Conference 7.286::digital

    That paperwork hasn't gotten to us yet.  It looks like they blew the
    payroll deduction.  However, the taxes look vaguely right -- the more
    you make, the higher the rate, and it really increases after a certain
    level.  I have the dim recollection that top Fed + Ca. tax rates, for
    example, sum to more than 50%.  It looks like the example folk are
    getting clobbered with a 30% or so marginal tax rate.
    
    Plus, they shouldn't have called the deduction "pre-tax" any more.
    

    The highest Federal marginal tax rate (in 1991) was 31%.  Does CA
    really charge anybody 19% AFTER the CA deduction on the Federal?

    
    I noticed one another mistake. It says that the weekly deduction is 
    $.40 (option A) and $.90 (Option B) for every $100 of your base salary.
    
    This doesn't make any sense. For example, for a salary of 50,000, the
    weekly deduction would be .4*500 which is $200 (option A).
    
    Can someone else confirm this mistake !
    
    Regards,
    
    Santosh 

    I know Calif gets up to at least 11%.  I have the (dim) idea that
    there's something sneaky in the Federal tax that allows it to get up to
    38%, and that the 31% is a fable;  on the other hand, I may be
    remembering a pre-Bush Federal rate... (Hi, Tom.)
    

>
>   This doesn't make any sense. For example, for a salary of 50,000, the
>   weekly deduction would be .4*500 which is $200 (option A).
>

    Perhaps they meant "for every $100 of your -weekly- base salary" ...

        $ 50,000 per year == roughly $ 960 per week

        $ 960
        -----  *  $ 0.40   =   $ 3.84  (or $3.60 or $4.00 if they truncate
        $ 100                           or round amounts below $100.00)

    After all, $0.40 per week per $100 of your annual base salary would be

        $ 0.40 * 52       $  28   in premiums for every
        -----------   =   -----------------------------
        $ 100             $ 100   of your salary

    That's about the same as the federal income tax rate ...

    Re: .4

    The 1991 Federal tax tables show (I just looked) a maximum rate of 31%. 
    I think the alternate minimum tax rate is 25%, if my quick reading of
    the form is correct.  Prior to the Reagon-Bush tax "reform", the
    highest marginal rates were in the range 48% to 52%, depending on the
    year. Considerably prior to that the marginal rates have been as high
    as 90% in the interests of "fairness" or "soak the rich", depending on
    your political persuasions.

    State taxes are deductible on the Federal.  So let your adjusted gross
    income be AGI.  Then (assuming the CA rate is 11%):

    	CA_tax = 11% AGI
    
    which is deductible on the Federal, so:
    
    	fed_tax = 31% (AGI - CA_tax)

    so:

    	CA_tax + fed_tax = 38.6% AGI

    Various rules on how to compute the AGI may change the 38.6% number
    somewhat, but remember that the number is a maximum marginal rate and
    not that % of your total income.  And AGI < total_income.

    I really don't think there are any present income tax rates higher than
    those numbers.  I could be disabused of that notion rather easily if
    somebody claimed they had higher numbers in front of them.

    	In all, a typical error-laden, not to-the-point Benefits BULLetin.
    
    	We've no idea what the Travelers' rate structure will cost us.
    
    	A lot of paper could have been saved by printing simply:
    
    
    
    	"Please bend over, and try not to become disabled before late
    September. Thank you for your attention."
    
    Phil (not bitter, mind you.)

    RE: .4, .6
    
    I may be wrong, but I believe that the highest marginal Federal rate is
    33%, as opposed to the Federal rate on the highest income, which is
    31%.
    
    An individual in the "middle income" bracket actually pays a higher
    marginal rate on earned income than someone with a much higher earned
    income.

Plan A $0.40 per 100 of weekly salary.
Plan B $0.90 per 100 of weekly salary.

    I just figured based on the numbers given in .9:
    
    ($.90 x (weekly salary/100))
    
    and then assumed the tax savings would reduce the resulting number
    by "about" 1/3.  I doubt that there's any way to get an exact tax
    number, anyway; it all depends on how much you actually make in a
    year, which may include income other than your salary, and what your
    deductions happen to add up to.
    
    

    
    	Re: .6 and .8
    
    	You're both right.  The current highest incremental tax bracket is
    officially 31%.  There is a zone of income (from ~$120K to ???) in
    which the incremental tax bracket is _still_ 31%, but for which various
    deductions are gradually phased out (all in an effort to bring the
    early 15% and 28% taxed dollars up to 31%) that results in a net
    effective tax bracket of 33%.  Above the adjustment zone, the
    deduction game is done (ie. every dollar is now at 31%) and the
    official tax bracket and the effective tax bracket are once again the
    same; 31%.
    
    	Yeah, wasn't that "tax simplification" bill simple?  :-)
    
    							-craig

re .0:

I think the table is talking about a different payroll deduction than
that you pay while you're not on LTD.  I base this on the fact that
they subtract it from your benefit.

The legend in the example boxes indicates Fed, FICA, and State taxes so 
looking at the $50K case Option B (Example 2) the effect of tax savings
comes out to 42% which seems about right. BUT in Example 4 when they
calculate your net benefit they assume the 3 taxes total only 22%.

Are disability benefits taxed at a different rate than normal benefits?
 
Mo money, Mo money,...

        Re: .0
        
>Can anyone tell me how the payroll deduction and tax info were derived in
>examples #3 & #4 of the "DIGITAL DISABILITY PROGRAM Selection and Information
>Guide"?  How can the payroll deduction remain the same for Core, OptionA and
>OptionB?
        
        In the information you entered, the payroll deductions remain
        the same for all three disability options because the deductions
        are totally unrelated to the disability plan--the deductions are
        *medical coverage* deductions.  The reason this line was listed
        was to show that the current plan gives you medical coverage for
        free but the new plan doesn't (in all three flavors).
        
        And in response to .1, the deduction should be called "pre-tax"
        because medical deductions (and the new disability deductions)
        are taken out before taxes.
        
>And how can the taxes be so much different?
        
        The entire benefit is taxable, so the taxes will be higher for
        benefits that pay more coverage.  The difference isn't linear
        because higher salaries have higher tax rates.
        
        					B.J.

>the chart for Example 3:
>
>			    Current
>			   LTD Plan	Core	Option A	Option B
>                           ---------	-----	--------	--------
>
>Monthly Salary		    2500	2500	  2500		2500
>Monthly disability benefit  1667	1250	  1875		2500
>Pre-Tax payroll deduction
> for medical coverage        -0-	-  8	  -  8		-  8
>Taxes			     -0-	-253	  -434		-641
>
>Net monthly take-home
>  benefit		    1667	 989	  1433		1851

        Re: .7

>    	In all, a typical error-laden, not to-the-point Benefits BULLetin.

        It doesn't appear to me that there were errors in the bulletin,
        at least the comments in this note imply at most a lack of clarity.

>    	We've no idea what the Travelers' rate structure will cost us.

        You can't multiply your salary by .004 or .009?

        I'm not going to repeat the rest of your message, but your
        negative attitude seems out of place for this change.  Are you
        upset that Digital is going to give you 50% disability coverage
        for free, or for the fact that the (unrelated to Digital) the
        cost of coverage has increased since rates were last changed?

        					B.J.

    A lot of people don't like change.  Any change, even if it benefits
    them.  That's human nature.
    
    Dick

Ah, thank you BJ.  I did not realize that these charts illustrate the case
of a person who is disabled, and receiving benefits from the Plan.

I was mis-interpreting the labels.  I thought that the
"deduction for medical coverage" was the deduction for LTD, and that the
"net take-home benefit" meant net take-home pay for a well person.

    
    
    I hope this change will save the company money.  I do have some
    concerns.
    
    Our disability pay will now be taxable and, as such, while on
    disability, we will pay more tax whenever taxes are raised, same for
    FICA and maybe our health/life payroll deductions.  SO, for someone
    out for a long time, they will be receiving less and less net pay (and
    then there is inflation).  Will disability payees receive COLA's?
    If not, I sure hope I do not get a permanent disability (or the one I
    have does not get worse). 

    Some comments on the examples contained in the disabilities booklet...
    
    Let's vet this a bit.  It's possible that people working in different
    states have received different examples based on local tax structure. 
    In my booklet, received in Massachusetts, the payroll deduction
    examples assume a 42.3% marginal tax rate.  This breaks down as:
    		Federal income	28%
    		FICA (soc. sec.) 6.2
    		Medicare	 1.40
    		State 		 6.65
    which does not agree with the 1991 Massachusetts state income tax rate
    of 6.25%.  Given these assumptions, Example 2, Option A is wrong.  It
    should read
    			      Option A
    	Weekly Deduction	$3.85
    	Effect of tax-savings   -1.63
    
    	Net weekly cost		$2.22
    
    Reason: the employee paying for Option A or Option B is still making
    about the same taxable income, and should be in the 28% marginal
    federal tax bracket either way.
    
    A couple of other comments:  Example 4, benefits to married WC4
    employee with $50,000 salary, is clearly based on a single income and
    two children, i.e. a family of four.  The taxes appear to have been
    estimated with standard deductions only and an approximation to state
    tax, not the real Massachusetts rules.
    
    To convert from weekly to monthly figures, multiply by 4.33.  Note that
    the "option B" columns in the benefit should be within $10-20 of
    actual, non-disabled take home pay.  Use this as a rule of thumb for
    personal extrapolation.
    
    I'll have some estimates for two-income families in a later reply.
    
    Wes

    
    Say an employee is making $600 per week ($31.200/yr).
    
    Old rate for LTD  $2.00 per week   
    
    New rate for LTD (6*.90) or $5.40 per week
    
    
    THis is for 100% coverage LTD.
    
    Mike

    Mike, you forgot to account for the new LTD cost coming from pre-tax
    income.
    
    As one of my non-US-born colleagues said a few minutes ago, as he was
    shaking his head at his LTD info package and trying to decipher the
    semi-legalese English in it, "I know without opening this that it will
    make my wallet thinner"...
    
    /Charlotte

    Since so many people have working spouses I have tried to extend the
    disability program examples to two-income couples.  First is an
    estimate of deductions, then benefit examples, then, for the truly
    devoted, details of the model I used to come up with the figures.

    Take these numbers with a cowlick of salt.  They are the product of a
    simple simulation, NOT an evaluation by people well versed in tax
    regulations.  They use 1991, not 1992, Federal income tax rules, and an
    extremely simplified model of state income tax.  See also reply .19
    here.

    I have asked my personnel rep to provide "official" examples for
    two-income couples.

    Contributions:
    --------------

    Example 5:  Married WC2 employee with annual salary of $30,000,
    spouse's salary of $30,000.  Contributions are the SAME as Example 1.

    Example 6:  Married WC4 employee with annual salary of $50,000,
    spouse's salary of $50,000.  Marginal Federal income tax rate is 31%.

        Net weekly cost -  Current $3.46, Opt. A $2.11, Opt. B $4.74


    Benefits:
    ---------

    NOTE:  Benefits are for the disabled spouse of a working couple. 
    Healthy spouse's salary and net monthly income are unchanged.  Core
    plan benefits were not calculated.

    Example 7:  Married WC2 employee with annual salary of $30,000,
    spouse's salary of $30,000.  Each employee pays single medical
    premiums.  No dependents.

			    Current
			   LTD Plan	Core	Option A	Option B
                           ---------	-----	--------	--------

Monthly Salary		    2500	2500	  2500		2500
Monthly disability benefit  1667	1250	  1875		2500
Pre-Tax payroll deduction
 for medical coverage        -0-	N/A	  -  8		-  8
Taxes			     -0-	N/A	  -445		-697

Net monthly take-home
  benefit		    1667	N/A	  1422		1795


    Example 8:  Married WC4 employee with annual salary of $50,000,
    spouse's salary of $50,000.  Disabled spouse carries dependent medical
    coverage.  Two dependents.

			    Current
			   LTD Plan	Core	Option A	Option B
                           ---------	-----	--------	--------

Monthly Salary		     4166	4166	  4166		4166
Monthly disability benefit   2778	2083	  3125		4166
Pre-Tax payroll deduction
 for medical coverage	      -0-	N/A	  - 93		- 93
Taxes			      -0-	N/A	  -872	       -1297

Net monthly take-home
  benefit		     2778	N/A	  2160		2776


    Conclusion:
    -----------

    The single person in example 3 loses little by marrying.  The
    two-income family member with higher wages pays about 1/3rd more for
    the same coverage as the old plan.

    My model is explained on the next screen.

    Wes Plouff

    Tax model used in these calculations:

    Gross Income is $30,000 or $50,000 per person as noted.
    Taxable Gross         = gross income - pretax benefit deductions
    Adjusted Gross Income = Taxable gross - std. deduction - exemptions
    
    Federal Income Tax     = per 1991 form 1040 tables and formulas
    FICA (Social Security) = Taxable Gross x 6.2%
    Medicare Tax           = Taxable Gross x 1.45%
    State Income Tax       = (Taxable Gross - Federal Income Tax) x 6.5%

    Disabled person pays all pretax benefit deductions.

    Discussion:  For Examples 3 and 4 in the booklet, this method agrees
    within $10 per month.  FICA and Medicare tax formula is based on actual
    pay stubs.  FICA tax stops after $52,000+ income per individual,
    Medicare after $100,000+ per individual, so the limit is not reached in
    any example.

    The estimated state income tax was a "best fit" implied by the payroll
    deduction Examples 1 and 2.  It hides a multitude of sins such as
    differences between the 1991 Federal tax rules, which were available to
    me, and the 1992 rules used in the booklet.

    In figuring the Option A after-tax benefits, I assumed that the
    disabled person made the same pretax contributions as before, and that
    the healthy spouse's income and taxes paid did not change.  Another way
    of looking at it is: I figured the disabled spouse's benefits based on
    marginal tax rate.

    A note on deductions: a homeowner should be able to generate $10-20,000
    in itemized deductions (here in Massachusetts).  I estimate these would
    increase the after-tax disability benefit by roughly $150-250 for
    Examples 7 and 8.

    Please remember that I am not a tax expert, and anyone reading this
    note should get competent tax advice or estimate their own actual
    benefits before choosing an LTD plan option.

While I did find time to look through this string, I haven't found time to
go through the details of YABCB (yet another benefits change bulletin).

Can anyone quickly summarize for me what "the default" is regarding this
change? I.E. What happens if I don't do anything during the enrollment
period?

(I know - I could find out if I'd read the damn booklet, but I figured
 some of you already did so, and . . . :^)

Thanks,
-Jack

    
    re: .23 - If you do nothing, you default to Digital paying 100% for 
    	      the first 13 weeks of disability and then 50% after 13 weeks, 
    	      for the longer term benefit.

Two questions that I don't believe have been answered in this string of notes:

1) Is this "benefit" one of the benefits that goes on after a TSFO occurs (for
as long as your package covers)?

2) If it does, what if you get TSFOed before you enroll?  Do you still have
the entire enrollment period to make up your mind, or are you "stuck" with the
100% for 13 weeks and 50% after that (the default)?

/Marty

    
    
    I too have a question that has not been asked.  Maybe someone here has
    the answer to one of the mysteries.
    
    What has happened to the monies that WE have all paid into the current
    "LTD" plan?
    
    Am I out in left field here? or has I been paying this money weekly as
    an Insurance Policy that pays no dividends, and gives nothing back to
    you if your don't use it?
    
    Thanks for anyone who can spell this out!
    
    Bob

re .26:

It's like term life insurance -- there's no cash value.

That raises an interesting question, though. Say you had a term life policy
with some carrier, and for n years you've been paying into it a certain
premium with the expectation of a certain amount of coverage in the event
of your death. Can the writer of the policy just up and tell you all of a
sudden after n years, "Oh - sorry - your premium's going up and your
coverage is going down - tough cookies." ???
-Jack

My term policy (Mass SBLI) gives maximum rates for various ages.  For example,
the policy says that when I'm 45, I'll pay no more that $xxx, which is
considerably more than I'd pay today if I were 45.  I have no idea if this
is a universal feature of term insurance.

I'm not sure under what circumstances (if any) they can refuse to renew.  

        Re: .30 (term life insurance)

        I can give you a definitive answer to your question:  it depends.

        Each insurance policy has its own conditions and requirement-- 
        each policy is a complex contract.  It is possible to purchase a
        non-cancelable individual term life policy where you can renew
        each year at a rate specified in the policy.  In the policies I
        looked at there was a range of rates for each year until age 65
        or 70:  you don't know how much the premium will be until you
        get the bill, but you know the upper bound.  As long as you pay
        your premiums each year you can renew until the maximum age
        specified in the policy.

        Other policies, especially group term life policies, can be
        canceled by the policy writer under various conditions specified
        in the contract.  And, of course, any policy has conditions
        under which they won't pay a benefit even if you pay your
        premiums.  For example, some policies won't pay a benefit for an
        HIV related death unless you test negative for HIV after you
        apply for the insurance (but you can take an AIDS test at any
        time and gain the coverage).

        					B.J.
        Czech spelled eye

Since the computation is made on base pay I would *assume* that deductions for
LTD will be the same amount each week even though your gross for the week may
be more due to standby and/or overtime? (No, I don't get OT, I'm a WC4).

Lee

    I just received my Disability booklet.  This may be a simplistic view,
    but... 
    
    Why not print this info in plain English on one sheet of paper ie;
    
    Pay this amount  = Receive this benefit.
    
    I wonder how many were involved and how long it took them to design and
    print this wonderful brouchure that will take me the wekend to read and
    understand?
    
    Not to mention the meetings that are set up to explain the brouchure!
    
    Why can't we just do things in a simple and concise manner?
    
    Sometimes we are our own worst enemy.   Oh by the way, how much did it
    cost the Corporation to produce this brouchure?

    I read through the DIGITAL DISABILITY PROGRAM brochure, and
    am confused by one thing.

    It's my understanding that if you are (certainly for fully,
    and maybe for partially) disabled, you will receive some
    amount from social security.  It is my hear-say
    understanding, that these LTD numbers are net after any
    social security.  For instance, if I enroll in digital's 50%
    LTD coverage, and am disabled, and if ss paid 20%, digital
    would pay 30% to bring me up to 50%.

    IT DOES NOT SAY THIS IN THE BOOKLET.  Nor is there a
    disclaimer saying something like 'review detailed plan
    documents' for complete information.

    Is this brochure intended to be an offer of the plan, such
    that if I accept there is a contract?  If so, in my opinion,
    I would receive (with legal assistance) the digital specified
    50%, 75% or 100% LTD payment PLUS social security.

    I'm not a lawyer, but I have many books in the picture behind
    me.

    	- Lee
          

    Well, remember with any social security disability claim, there is a
    5-month waiting period. My father became totally disabled. Waiting for
    5 months to get that first lump-sum check was horrible. LTD keeps your
    pay coming during that 5 months.
    
    It would be nice if they would give us the implementation details. This
    includes synchronization of SS benefits.

    
    
       I have to agree with a few notes back.  We are a computer company
    and once again failed to use our own resources.
    
    It sure would have been nice to get a one page (cheaper that the
    bookelt).  "This is your LTD information. Based on your current
    $xxxx.xx monthly/weekly salary if you choose one of the following
    packages this will be your weekly deduction"
    
    $xxxx.xx PLAN A:  = $xx.xx per-week
    
    Etc...etc..etc...
    
    No, we have War and Peace sent out to XXXXXX number of employess, who
    now will try and figure out this mess instead of giving us the
    simple details.
    
    FLAME -OFF, but I had better things to do this weekend than read this
    booklet.
    
    Bob

re .37

There's a lot more to it than what your weekly deduction will be.  There are
some questions that DEC can't answer for you -- you need to know how the
program works and what your own circumstances are likely to be to make the
best decision.  You also have to know how much risk you're willing to take.
I'll confess that I also had better things to do with my weekend, so I don't
know if the booklet gives enough information to let you make a wise decision.

    I just changed my disability in VTX and it gives the approx. cost both
    weekly and yearly, for each person.  So you can find out how much it
    will cost.  Also, had other info.  You don't have to change your
    benefits when you log in.
    
    Derek

    
    One more Question that I can't find an answer to. Why is the benefits
    of the old program tax-free income, and the benefits of the new plan 
    taxable income?
    
    

    re: .40
    We paid for the old plan with post-tax dollars; we'll pay for the
    new plan with pre-tax dollars.
    
    Under the old plan, the money got taxed first; in the new plan,
    it gets taxed when somebody collects LTD.

    re: .40
    
    Because previously, you paid the LTD portion with after-tax dollars. 
    Now the 1st 50% is being paid by Digital and the optional parts are
    paid by you with before-tax dollars, and as such, the IRS considers
    income provided in either form to be taxable income.
    
    One thing that bothers me is that I can't opt to pay the optional part
    with after-tax dollars.  A quick calculation indicates that in my case,
    If I'm out on disability, for each week I'm out, I will pay taxes on
    the income that more than offset the money I saved in 1 year by using
    pre-tax dollars for my premium :-(
    
    The other thing is that my personal policy is designed to kick in after
    the old Digital STD policy stops.  This meant that my personal policy
    kicked in after 6 months.  Now, I have 3 choices:  Buy the optional
    stuff thru Digital and lose some of the benefits when my personal
    policy kicks in, thus making my per $ cost higher, or, see if I can
    simply pay a higher premium on my personal policy to make it kick in
    sooner, rather than having to reapply for a new policy with a shorter
    elimination period, or figure out how I can live on 50% of my income,
    minus taxes, for the 3 month period between the Digital 100% pay and my
    personal policy kicking in.
    
    Bob - not enjoying this exercise much at all

RE:.40

The difference is how the policy is paid for.  You were buying the old
policy with after-tax dollars.  The new policy is being bought by Digital
and you with pre-tax dollars.  Uncle Sam wants his cut one way or the other
so since he doesn't get it up front with the new plan, he gets it when
there is a payout.

Lee G.

	Note that if you are permanently disabled, there is a 
	higher than normal probability that you will have medical
	expenses high enough to overcome the 7.5% (I think) threshold
	to be deductible, and these deductions will reduce the 
	tax Uncle Sam collects. Not a great way to get a tax deduction, 
	though.

					Tom_K

     I can see some of this as a cost cutting move by the company
     to reduce its co-payment amount for this benefit. Everyone has
     to bite the bullet of outrageous health insurance. What confuses
     me is why the move to a "pre-tax" method of payment when the 
     tax savings amounts to a pittance from your weekly check yet 
     you wind up taking a horrendous hit in taxes if and when you
     have to rely on the benefit for an income ....

     It's irritating enough in these times to have an additional 
     expense on my budgeted income.. But why a program with a 
     double whammy ?? It's bad enough to have to dig deeper to cover 
     yourself, but why a program that also penalizes you with having
     to pay taxes on the other end also ?? I fail to see the wisdom in 
     switching the plan to one that winds up taking money away from 
     you when you need it most...Can someone out there give me a 
     valid reason as to WHY this part has been changed ????

     And I can speak to this first hand .. About 4 years ago I severely
     broke my leg and ankle in about 6 places. It left me out of work
     for almost 10 months.. The problems began when the DIGITAL check
     stopped and the LTD kicked in.. Keep this in mind since these are 
     things the "book" doesn't tell you...

     Prudentional only pays you ONCE a month at the end of the month.
     They force you to apply for Social Security disability ( and you 
     must provide them with proof of the application, as in if you 
     don't, they will cut your insurance check off) If SS denighs the 
     claim  (which they will if it's a short term disability) then 
     Prudentional forces you to go through the appeal process. The 
     problem with that is that when you hit the second appeal you must 
     hire a lawyer AT YOUR EXPENSE.. They do this in so that they may 
     REDUCE their payment to you by the amount that SS winds up giving
     you. This is for insurance moneys owed to you via the premiums you 
     have paid them each week... But they have the right to do this under 
     the contract.. Also be aware if Prudential "feels" that you haven't
     been aggressive enough in pursuing the SS benefits, they will REDUCE
     your check the amount they feel that SS should be giving you ..

     And then if you have ANY of your insurance with METPAY stand by...
     When your DEC check stops, the insurance payment to METPAY stops..
     I found this out when METPAY sent me a nasty gram that said my 
     car insurance was canceled due to non payment .. After a few calls
     to attempt to let them know what was happening I find that their 
     attitude is that if they don't get their payment as part of the 
     deductions program, you are no longer part of the DEC program.
     Which means you LOOSE the DEC group rate reduction in your rate,
     and now the balance of whole bill is due. And be appraised that 
     Prudential will NOT send you car insurance payment to METPAY...

     Add to this, I was NOT on one of the HMO programs. So as soon as I 
     out of the hospital everything goes to a 80/20 split with you picking 
     up 20 % of the medical bills as well as the normal expenses such as
     the mortgage, heat, electrical and food....

     This is not a play at sour grapes folks, I am just doing this as
     an eye opener to those of you that are in a single source income
     situation such as myself.. Remember this occurred back when I received 
     a full check for 26 weeks before I hit LTD. Once on LTD, I was getting
     almost an equal amount to my regular take home because it WASN'T TAXED
     and the medical insurance was automatically covered ..  

     Had the program been this new one I could have been in trouble very 
     quickly. Especially with them subjecting your 50 or 75 % of pay to 
     taxes and insurance costs also. Knowing this I am almost forced to
     take the B option at a much greater expense to insure I have an 
     equitable amount of "take home" pay should something like this happen
     to me again..And believe me after the pain and aggravation of having 
     it happen once I take great precautions not for it to happen again.

     But it was a rude eye opener.  Look at the numbers .. and see that 
     you are getting less with the new 75 % plan than the old 66% without
     taxes and insurance plan.. Its a tough choice to make ...But banks
     now adays don't care and the paper is loaded with forclosed propertys.

     Is there anyway we can change this plan to after tax dollers payment
     and not be subjected to the tax hit in case we need to use it ??

                                                  Bob B     
    

    re .37 & .39,
    
    Yes, it sure would be nice to USE our Komputers.  As .39 said, the VTX
    registration system DOES tell you your GROSS PRE TAX cost, but that
    isn't what most people will find interesting.  Apparently, the VTX
    utility has access to your payroll file and simply multiplies your
    gross pay by .004 or .009 to arrive at a weekly rate.  What it does
    NOT do is examine your tax rate(s), check if you currently have LTD,
    etc., and tell you the NET change in your take-home pay.  I guess I'm
    just asking for too much  :^).

    Re .45:
    
    > Can someone out there give me a valid reason as to WHY this part has
    > been changed ????

    Yes, it saves both you and Digital money.  The new option B provides
    net benefits that are very similar to the old LTD option.  Consider
    that with the former LTD, you would be paid 66% of non-taxable income. 
    With option B, you get 100% of taxable income.  The highest tax rate is
    33%, so you'll have 67% after tax.  You'll actually get more than that,
    since few people are in the 33% rate, and deductions reduce that even
    more.
    
    Further, the operator of the plan, whether it is Digital or some other
    company, will make more money.  They take some amount in in premiums
    and pay some amount out in claims.  As long as they operate at a
    profit, the premiums are larger than the claims.  Which is the larger
    amount to tax?  Premiums are larger; paying taxes on them would be more
    than paying taxes on claims.  So making the claims taxable means the
    government gets less; there is more for the plan operator.  And that
    means they don't have to raise the prices to you as much to make a
    profit.
    
    > And then if you have ANY of your insurance with METPAY stand by...
    > When your DEC check stops, the insurance payment to METPAY stops..

    The new plan continues your payroll deductions for health, dental, et
    cetera for at least a year; maybe more.
    
    > Look at the numbers .. and see that  you are getting less with the
    > new 75 % plan than the old 66% without taxes and insurance plan.
    
    The old 66% non-taxable plan is roughly equivalent to the new 100%
    taxable plan.
    
    
    				-- edp

re .47:

>    With option B, you get 100% of taxable income.  The highest tax rate is
>    33%, so you'll have 67% after tax.

In NH maybe, but not in states with income tax.
    
>    Further, the operator of the plan, whether it is Digital or some other
>    company, will make more money.  They take some amount in in premiums
>    and pay some amount out in claims.  As long as they operate at a
>    profit, the premiums are larger than the claims.  Which is the larger
>    amount to tax?  Premiums are larger; paying taxes on them would be more
>    than paying taxes on claims.  So making the claims taxable means the
>    government gets less; there is more for the plan operator.  And that
>    means they don't have to raise the prices to you as much to make a
>    profit.

Are you sure?  On what basis do insurance companies pay taxes?  Corporations
usually pay taxes on their profits.  You imply that they can choose whether
to pay taxes on premiums (income) or claims (expenses).  Most companies
pay taxes on profits (premiums - claims).

    Re: 35 "It is my hear-say understanding, that these LTD numbers are net
            after any social security."
    
    I just got my brochure and on page 4 it says "The coverage amount you
    select is a combination of the benefits from all these [state or
    federal government] sources.."

I just talked to an insurance agent who has two 
alternatives.  The first was a "loaded plan" which
included 
	own occupation (not just "any other position the COMPANY 
		identifies you are capable of performing by virtue of your 
	        skill training and experience")
	partial disability
	options to buy more with no evidence of 
		insurability
	COLA
	nursing home coverage
	etc 

The second was a "stripped plan" which eliminated
the partial disability and COLA feature.  For
me the stripped plan was about 13% less than the 
pretax cost of Option B.  The loaded plan is about 14%
more than Option B.  The net cost is higher than B because of
the tax effects.

I used an amount that represented 66% of 50% of my salary. 
I agree with earlier noters who think that it is better to pay
with post tax dollars to get tax free income should a disibility
occur. While the net cost is higher, I think it is worth it. 


I also observe that the rates are quoted as amount per hundred of 
your salary.  Of 100% of your salary vs the benefit amount which 
is 50% of your salary. Thus the actual cost appears to be $.90 x 100%
of your salary for 50% benefit or $1.80/100 of benefit amount. Or $93/yr
per hundred of weekly benefit amount. 

Anybody check with the IEEE group benefit plans?  

    re: .46 Computer modeling of actual benefit
    
    Beware that additional income (working spouse) and deductions (kids,
    mortgage) can distort the examples in the pamphlet considerably, and
    the VTX system really wouldn't have this kind of information available. 
    The only way I found to get any realistic handle on benefits was to sit
    down with my 1991 tax returns and refigure the numbers based on
    disability income levels.
    
    For a very simplifed model, not specific to any state, look at the end
    of reply .22.
    
    re: .47 Yes, it saves both you and Digital money.
    
    For a two-income professional couple, the new plan is decidedly worse. 
    In the hypothetical model used in the insurance booklet, Plan B
    coverage (more expensive premium than today) gives after-tax benefits
    just about equal to the current plan.  Again, see .22.  In
    Massachusetts, I believe that state income taxes would be higher than
    in the pamphlet example, so it is possible that some people cannot buy
    the equivalent of today's coverage.
    
    Wes Plouff

    "$VTX DISABILITY_US" gives me "There is no page with 
    that keyword"
    
    db
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                                                                               

    .52 >     "$VTX DISABILITY_US" gives me "There is no page with 
    .52 >      that keyword"
  
 VTX hasn't got its error messages quite straight.  It's trying to say
 "couldn't connect because the appropriate VTX server is too busy at the
 moment, try again later."  But it gets a bit tounge-tied and just blurts out
 the first thing that comes into its little mind.
 
 	- Bruce
 

    don't type the dollar sign...
    
    -sandy
    

    nevermind...I typed the dollar sign and got in!  I guess you must have
    too by now....
    
    -sandy
    

re: .48

> Are you sure?  On what basis do insurance companies pay taxes?  Corporations
> usually pay taxes on their profits.  You imply that they can choose whether
> to pay taxes on premiums (income) or claims (expenses).  Most companies
> pay taxes on profits (premiums - claims).

I think the thread of explanation got a little twisted here.
It looks like the argument is sound, but I don't see how it applies to 
the insurance company, but to the insured.
Let's say 1000 of us get together and each pay $1 a week for insurance,
and that one of us gets disabled and collects $700 per week.
The other $300 stay with the insurance company for costs and profits.
If our $1 was pre-tax, the government hasn't taken its cut yet,
and expects to get that cut from the $700 payout.
If the $1 was after tax, then "we" as recipients (insurance lumping us all 
into the same pool) have paid our taxes on the $700 and it's not so much
tax-free as already tax-paid.
But what about the $300 the insurance company keeps?  Some of it goes
into costs, and some is profit to the company.  Do they get/have to account
for profit differently whether it was paid for with pre- or after-tax
premiums?

- tom]

    Re .48:
    
    > You imply that they can choose whether to pay taxes on premiums
    > (income) or claims (expenses).
    
    No, I didn't imply that; I was writing about what amounts taxes were
    paid on, not who paid them.  Compare the two plans.  The old way,
    customers pay taxes on premiums, and the insurance company pays taxes
    on premiums-claims.  The new way, the insurance company pays taxes on
    premiums-claims, and customers pay taxes on claims.  It's cheaper to
    pay taxes on just premiums-claims and claims than on premiums and
    premiums-claims.  Actually, premiums-claims will be larger in the case
    where they are pre-tax premiums and claims, but you can bet the
    insurance company will offset this by taking deductions, earning
    interest on the difference before it pays taxes, et cetera.  Basically,
    the longer you can keep money out of the hands of the government, the
    better off everybody involved is.
    
    
    				-- edp

	Re. the rates for Options A & B: the multipliers (.4 and .9) are 
	applied to the *whole* salary. Since these options only cover the
	extra 25 or 50% of the salary, shouldn't the multipliers be only applied
	to those portions of the salary?

	Put another way, the effective rates are actually 1.2 and 1.8 per
	100 dollars of salary that we are trying to insure. Or, that Digital
	is passing the complete premium to us when we choose Options A or B.

	Or, am I missing something here?

    Digital is paying for the entire cost of the first 50% of your entire 
    base pay. 
    In theory, the plan works out that the company pays the first .90 for
    50% of coverage for you (or whatever the actual cost is for the
    company) and you have the opportunity to pick up the other 50% coverage
    at a cost of .90. Therefore, the company pays .90 for 50% and you pay
    .90 for 50%.

        Re: .60

>	Put another way, the effective rates are actually 1.2 and 1.8 per
>	100 dollars of salary that we are trying to insure. Or, that Digital
>	is passing the complete premium to us when we choose Options A or B.

        I believe your first sentence is correct, except that the
        effective rates should be 1.6 and 1.8.  Your second sentence
        is incorrect, we only pay the premium on the optional part.

        Saying .4 and .9 results in an easier calculation that saying
        `1.6 times 0.25 of your salary' and `1.8 times 0.5 of your salary'. 
        I don't Digital is trying to hide anything as the actual benefit
        is clearly stated.

        					B.J.

    I think that we are also missing the other end of this .. That
    is when April 15 rolls around your still paying taxes on the 
    money.....

    To whit... They take the X amount cost premium out of your pay
    each week before they deduct the taxes against the ballence amount..
    But in essence what are they taking out.?? But the weekly contribution
    that will be somewhat close to the total taxes for the year owed to 
    the Feds and state (if you have state tax) ... This is akin to you
    claiming another deduction .. They take less out in taxes each week
    but you still OWE taxes againt the total gross you made for the year.

    In short if you make 50 K a year your still going to owe taxes on
    50 K for the year even if they reduce the amount taken out of your
    check by a couple bucks each week...  Or am I missing something here ?
    Can you (as in the old days) subtract the premium amounts right off 
    the top and not have to pay taxes against them ??

                                            Bob B 

    re: .62
    
    >Or am I missing something here ?
    
    Yep. The IRS regs section 125 allow for pre-tax payment of certain
    items. The money used to pay those items is not used to calculate
    your tax liability.
    
    J.B.

	... when I read about "taxable benfit", or "pre-tax" deduction:

	1. If benefits from a pre-tax deduction is taxable, should we be lis-
	   ting all our money from the medical/dental plan on the 1040?  That
	   has been pre-tax for a couple of years!  If not, what makes it dif-
	   ferent from the new disability plan?

	2. What's the logic behind letting a few $$$ a week of after-tax deduc-
	   tion generate HUNDREDS of $$$ of tax-free benefit (current plan,
	   right?), versus taxing at normal rates hundreds of $$$ in benefits
	   because the few $$$ per week to buy it were pre-tax??????  Well,
	   this is the IRS, so maybe "logic" is a bad word!  :>)

re .62:

As .63 points out, your pre-tax deductions reduce your taxable income.
Take a look at your pay stub tomorrow.  Not all your income is reported
as taxable.

re .64:

>	1. If benefits from a pre-tax deduction is taxable, should we be lis-
>	   ting all our money from the medical/dental plan on the 1040?  That
>	   has been pre-tax for a couple of years!  If not, what makes it dif-
>	   ferent from the new disability plan?

The difference is that if you get LTD, you actually get a cash benefit.
If you file a medical or dental claim, it goes to pay your provider.
Medical and dental expenses are (theoretically) deductable.

One interesting sidelight is our medical insurance premiums used to be
deductable as a medical expense (with the limitation that applies to all
medical expenses -- 7.5% of AGI).  Since they've been deducted pre-tax,
they're no longer deductable.

>	2. What's the logic behind letting a few $$$ a week of after-tax deduc-
>	   tion generate HUNDREDS of $$$ of tax-free benefit (current plan,
>	   right?), versus taxing at normal rates hundreds of $$$ in benefits
>	   because the few $$$ per week to buy it were pre-tax??????  Well,
>	   this is the IRS, so maybe "logic" is a bad word!  :>)

The IRS is going to tax it on one end or the other, but not on both ends.

What about Workman's Compensation and this "NEW" plan

<Background Information>

I'm a Wage Class 3 employee.  I had a "JOB-RELATED" injury in July of 1987.  
Finally had major back surgery in November of 1991.  Prior to surgery I was on
and off short-term disability.  The longest I was ever on disability prior to
surgery was 11 weeks.  After surgery I was on disability for 17 weeks.  The
Digital Workman's Compensation Administrator at my location told me prior to
being placed on disability my benefits would breakdown as such:

First 13 weeks 100% salary continuation (Taxable)
Second 13 weeks 80% sick-accident benefit (Taxable)
After 26 weeks Long-Term-Disability benefit starts (if enrolled, I was) 66.6%
of current salary until I return to work (Non-Taxable)

What I really received:

First 13 weeks 100% of salary/benefits (Taxed)
Second 4 weeks 0% of salary (benefits were paid)
During the 17 weeks of Disability I received every two weeks a check from
DEC's Disability Insurance carrier (Liberty Mutual) for 47.3% of my salary
For the first 6 checks I had to give to DEC, the other three checks were mine.
I never did reach the LTD portion to find out how it works.  But it was quite
a shock to go from 100% to 47.3% when I was expecting 80%.  But, this is water
under the bridge.

<New Disability Program>

After receiving my copy of the new benefit package I was confused to how it 
handled "ON-THE-JOB" injuries.  I went to my personnel specialist and was told
that all options also covered Workmen's Compensation.  In other words, were I
to choose option B I would receive 100% of my salary for 26 weeks and then LTD 
would kick in at 66.6% (Non-Taxable).  At least to me, I wouldn't mine paying 
taxes on 13 more weeks of 100% income, then paying no taxes on 47%.

<Final Remarks>

I'm not trying to say which plan is best for everyone, I just want to give 
people an opportunity to think about salary protection and disability

Rick Wright
CSC - Colorados Springs, CO

    I'm not sure if this or 2008 is the right place to post this...
    
    I have a few questions about the new plan, one or two of which are of
    great importance to my eventual selection. Now I can ask the local HR
    rep, but I am concerned that if I get what turns out (in the long run)
    to be an incorrect answer, even in writing, I have no recourse. So my
    question here is, from whom can I get authoritative, binding, answers?
    
    Dave (who got bit once by a verbal answer that was incorrect re:HCRA)

	Is the choice of the LTD coverage subject to annual review, like
	HCRA, DCRA, etc are currently done?

	If yes, does it matter if the employee is under STD/LTD at the time
	of selection?

	If the answer to the second question is No, then what is wrong with
	the following reasoning?

	I choose Digital core coverage now. Since there are barely 13 weeks
	left in the year after the date the new policy takes effect, if I
	go on STD, I still get my 13 weeks of coverage upto end of '92. 
	
	In the meantime I can choose the appropriate option for the next year
	depending on my condition. 

    re.66  You were given bad information. The first 13 weeks of a workers
           comp claim you would get 100% (taxable). Then whatever option
           you choose for LTD would kick in (taxable). We are being asked
           to repay Digital the difference of what we got from workers comp
           and what we are suppose to get from our LTD.
    
    re.68 I left a message on your machine with my number on it. BTW, If you get
          bad information in writing from a personnel person you definitely
          have a recourse to get the situation resolved. Corporate Benefits
          will work these type of issues.   

    re: .69
    Our personnel rep emphasized that LTD will not have
    open enrollment every year like the medical plan choices.
    Only if/when your family status changes will you be able
    to change your LTD. Status changes include marriage, divorce,
    birth of children, for instance.
    	You need to make a reasonable decision during this
    enrollment period!
    
    		Dick
    

    re.71 Thats good information. But, you are allowed to drop/lower your
    coverage. Therefore, if you choose the 100% option now (option B) you
    could in fact make changes. 

I still haven't seen anyone attempt to answer my earlier question so I'll try
here one more time.

I expect to be TSFOed before the September 11th disablility enrollment deadline.
Does the existing coverage continue, or do I have to select one of the new plans?
Disability coverage does go on during my "extended" coverage period, doesn't it?

Come to think of it, the 11th is expected to be my last day-of-work.  Does that
change anything?

/Marty

    Re .72: But, you are allowed to drop/lower ...
    
    I can only find where is says that I can CANCEL the additional
    coverage.  I don't see where is says I can LOWER my coverage.

Re .72 and .74: 

I just talked to my PSA about this, because this confused me too.  She
told me, after confirming it with a Benefits Specialist, that if you sign
up for Option B , you ARE allowed to drop the additional coverage at a later
date, and assume the core (50%) coverage provided by DEC.  But, you are NOT 
allowed to LOWER your coverage to Option A at any time after your initial
enrollment.

    .75 Can you send me a note in my mail account telling me who your psa
        and your benefits specialist are so I can call them directly?
    
        You can in fact lower your coverage (100% to 75%).
    
                                 John

    re.73  I must have missed your question or I would have answered it
           sooner. The answer is neither. You can't be covered for LTD
           once you are identified for TFSO. If you have LTD coverage (current
           or new LTD plan) your deductions for LTD will stop the week you are
           identified for TFSO. 
    
                                                                              

    re.75  You might want to tell your benefits person to check the first 
           Q and A's sent out by corporate on August 19th, question 9
           reads;
    
         Q.  What type of family status change would allow changes to
             Disability coverage?
         
         A.  Employees can drop or reduce the amount of their disability
             benefit at any time. Employees can add coverage only if the
             disability coverage selection is related to the change (i.e.,
             a single employee gets married and, because there is more
             reliance on his/her income, additional disability coverage is 
             required.  
                      

    RE: .76
    
    John, I sent the info you requested to your mail account.  Maybe you
    can clear up the confusion!
    
    Thank!
    

    re.79 Yes, as you know i've tried to get in touch with the person who 
    gave you that info. I spoke to a different person in that office and it 
    was clear to me that they wern't clear on this portion disability. I
    told them the way it is (you can lower or drop coverage) and they
    wanted to double check my info and get back to me. As of yet they
    haven't. 

    re.80 I just received a call that confirmed that we can in fact lower
    or drop LTD coverage at any time. Therefore, we can lower (100% to 75%)
    at any time and we can drop (100% to 50% or 75% to 50%) at any time.
    
    
                           John

    These Q&As were sent out to everyone in our building in a general
    distribution, with no restrictions, so here they are.
    
Date:	01-Sep-1992
Posted-date: 01-Sep-1992
Precedence: 1
==========================================================================
                            DISABILITY Q's and A's
============================================================================

- -  Is going on LTD considered a change in family status that would allow a       
   change in medical/dental benefits?  i.e. An employee goes on LTD and can
   no longer afford dependent medical coverage (because they only have the 
   50% core coverage), could they drop it and still retain their individual       
   coverage?

   Employees are only allowed to make changes from family to single coverage 
   if they have a qualifying family status change.  Going on Disability is 
   not considered a family status change.

- -  Why are the rates based on 100% of my base salary when I'm only purchasing 
   an additional 25% or 50% of my base salary?  Why are the new rates so much 
   higher than the current rates?

   The cost to Digital to provide the 50% core benefit is $.46 per $100. of 
   base salary.  To provide the 75% option, the actual cost is $.86 per $100. 
   ($.46 from Digital and $.40 from the employee), and the actual cost is 
   $1.36 to provide the 100% option ($.46 from Digital and $.90 from the 
   employee).

   If we made no changes to the current plan, we would have asked employees 
   to pay substantially more for their coverage and would not have resolved 
   any of the outstanding problems.

- -  What if someone's claim is denied or they disagree with the approved 
   length of the disability period?

   The employee may appeal the decision by filing a written request for a 
   review with the U.S. Benefits Delivery Manager.  This procedure is 
   described in Chapter 14 of the 1991 edition of "Your Benefits Book."

- -   Do LTD deductions cease after 13 or 26 weeks of disability?  

    LTD payroll deductions cease after 13 weeks.  The reason is that 
    deductions stop once a person is receiving the long term disability 
    benefit.

- -   Can SAVE and stock deductions continue during disability?

    SAVE and stock payroll deductions can continue. The % of deduction for 
    both SAVE and stock will be applied against the salary the person earned 
    PRIOR to becoming disabled, not against their disability benefit if it 
    differs.  Employees can reduce or drop their SAVE or stock deductions as 
    they wish, according to the rules we have for changing or dropping these 
    deductions.

    Since both SAVE and stock contributions must be made through payroll 
    deductions, these deductions will cease if an employee receives 
    disability benefits from other sources, i.e., social security, and their 
    disability benefit is not large enough to accommodate the payroll 
    deduction for SAVE and stock.

- -   Will disability premiums continue during a LOA?  

    Employees will not pre-pay their disability deductions for an unpaid LOA, 
    since they are not eligible for benefits during an unpaid LOA.

- -   If an employee is disabled during an LOA and the disability extends 
    beyond LOA end date, what will their coverage be?  

    If an employee is disabled during an LOA and disability extends beyond 
    LOA end date, their coverage will be what they had in place prior to the 
    LOA.

- -   Can an employee on LOA who becomes disabled end the LOA early and begin 
    collecting disability benefits prior to the planned LOA end date?

    An employee can end his/her leave of absence early, but must return to 
    work as an active employee prior to being eligible for disability 
    benefits.

- -   Will the 13 week rehabilitation period apply to returns from both shorter 
    and longer term disability?

    The purpose of the rehabilitation period is to provide a bridge between 
    disability and a full time work schedule.  We anticipate that in most 
    cases the maximum rehabilitation period will be 13 weeks.  Any situation 
    which falls outside these guidelines would be reviewed by Digital and its 
    Disability vendor.

- -   How is the rehabilitation benefit calculated?
    
    If an employee is on rehabilitation status within the first 13 weeks of 
    disability, he/she continues to receive 100% salary continuation.  For an 
    employee on rehabilitation, after week 13, he/she  will be paid for hours 
    worked.  This amount will be subtracted from the employee's regular base 
    salary and the disability benefit will be the appropriate percentage, 
    i.e., 50%, 75%, or 100%, of the difference between hours worked and 
    regular base salary.  

- -   What type of family status change would allow changes to Disability 
    coverage?

    Employees can drop or reduce the amount of their disability benefit at 
    any time.  Employees can add coverage or increase coverage only if the 
    disability coverage selection is related to the change, i.e., a single 
    employee gets married and, because there is more reliance on his/her 
    income, additional disability coverage is required.

- -   Are employees who are injured at work eligible for 13 weeks of salary 
    continuation?

    Employees with both job and non-job related illnesses or injuries are 
    eligible for salary continuation for 13 weeks.

    However, if employees receive benefits from Worker's Compensation, they 
    will be expected to return those monies to Digital.

- -   Is the 24 month nervous and mental benefit the maximum paid by the 
    program?

    Yes, unless the patient is confined to a hospital at the end of the 24 
    month period, the benefits will end.

- -   Will employees currently on disability continue with the same method of 
    payment under the new disability program?

    These employees will continue to receive the disability benefits 
    available from the plans that were in place at the time their disability 
    began.

- -   When an employee goes on to longer term disability, will he/she receive 
    payment monthly, as with our current plan?

    No.  They will continue to receive weekly checks.

- -   At what point will the cost center no longer be responsible for mailing 
    disability checks to employees' homes?

    For shorter term disabilities, managers are responsible for mailing 
    disabled employees their checks.  We are exploring the possibility of an 
    automated process for longer term disabailities.


    

    	I think the tax effects on the LTD costs and benefits in examples
    	1-4 if the Info Guide are misleading.
    
    	First of all, the tax savings in figures 1 and 2 are on the
    	order of 42+%.  It assumes that we will not be paying FICA on 
    	the LTD premiums.  I may be wrong, but I don't think the LTD
    	premuims will be exempt from FICA witholdings.  Sure they will
    	be exempt from fed and state tax, but not FICA.  I saw somewhere
    	in this conference that the 42+% comes from 28 fed + 6.65 mass
    	tax + 7.65 FICA.
    
    	Secondly, it is assuming that ALL dollars are getting taxed at 28%
    	(or whatever) federal rate.  Look at the $30K example.  how much
    	of that person's income gets taxed at 28%.  Very little if any.
    	Most gets taxed at 15%.  Some gets taxed at 0% because of
    	deductions.
    
    	For most people, the savings will be 15% fed, plus your state
    	tax.  You folks in Mass, you should recompute the numbers using
    	21 or 22%, not 42%.
    
    	Now look at the taxes that figures 3 and 4 say you'll pay on the
    	benefits.  It looks like they are not taking into account state
    	tax at all.  I can understand doing that if state used to tax
    	the old LTD benefits, because then all things are equal.  But
    	I know that in Colorado, I only have to pay state tax (5%) on
    	whatever I had to pay federal tax, so under the old program I
    	wouldn't have had to pay state, but now I do.
    
    	And what about FICA?  Were the old benefits subject to FICA
    	witholdings?  I suspect not.  Are the new benefits subject
    	to FICA witholdings?  I believe so.
    
    	I'd sure like some definitive answers to what used to get witheld
    	from the old benefits with respect to FICA and state, and what
    	will get witheld from the new benefits.  I'd also like confirmation
    	that we will still have to pay FICA on the premiums we pay 
    	towards the optional LTD coverage, and that the benefits bulletin
    	is therefore misleading.
    
    	Joe Oppelt

    RE: .83-
    
    	I agree; I stated my abbreviated, aggrevated, perhaps over
    emotional response in .7 early on. I was ridiculed.
    
    	Your comments hit the nail squarely- the bottom-line varies
    depending upon the tax situation of each person and their domicile.
    
    	I take particular exception to the scolding attitude regarding the
    (alleged) fact that po' ol' Prudential took a beating on DEC's expiring 
    LTD policy, so now the Travelers rate has to be higher to offset losses
    Prudential experienced? WHAT? Is it DEC's loss if Prudential had to
    pay? I'll bet Travelers was/is MOST interested on health and age
    statistics on DEC employees (not to mention an expected headcount)
    before providing coverage.
    
    	As the Firesign Theater skit said: "You're not paying more, you're
    getting less. What was 5 is 2, what was 2 is 1, what was 1 is nothing.
    Now I'm going to repeat that for those of you on drugs...."
    
    Phil (not bitter, mind you.)

    In the BENEFITS BULLETIN  July 1992 it states in the "How we
    got here" section 1st bullet, "The charge employees pay per $100
    of coverage under the current LTD plan has not increased since 1986,
    due to a rate garantee with Prudential."
    
    I have a bulletin dated June 24, 1991 from Edward J. Brady,
    US Employee Benefit Programs Manager, stating "On July 1, Digital's
    Long-Term Disability (LTD) premium rate will increase from
    $.34 to $.36 for each $100 of base weekly salary. If you are
    currently enrolled in the LTD Plan, this new premium rate will begin
    in your July 11 pay statement."00000
    
    
    I don't understand this seeming error. It certainly does look like 
    we don't even have the facts straight from the people responsible 
    for this new program.
    

    
    It could be that that was an increase that was planned into the
    agreement made in 1986 which, if the case, means that the bulletin
    in July this year simply meant that Prudential and Digital had
    locked in premium rates back in 1986.
    
    
    Steve
    

    RE: .86
    
    Steve, nice spin!
    
    Marc H.

   >  "The charge employees pay per $100 of coverage under the current LTD
   >  plan has not increased since 1986, due to a rate garantee with
   >  Prudential."
    
    So what?  Why should the rate go up over time?  Are people more likely
    to go onto LTD now than in 1986?  If not, there is no reason for an
    increase in rates.  Salary increases don't matter since we pay a
    percentage or our salary, not a fixed amount.  When we get a salary
    increase, we pay more for the LTD protection.
    
                            August G. Reinig

>    So what?  Why should the rate go up over time?  Are people more likely
>    to go onto LTD now than in 1986? 
    
    	With today's litigious society, does this question really have to
    	be asked?

    As DEC downsizes, will the LTD costs increase?

Something in the back of my mind says," As the previous LTD program
was Employee-Pay All, when a person went out on LTD my current payments
payments contributed to their current benefits." 

I have a hunch this method is the same as used in Social Security 
payments. Current workers pay for previous employees' income.

If this is the case, we are not paying for insurance per se, instead
we are paying for a benefits program out of an ever-decreasing pool.

    
    Re: .90
    
    Wouldn't the ever decreasing pool also mean that the risk changes as
    well?   Which would affect the cost?  No.
    
    Steve
    

>          <<< Note 2048.89 by CSC32::J_OPPELT "I saw the hoodoos." >>>
>
>>    So what?  Why should the rate go up over time?  Are people more likely
>>    to go onto LTD now than in 1986? 
>    
>    	With today's litigious society, does this question really have to
>    	be asked?

Has society's litigiousness changed markedly in merely six years ('86-'92)?
I think not.
But what's the connection?  This is disability insurance, not liability.

- tom]

>   <<< Note 2048.90 by USCTR1::RTRUEBLOOD "Rollyn Trueblood DTN 297-6553" >>>
>                  -< Decreasing Pool==Increasing Payments?? >-
>...
> If this is the case, we are not paying for insurance per se, instead
> we are paying for a benefits program out of an ever-decreasing pool.

That's all insurance EVER is, with certain modifications for capital reserves
to cover fluctuations in claims (like the Hurricane Andrew disaster).
Long term payments (LTD) are supposed to be paid out of interest 
on the capital reserves and by lump-sum set-asides when disability occurs.

That's also why we use an insurance company instead of being self-insured
(at eiother the personal or company level), to spread the risk among
a large population.

- tom]

    question:  the ins co that is handling our ltd is also handling the ltd
    of many other people in many other companies?  if so, then it only
    stands to reason thatit's much like life insurance or auto ins? we pay
    for everyone's ltd?  this explains the increase in deduction as we now
    have to deal with a much larger organization and a much larger possible
    recipient of benefits base?
    
    All asked in the form of questions and sorry it was more than one.
    
    Reg.

    ref. previous. 
    Doesn't make sense. First I don't think the company would be that
    heartless. Second, when you are on LTD the insurance company is
    paying your salary not Digital as far as I understand it, and third,
    if your have no chance of ever returning to work due to you medical
    condition what difference would if make whether your job went away
    or not?

>                      <<< Note 2048.94 by STOKES::BURT >>>
>
>    question:  the ins co that is handling our ltd is also handling the ltd
>    of many other people in many other companies?  if so, then it only
>    stands to reason thatit's much like life insurance or auto ins? 
>    we pay for everyone's ltd?  

Yes, and they pay for ours.

>    this explains the increase in deduction as we now
>    have to deal with a much larger organization and a much larger possible
>    recipient of benefits base?

No, we are joining a population of insurance users.  We will contribute both
risk and funding (we all will pay premiums, some of us will collect benefits).
Our mix may or may not match that of the current population.
Normally the details our premiums reflect the expected risk/contribution ratio
our additions to the population effect.  Yes, there is extra overhead,
but the level of overhead SHOULD be increased by less than the direct
proportions of the expanding size of the population.  
Also, fluctuations in financial exposure SHOULD be lessened by increases 
in the population.

Why do rates go up?  Because of some combination of what we are told
is true and the rest of the story.  (that's as cynical as I care to get
just now.)

- tom]

    
    Re: .95
    
    I think what this means is that if you are TFSOd then LTD is not
    a benefit any longer available to you.  You can continue medical
    by law.
    
    If you are OUT on LTD, then your benefit continues until you are
    declared able to return to the job that you left.  If while you
    were out, your job went away then you could be TFSOd when you
    return.  No?
    
    Steve
    

    re .98
    I'll buy that. Sounds reasonable to me.

    Re: the last 10-15 or so replies.  You're all missing a crucial piece
    of information.  Traveller's is not the new LTD insurance carrier. 
    There is no insurance carrier.  DEC is self-insuring all its new
    disability programs.  Read again: DEC is the insurer!  Haven't read
    that anywhere in the mounds of documentation, A1 memos, bulletins, etc.
    have you.  Do some of the seemingly strange twists to this new and
    improved program make more sense now? Examples: $.40 per weekly $100 of
    salary for 75% coverage and more than double the cost ($.90) for
    exactly double the extra coverage (100%).  DEC's exposure is
    proportionally greater under 100% coverage due to net difference
    actually paid out by DEC. Workman's comp., Social Security, California
    and other similar state disability benefits all must be repaid to DEC.
    Also, ever wonder why under the new disability programs you won't
    receive a monthly insurance co. check, but continue to receive a DEC
    paycheck instead?  Again, there is no isurance company.  Our payroll
    deductions now go directly to DEC's coffers...

re:                     <<< Note 2048.100 by CGVAX2::CARLTON >>>

>    Again, there is no isurance company.  Our payroll
>    deductions now go directly to DEC's coffers...

So? many companys are self insuring. What is your point? Would you feel
better if our money went into an insurance companys coffers?
DEC is betting that the amount paid out + admin costs are < or = premiums
paid in.

- George

	So assume the worst, and say that 5 years down the line, Digital
	gets WANGed and finds itself in Chapter n bankruptcy. What would
	that mean for those persons who became eligible for benefits?
	Would they be SOL?

				Tom_K

    Tom K.
    
    I'm no lawyer, but it seems they'd be waiting in line with the other
    creditors...

re .102

    
I believe that just like insurance companys, DEC would be required to have
$n in some sort of account to handle claims. Sort of showing that they
are solvent. 

What would happen if 5 years down the line John Hancock went belly up?
what would happen then?

- george

>What would happen if 5 years down the line John Hancock went belly up?
>what would happen then?

	Probably the same thing. In which company do you have more confidence
	that it will be solvent in 5 years?


					Tom_K

>>What would happen if 5 years down the line John Hancock went belly up?
>>what would happen then?

>	Probably the same thing. In which company do you have more confidence
>	that it will be solvent in 5 years?

I'd rather not say right now.... thanks.

But, I like everybody else have a choice. I can buy my health insurance from DEC
or somebody else. The benefit of buying it from DEC is cheaper rates (at least
right now). The benefit from somebody else might be solvency.

Roll them dice!!!!!

- George

    
>I believe that just like insurance companys, DEC would be required to have
>$n in some sort of account to handle claims. Sort of showing that they
>are solvent. 

Are you sure about this, george?  I remember around about the time that DEC
went self insured for Health benefits that there was a 60 minutes show on
companies that did this.  One of the concerns raised by 60 minutes was that 
self insured companies were not covered by the same regulations as the 
insurance industry.  For example, self insured companies could drop 
benefits during a long term illnesses and not be breaking any regulations or 
laws.

I think this is one of the questions that needs to be answered.  Are 
companies that are self insured for long term dissability covered under
the same regulations as a standard insurance company?  Are the benefits as
safe for the insured?  Are they backed by the government or other agencies?

al

    Does anyone else in Notesland recall a recent story where a "self-
    insured" company (in Texas??) dropped the maximum coverage for an
    employee to $5000 after being diagnosed with AIDS?
    
    I seem to recall it was on its way to the US Supreme Court, but so far
    all verdicts had indicated it was entirely legal...

    During the session at MSO on long term disability coverage I asked what
    would happen to the payments if Digital went belly up.  The individual
    giving the presentation did not know but stated that she would get back
    to me. Very near the last date on which one could enroll in the program
    I and several others got a mail message indicating that corporate was
    still researching the question.  I never received an answer.  I would
    suggest that the program is not backed by a fund which Digital makes
    payments to.  I would also suggest that this is probably true of all
    benefits which Digital is not required by law to insure.
    
    Ken  

    re: .108
    
    Yes.  This was a Houston man who has since died.  His estate has filed
    for a hearing before the U.S. Supreme Court.  They are still waiting to
    see if the Supreme Court will hear the case.
    
    Bob

re .-1

This is now old news - but for completeness of the thread ...

The US Supreme Court declined to review the case - therefore the law that
allows self-insured companies to operate with less protection for the insured
than regulated insurance companies is valid under law.

    re: .-1

    It is valid only for the area of the country that was under the
    jurisdiction of the court that ruled on the case.  It does not set a
    precedent for the US as a whole as the Supreme court did not rule on it
    one way or the other.  Refusing to take the case is not a ruling by the
    court.

    Also the reason insurance regulations do not apply is because no
    insurance was involved.  Self-funding (incorrectly called
    self-insurance) of a medical plan is not insurance so insurance
    commissions have no jurisdiction.  The issue would be over the
    contractual obligation the company had to an employee and whether
    illegal discrimination against a protected disability was being
    practiced.