Benefits Administration Manual - Long Term Disability
901. General Information
The Voluntary Long Term Disability (LTD) Insurance Program was implemented in 1988 for active excluded employees. This benefit is intended to provide income protection in the event an employee becomes disabled due to an illness or injury and is unable to work for six months or longer. The California Department of Human Resources (CalHR), Benefits and Training Division, maintains responsibility for the program and for providing departmental personnel offices with information regarding premium changes or open enrollment periods. The new carrier for the LTD Program is Standard Insurance Company (The Standard).
Government Code Section 19849.11
All active excluded employees appointed permanent, half time or greater, with one of the following designations are eligible to participate in the program:
- Managerial (M, E50, E59, E79, E99,)
- Supervisory (S, E48, E58, E68, E78, E98)
- Confidential (C, E97)
- Excluded/Exempt (E88, E89)
- Excluded employees who are enrolled in LTD at the time they are re-designated to E01 through E21, E67, or E77 due to middle management reductions are allowed to continue the coverage. However, future incumbents appointed to these positions will be designated represented and will not eligible for LTD.
Employees on limited term appointments who otherwise meet the eligibility criteria may enroll in LTD ONLY if they have a mandatory right of return to a position and status that also meet the criteria. Permanent Intermittent employees are not eligible.
If an employee has a reduction in their time base/salary, the employee will need to complete the LTD enrollment authorization form to reduce the monthly premium.
903. Definition of Disability
"Disability" or "Disabled" means that, due to a physical disease, injury, pregnancy or mental disorder, the employee requires the regular care and attendance of a doctor and:
- is unable to perform each of the material duties of their regular job; and
- after the first 24 months of benefit payments, the employee is unable to perform each of the material duties of any gainful work or service for which he/she is reasonably qualified, taking into consideration training, education, experience and past earnings; or
- the employee, while unable to perform all of the material duties of their regular job on a full-time basis, is unable to earn 80% or more of their predisability earnings in their occupation.
904. Level of Benefits
The LTD program offers a monthly benefit of either 55 percent of the first $18,182 or 65 percent of the first $15,385 of the employee's pre-disability earnings (monthly base salary), reduced by other deductible income benefits. These percentages are based on the plan option the employee has selected.
The minimum payment for a claim is 15 percent of the monthly benefit before being reduced by "other deductible income" or $100 per month, whichever is greater. The maximum payment is $10,000 per month. Claims are offset by certain "other deductible income" available to the employee. Other deductible income includes but not limited to: work earnings; sick leave; workers' compensation; state disability income; Social Security; disability and retirement benefits under the State's retirement plan (such as CalPERS and STRS); other group insurance benefits; third party settlements and any amounts received by compromise, settlement or other methods as a result of a claim for the above.
905. Disability Claim Elimination Period
All claimants must complete an Elimination Period, which is the first six months of the disability. It is the period of time during which no LTD benefits are payable. The employee must be under the continuous care of a physician during the Elimination Period. During the elimination period, claimants are responsible for paying the monthly LTD premiums.
906. Pre-Existing Condition Limitations
The coverage for pre-existing conditions begins 24 months after the employee's effective date of coverage. A pre-existing condition is an injury, sickness, or pregnancy for which, in the 12 months before the effective date, the employee: (1) received medical treatment, consultation, care, or service; (2) took prescription medications; or (3) had symptoms or conditions which would cause a reasonable prudent person to seek diagnosis, care, or treatment.
907. Maximum Duration of Benefits
The maximum benefit duration will be the greater of the duration shown below or the employee's Social Security Normal Retirement Age (SSNRA).*
Age Disability Date Starts: 61 or younger
Max Benefit Duration: To Age 65, or to SSNRA, or 42 months, whichever is longer
Age Disability Date Starts: 62
Max Benefit Duration: 42 Months, or to SSNRA, whichever is longer
Age Disability Date Starts: 63
Max Benefit Duration: 36 Months, or to SSNRA, whichever is longer
Age Disability Date Starts: 64
Max Benefit Duration: 30 Months, or to SSNRA, whichever is longer
Age Disability Date Starts: 65
Max Benefit Duration: 24 Months
Age Disability Date Starts: 66
Max Benefit Duration: 21 Months
Age Disability Date Starts: 67
Max Benefit Duration: 18 Months
Age Disability Date Starts: 68
Max Benefit Duration: 15 Months
Age Disability Date Starts: 69 or older
Max Benefit Duration: 12 Months
*SSNRA means an employee's normal retirement age under the Federal Social Security Act, as amended.
Limitation for Disability due to Mental Disorders or other Limited Conditions
Monthly benefits are limited in duration to 24 months in the employees lifetime if their disability is caused or contributed to by (or medical or surgical treatment of) mental disorders or other limited conditions, including but not limited to chronic fatigue conditions, allergy or sensitivity to chemicals or the environment, chronic pain conditions, carpal tunnel or repetitive motion syndrome, temporomandibular joint disorder or craniomandibular joint disorder, arthritis, diseases or disorders of the cervical, thoracic or lumbosacral back and its surrounding soft tissue and sprains of joints or muscles. If the claimant is confined in a hospital or institution solely because of a mental disorder at the end of the 24 months, monthly benefits will continue until the confinement ends. In no event will benefits be paid beyond the maximum benefit duration shown above.
908. Plan Features
While complete LTD Plan coverage information can be found in the LTD Brochure and Certificate of Insurance provided by The Standard, here are some plan highlights:
Unless the employee has a disability preventing him/her from participation, the plan prepares employees to return to work, when approved by The Standard and may pay for return to work expenses they incur, such as job search, training and education expenses.
Family Care Expense
A monthly adjustment to work earnings for family care expenses may be allowed when determining deductible income, if the expense is necessary to enable an employee's return to work. This adjustment is for up to $250 per month for each eligible family member during the first 24 months of benefit payments, but not to exceed a total of $500 for all Family Members.
If the employee is disabled and receiving monthly LTD benefits, an additional monthly benefit of $150 will be paid for up to 48 months for each child under the age of 22 who is attending an accredited post-secondary school on a full-time basis.
If the employee dies while receiving benefit payments, eligible survivors will receive a one-time payment equivalent to six times the monthly benefit. If the employee was not receiving LTD benefits or a claim had not been approved at the time of death, there are no survivor benefits.
Tax-Free Benefit Payments
Monthly LTD benefits received by the employees are non-taxable.
909. Benefit Level Plan Options and Rates
Benefit Level Plan Options and related Age Factors and rates are as follows:
65% Miscellaneous/Non-Safety/OASDI Employees (075-111)
- Under 30: .00033
- 30-39: .00096
- 40-49: .00226
- 50-59: .00453
- Over 60: .00502
65% Peace Officers/Firefighters/Safety/Non-OASDI Employees (075-112)
- Under 30: .00040
- 30-39: .00112
- 40-49: .00271
- 50-59: .00599
- Over 60: .00677
55% Miscellaneous/Non-Safety/OASDI Employees (075-119)
- Under 30: .00016
- 30-39: .00048
- 40-49: .00113
- 50-59: .00229
- Over 60: .00254
55% Peace Officers/Firefighters/Safety/Non-OASDI Employees (075-120)
- Under 30: .00022
- 30-39: .00064
- 40-49: .00152
- 50-59: .00329
- Over 60: .00369
910. Premium Computations
To determine the exact monthly LTD premium rate for employees, take the employee's monthly base salary (not to exceed the maximum of $18,182 for the 65% benefit level or $15,385 for the 55% benefit level and not including overtime compensation, premium pay, etc.), and multiply that salary times the rate noted under the age factor for the Plan Option selected by the employee. Add the $.80 administrative fee. This will give you the total LTD Monthly Premium rate.
Example: Monthly Base Salary x Factor for Employee's Age + $.80 cent Admin. Fee = LTD Monthly Premium
911. Annual Premium Update
The employee's LTD premium can change based on salary and age changes. On January 1, of each year, an annual age/salary update is conducted for all employees enrolled in the LTD program. The SCO will audit the payroll history files to identify any enrolled employees who have experienced a salary change and/or an age change during the previous year that would move them to the next higher age factor.
Those employees that have a salary change or have moved to the next age factor (age 39 to 40, 49 to 50, etc.) will receive a change in the monthly premium. For example, an employee in the 65% LTD benefit level option (miscellaneous retirement category) aged 39 with a monthly base salary of $3,800 would have a LTD premium of $3.65 per month.
On January 1, following the employee's 40th birthdate, the premium would adjust (i.e. $3,800 salary x .00226 age factor + $.80 cent Admin fee) to a new rate of $9.39 per month.
Newly Eligible Employee
Newly eligible employees have 60 days to enroll in the program. The 60-day eligibility period is calculated from the transaction key-in date, PAR turnaround date, or NOPA date. If the personnel office submits the LTD enrollment form before the key-in date, SCO will reject the LTD enrollment form. Newly eligible is defined as:
- New appointments to State service, in an eligible classification;
- Promotions to an eligible class;
- A change in CBID which changes an employee's status from ineligible to eligible (such as a change from rank-and-file to confidential); or
- Change from an ineligible time base to a half time or greater time base in an eligible class.
Departmental Personnel Offices are responsible for notifying newly eligible employees of the availability of the program and providing them with an eligibility notice and LTD flyer. The notice must specify the 60-day enrollment eligibility period. A copy of the notice should be kept in the employee's personnel file to verify that the employee was informed of his/her eligibility for the LTD benefit.
If the employee is not enrolled timely (during the 60-day period) because of a delay in processing the LTD form by the personnel office or the form is lost, CalHR will allow the personnel office an additional 60 days to assist the employee. The personnel office must submit a memo to CalHR, Benefits and Training Division explaining the circumstances for requesting approval as an exceptional enrollment. If the enrollment is approved, the effective date will not be retroactive. If approved, CalHR will provide the personnel office with a written response and a copy of the LTD enrollment authorization form.
Open enrollments for the LTD program are usually conducted every 18-24 months. During an open enrollment period, CalHR mails informational materials to the home addresses of all eligible employees not currently enrolled in the LTD Program.
Personnel offices are notified of the open enrollment period through a Personnel Management Liaison (PML) memorandum. Eligible employees must be actively working in order to enroll in the LTD plan. If the employee is off work on some type of leave, they will not be able to enroll until they return to active status.
913. Ordering of Enrollment Authorization Forms
CalHR does not maintain forms for distribution to departments.
Human Resources/Departmental Personnel Offices do not need to order large quantities of the LTD Enrollment Forms and brochures since eligible employees not currently enrolled in the Plan are automatically mailed informational materials to their home address during the designated open enrollment period or when they become newly eligible. Departments should maintain an adequate supply of enrollment forms and plan brochures for use by employees who become newly eligible or for employees who want to cancel the plan. Supplies can be ordered by calling Standard Insurance Company at 1-888-641-7193.
914. Completion of LTD Enrollment Form
Enrollment in the LTD Program requires completion of the Long Term Disability Enrollment Authorization (SI 7533D-643146). The last digit of the form number indicates the most recent revision and will change as the form is updated. Enrollment forms and LTD informational brochures can be obtained from CalHR, Benefits and Training Division. Correctly prepared forms (processed through personnel offices) received at the SCO by the 10th of the month will be effective the first of the following month, provided a premium has been deducted from the employee's pay warrant. Employees cannot receive a retroactive effective date. If the employee is absent from work due to a disability on the date the insurance would otherwise have become effective, the effective date will be deferred. The insurance will not become effective until the employee works one regular working day.
Employee - Section A
1. Check type of action: new enrollment, cancellation or change (cancellations can also be completed by an employee sending a memo directly to SCO);
2. Enter Social Security number;
3. Enter full name;
4, Enter date of birth;
5. Enter mailing address.
6. Enter job title/occupation; and
Employee - Section B
1. Check box to select LTD benefit level and to authorize payroll deduction of premium. Choose one type of coverage only:
- Option A - 65 percent Miscellaneous Employee (Contributes to OASDI/Social Security);
- Option B - 65 percent Peace Officer/Fire Fighter/Safety Employee (Does not contribute to OASDI/Social Security);
- Option C - 55 percent Miscellaneous Employee (Contributes to OASDI/Social Security); or
- Option D - 55 percent Peace Officer/Fire Fighter/Safety Employee (Does not contribute to OASDI/Social Security).
Employees who do not contribute to OASDI/Social Security should enroll in the Peace Officer/Fire Fighter/Safety Plan regardless of their classification.
2. Complete Premium Computation to determine monthly LTD premium rate.
Employee determines monthly base salary (not to exceed the maximum of $18,182 for the 65% benefit level or $15,385 for the 55% benefit level and not including overtime compensation, premium pay, etc.), identifies the age factor appropriate from the grid of rates on the enrollment form, and adds the administrative fee.
Example:Monthly Base Salary x Factor for Employee's Age + $.80 cent Admin. Fee = LTD Monthly Premium. To determine the premium for the 65% LTD benefit level plan option for a 40-year old peace officer, with a monthly base salary of $4,000, the calculation would be as follows: $4,000 x .00271 + $.80 cent Admin fee = $11.64 monthly premium
Employee - Section C
- Read statement of authorization for enrollment/cancellation and payroll deduction;
- Sign form;
- Enter date form was signed; and
Give form to Departmental Personnel Officer for further processing.
Personnel Office - Section D
- Deduction Code 075 (already entered on form);
- Enter Code based on employee's election of coverage with standard insurance company (643146-B) as follows:
Verify premium computation is accurate;
Enter deduction amount (Monthly LTD premium);
Enter agency name;
Enter effective date (Correctly prepared forms received by the SCO by the 10th of the month will be effective the 1st of the following month.);
Enter employee's CBID;
Enter agency code;
Enter employee's unit code;
Enter eligibility period (beginning and ending dates), if newly eligible employee;
- 65% Coverage Plan - Miscellaneous/Non-Safety/OASDI Employees
- Deduction Code: 075
- ORG Code: 111
- 65% Coverage Plan - Peace Officers/Firefighters/Safety/Non-OASDI Employees
- Deduction Code: 075
- ORG Code: 112
- 55% Coverage Plan - Miscellaneous/Non-Safety/OASDI Employees
- Deduction Code: 075
- ORG Code: 119
- 55% Coverage Plan - Peace Officers/Firefighters/Safety/Non-OASDI Employees
- Deduction Code: 075
- ORG Code: 12
Authorized personnel staff must sign form;
Enter telephone number; and
Enter date received in the personnel office.
- Exception: Documents processed during open enrollment are considered open enrollment documents and are not required to show the eligibility period.
Any forms not accurately or completely filled out, will be returned by SCO to the personnel department. Returned forms will delay the effective day of the employee's LTD coverage, or may jeopardize coverage approval.
915. Claims Process/Procedures
Employees who become disabled and wish to file a LTD claim should contact the CalHR, Benefits and Training Division, at (916) 324-5553, as soon as possible to request the necessary forms. Eligible employees must be advised to contact CalHR before the 6-month elimination period is completed. Personnel offices should contact CalHR, Benefits and Training Division, as soon as an employee who is enrolled in LTD files a worker's compensation claim.
CalHR will send the following documents to the employee:
- Cover letter with instructions on how to initiate the LTD claim process;
- Statement of Claim for Group Long Term Disability Benefits forms to be completed by the employee;
- Attending Physician Statements to be completed by the physician(s); and
- Certificate of Coverage Booklet.
CalHR will send the following documents to the employer:
- Cover memo with instructions on how to complete the LTD claim and request for duty statements; and
- Employer Statement for LTD.
The personnel office must complete the Employer's Statement for LTD benefits and provide a copy of the duty statement by the stated due date in order to initiate the claim on a timely basis. All forms must be sent back to CalHR at the following address:
California Department of Human Resources
LTD Claims/Benefits and Training Division
1515 "S" St., North Building, Suite 400
Sacramento, CA 95811-7258
CalHR will review the forms for completeness and forward to the carrier. Once the forms are sent to the carrier, the carrier will work directly with the employee to process the claim. CalHR will receive copies of correspondence and status reports from the carrier.
Waiver of Premiums
During the 6-month waiting period, employees must continue to pay their LTD premium. If the claim is approved, benefit payments will be made directly to the employee. LTD premiums are waived when an employee is receiving benefits. The claimant's premium deduction will be administratively cancelled by CaHR. Therefore, upon return to work (if still eligible), the employee must re-enroll into the LTD plan in order to reinstate the automatic payroll deduction and maintain coverage.
916. Continuation of Coverage Upon Loss of Eligibility
Transfer to Rank and File Status
Employees who lose eligibility will have their enrollment cancelled by the SCO. If they transfer to represented status but retain an eligible time base, employees may continue LTD coverage through direct pay for up to 24 months. They must request this continuance in writing within 60 days of the date they lose eligibility by completing and submitting the online Request for Long Term Disability 24 month Direct Pay Coverage card (SI 13898-643146) at The Standard Insurance Company
. The card should be returned to Standard Insurance Company, 920 SW Sixth Avenue (PSB7C), Portland, OR 97204.
Once the SCO has stopped the LTD insurance deduction from the employee's pay warrant; The Standard will begin billing the employee three times a year. Nonpayment by the due date or checks that are returned due to insufficient funds will result in cancellation of the employee's coverage.
Employees who complete the 24-month direct pay period are eligible to convert to an individual policy. A conversion application form may be obtained from The Standard Insurance Company
Separation from State Service/Leave of Absence
Employees who separate from State service or take a leave of absence may convert their group LTD coverage to an individual disability plan providing they have been enrolled in the group plan for at least 12 months and they are not disabled from performing the duties of their occupation at the time they separate or take a leave. The request for the conversion application must be made in writing to Standard Insurance Company within 31 days of termination of the group insurance. The employee should complete the online Request for Group LTD Conversion Materials (SI 4781-643146) at The Standard Insurance Company
and return it to Standard Insurance Company, 920 SW Sixth Avenue (PSB7C), Portland, OR 97204.
Upon return to active pay status after a leave of absence or separation, the LTD payroll deduction should start automatically. However, employees should verify the deduction when they receive their first pay warrant, and if no deduction is noted contact their personnel Office.
Depending upon the length of the leave and whether the employee converts the coverage, he/she may have a new effective date of coverage upon returning to work (waiting period for a pre-existing condition would start over) as follows:
- Employee takes a leave of any length and chooses not to convert: The coverage terminates until the employee returns to work and the employee has a new effective date of coverage.
- Employee takes a leave of six months or less and continues to pay directly to CalHR: CalHR sends premium payment to Standard: Coverage is considered continuous and employee retains the original effective date of coverage.
- Employee takes a leave of six months or more and converts the coverage to individual plan: The employee will have a new effective date of coverage.
Retirement from State service
There is no conversion privilege when employees retire.
917. Changing Plan Categories
Employees who change from the Miscellaneous/Non-Safety/OASDI category to the Peace Officers/Firefighters/Safety/Non-OASDI category or vice versa should complete Sections A, B and C of the LTD enrollment form, and then submit the form to their personnel office for completion of Section D.
The personnel office will send the form to SCO for implementation of the new premium.
918. Cancellation of Coverage
Employees can cancel their LTD coverage by either: (1) completing an LTD Enrollment Authorization form, indicating cancellation of coverage and submitting it to their personnel office, or (2) submitting a written request to the State Controller's Office, Miscellaneous Deductions Unit, 300 Capitol Mall, 10th Floor, Sacramento, CA 95814. The request must include the employee's name, Social Security Number, phone number and address. Also the employee must submit a copy of the cancellation request to their personnel office. Requests received by the State Controller's Office by the tenth of the month will be effective the first of the following month.
If the employee does cancel using the LTD Enrollment Authorization form, their personnel office is responsible for fully completing Section D (instructions on filling out the form is in BAM Section 914, Completion of the LTD Enrollment Form (SI 7533D-643146). If the LTD form is not complete, SCO will return it to the personnel office, thus delaying the cancellation of coverage.