Long Term Disability Cost Savings

The Issue

A retail client with 225 employees received a 28% increase in their Long Term Disability program. They asked us to analyze the renewal and provide guidance regarding the validity of the increase and any options they would have to reduce the financial impact on the group’s employee benefit budget.

Our Solution

We first met with the LTD carrier to review the factors that weighed on their decision to drastically increase the rates for this group. We discovered that there were several employees out on disability but also that 4 disability claimants had since passed away or no longer worked for the company. Compounding all of this was that the carrier had decided to increase the forward trend factor for all renewals. Although we were able a negotiate a reduction in our client’s renewal to 20%, we also felt we could do better by marketing the group’s program to other carriers.

The Result

By presenting the past claims data and pointing out the dollars paid for claimants no longer with the company, we were able to find an A+ carrier willing to offer our client a 3-year guaranteed rate equal to an increase of just 7% over what they were paying prior to their renewal. The 19% difference saved the company $69,000 over three years!

We know where to look to control costs relating to employee benefits.