term Disability Plan  Long Term Disability engages after 6 months of total disability –What happens during those 6 months? Accrued sick / vacation leave is applied –What happens when leave is exhausted? –What happens when personal savings is exhausted? –No Income and No health insurance Source: WSU HR Website Benefits/Disability, Employee Handbook,

WSU employee statistics  Identify employee hardship  How many WSU employees were impacted by similar circumstances? HR  Identify employee financial “cushion”  What is the average accrued sick / vacation leave for WSU employees? HR

Disability Case Study  WSU employee case study: Kiel Rottgen - Purchasing  40 Yr Male – Good condition, no prior heart, cholesterol or blood pressure issues, non-smoker, non-drinker of alcohol, no street drugs –Married, two children, sole provider for a family of four –Hired June, – On March 14 & – Heart Attack, RCA dissection, 5 Stents in RCA –10 Days in ICU and another 14 days in the hospital –Sick/Vacation leave exhausted in 7 days –Personal savings depleted in 30 days –April 15 to June 30 – No Income –Returned to work part-time on June 1 (Paid for PT hrs on June 30) –Required to pay $156/mo to maintain health insurance with no income –Out of pocket expenses:12 different prescriptions per month, multiple medical appointments w/co-pays, insurance deductible $1,000 –WSU colleague care offering: $250 gift card = Greatly Appreciated!! Solution: Some type of short term disability or supplemental insurance Source: Kiel Rottgen Testimony 2007

Short Term Disability Plans Available:  62% of U.S. employers offer a Short term disability and/or supplemental plans  Group vs. Voluntary Individual  Group Offering  Employer must administrate the plan  Usually employer funded  Available to every employee whether you need it or not  Subject to frequent rate increases  Not customizable  Voluntary Individual Offering  Insurance provider administrates the plan  Usually paid by the employees individually or shared with employer  Completely portable to the employee  Rates are more stable  Customized to the individual Source: John Hewitt & Associates, WSU RFI data research 07

Plan Recommendation  Voluntary individual employee paid STD & supplemental insurance plan  Considerations & Benefits:  No cost to WSU  No administration or resource burden to HR  Easy payroll deduction implementation  All claims are processed directly by the insurance provider  Portable to the employee  Simple transition from employee paid to employer paid  Return to work and wellness incentive  Future consideration: WSU to pursue an employer funded program Source: WSU RFI data & research results John Hewitt & Associates

Leading Insurance Providers Offering Voluntary Individual STD & Supplemental Benefits  Aflac  Colonial Life (UnumProvident)  American Heritage (Allstate) Source: John Hewitt & Associates. A.M. Best & Co, Standard & Poor’s, Moody’s Investor Service and Fitch

STD Insurance Provider Primary Selection Criteria - Financial strength - Ability to pay - Ability to pay –Rates –Individual custom plan design –Problematic claim payment issues Source Criteria: John Hewitt & Associates, Standard & Poor’s, A.M. Best & Co., Moody’s Investor Service & Fitch

Comparison of Benefits/Companies Performance Source: WSU RFI data collection & analysis Colonial, Allstate, Aflac 2006

Comparison of Accident Benefits/Companies Source: WSU RFI data collection & analysis Colonial, Allstate, AFLAC 2006

Comparison of Cancer Benefits/Companies Source: WSU RFI data collection & analysis Colonial, Allstate, AFLAC 2006

Provider Recommendation  Aflac  No cost to WSU for both STD & Supplemental insurance  Best overall coverage in selection criteria analysis  The best plan proven to pay the maximum “CASH” dollars to the disabled  Average time period to receive cash: 4 days  Employee wellness incentive for consistent health screenings  Strong supplemental coverage options  Accident Plan, Cancer Plan, Life Insurance, etc…  Local and personalized customer service  Provide flexible on campus enrollment services Source: WSU BC Comparison & Analysis 2007

Perspective: Payroll  Aflac will create a withholding file and transmit to WSU payroll for uploading once per month  When payroll runs, A/P will issue one check to pay the total amount withheld (payroll requests)  Payroll performs this process for all withholdings  Current examples of payroll withholding programs:  WSU athletic tickets  WSU Pharmacy  United Way  Weight Watchers  Process is in place to implement  No cost to the employer withholding Source: Linda Sykes-WSU Payroll Mgr, Aflac Proposal 2007

Next Steps  Executive response and discussion meeting  If Executive review and analysis – HR, Finance, USAC, CSAC, etc…  positive response to move forward  Schedule a meeting with Aflac Account Executive to meet with Executive committee and HR  If negative response to move forward  Discussion  Next steps

Make the Wright choice Do the Wright thing In the continued Spirit of the Faculty & Staff at Wright State University