SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits--Base Group Long-Term Disability Plans

SHRM Survey Findings: 2013 Employer Perspectives on
Disability Benefits—Base Group Long-Term Disability Plans
In collaboration with and commissioned by
MassMutual
September 18, 2013

In collaboration with and commissioned by MassMutual
• The 2013 Employer Perspectives on Disability Benefits survey, which was commissioned by
MassMutual, is a collaboration between the Society for Human Resource Management
and MassMutual.
• The survey was sent to a randomly selected sample of SHRM members from a variety of
industries. A response rate of 10% was achieved with 4,402 responses.
• The main purpose of this research was to gain a better understanding of organizations’
needs and gaps regarding long-term disability and executive benefits. The 2012 data were
collected from a sample including small-, medium- and large-staff-size organizations (see
slide 33).
• The findings are divided in the following topics:
 Base Group Long-Term Disability Plans
 Compensation and Buy-Up Coverage
 Supplemental Plan/Individual Disability Income
 Carrier Satisfaction/Changes
 Executive Group Life Benefits
2013 Employer Perspectives on Disability Benefits—Base Group Long-Term Disability Plans ©SHRM 2013 2
Introduction

• The results of each question are reported by the overall sample, and then, where
applicable, statistically significant differences by organization staff size, industry and region are
included. Only statistically significant differences with a sample size of 25 or more were reported.
• The results are based on respondents who indicated that they were either “extremely
knowledgeable,” “very knowledgeable” or “somewhat knowledgeable” about their
organization’s employee benefits plan. The results include respondents from publicly owned for-
profit or privately owned for-profit organizations only.
Introduction (continued)
Industries Organization Staff Size Region
 Accounting/architectural
 Computer and electronic
products/technology
 Energy, gas, oil
 Financial services
 Health care services
 Information services
 Law firms and legal services
 Manufacturing
 Pharmaceutical and medicine
 Physician and dental offices
 Professional, scientific and
technical services
 Telecommunications
 Utilities
 Wholesale and retail trade
 Other industries
 1 to 99 employees
 100 to 499 employees
 500 to 2,499 employees
 2,500 to 24,999 employees
 25,000 or more employees
 Midwest
 Northeast
 South
 West

2013 Employer Perspectives on Disability Benefits—Base Group Long-Term Disability Plans ©SHRM 2013
Base Group Long-Term Disability Plans
4

• Are organizations providing long-term disability coverage? Long-term disability insurance plans
supplement a portion of an employee’s income over an extended period for a disabling
condition. More than eight out of 10 (84%) of organizations reported offering a group long-term
disability plan for their employees.
 These plans are more prevalent among larger staff-size organizations and those in the
financial services and utilities industries.
• How are employees paying for their portion of the long-term disability base plan benefit? Overall,
69% reported employees are paying with post-tax dollars, 25% with pre-tax dollars, and 5% with a
combination of pre-tax and post-tax dollars.
• How long do employees need to wait before they can start receiving benefits under group long-
term disability plans? The majority (87%) of organizations reported employees must wait 60 or
more days, once they become disabled, before they can start receiving benefits under the
group long-term disability plan.
• Is the maximum benefit amount provided to disabled employees adequate? The vast majority
(83%) reported the maximum benefit amount they provide is adequate.
 Among organizations that did not believe the maximum benefit amount is adequate, 45%
indicated it does not adequately cover highly compensated employees, and 39%
indicated it does not provide enough to live on for most employees.
Key Findings in Base Group Long-Term Disability Plans

• Is the monthly maximum long-term disability benefit amount adequate for employees? Most HR
professionals believe that the maximum monthly benefit amount of their base group long-term
disability plan is adequate. Among the 17% that do not believe the plan is adequate, the main
reason was the plan’s lack of coverage for highly compensated employees. HR professionals
need to take into consideration additional options for highly compensated employees. These
options could provide an edge when recruiting and retaining this employee group.
• Will employees be left unprepared if there is a need to utilize long-term disability benefits?
Employees may decline to purchase long-term disability insurance because they do not see the
value, especially given the higher premiums. However, many employees may not fully
understand what the long-term disability insurance plans cover. It will be up to HR professionals to
communicate what kind of assistance their benefits can provide their employees.
What do these findings mean for HR professionals?

Does your organization offer a group long-term disability plan?
Note: n = 4,359. Respondents who answered “don’t know” were excluded from this analysis.
Yes
No
84%
16%

Note: Only statistically significant differences are shown.
Does your organization offer a group long-term disability plan?
Comparison by organization demographics
100 to 499 employees (84%)
500 to 2,499 employees (92%)
2,500 to 24,999 employees (96%)
25,000 or more employees (96%)
> 1 to 99 employees (69%)
500 to 2,499 employees (92%)
2,500 to 24,999 employees (96%)
> 100 to 499 employees (84%)
2,500 to 24,999 employees (96%) > 500 to 2,499 employees (92%)
Financial services (92%)
Utilities (91%)
Energy, gas and oil (90%)
Telecommunications (90%)
Manufacturing (87%)
>
Wholesale and retail trade (79%)
Other industries (76%)
Health care services (74%)
Physician and dental offices (67%)
Information services (90%) >
Physician and dental offices (67%)
Pharmaceutical and medicine (91%) > Physician and dental offices (67%)
South (88%)
Northeast (86%)
Midwest (85%)
> West (80%)
Larger staff-size organizations are more likely than smaller organizations to offer a group long-term disability plan
for their employees. Financial services and utilities are also more likely than wholesale and retail trade industries
to offer a group long-term disability plan for their employees. Organizations located in the South, Northeast and
Midwest offered these plans more than in the West.

Less than
$250,000
$250,000 to
$499,999
$500,000 to
$999,999
$1 million to
$1.499 million
$1.5 million to
$1.999 million
$2 million or
more
75%
11%
5%
3%
1%
5%
Considering only your current base plan, what was your 2011
aggregate expense for providing disability benefits to your
employees?
Note: n = 2,430. Only respondents whose organizations offer a group long-term disability plan were asked this question. Respondents who answered
“don’t know” were excluded from this analysis.

Considering only your current base plan, what was your 2011
aggregate expense for providing disability benefits to your
employees?
The general trend for aggregate expenses provided by organizations to employees increased as the staff size
of the organization increased. Smaller staff-size organizations were more likely than larger organizations to have
an aggregated expense of less than $250,000, for example.
Comparisons by organization demographics
Less than $250,000
>
500 to 2,499 employees (60%)
2,500 to 24,999 employees (30%)
500 to 2,499 employees (60%) >
2,500 to 24,999 employees (30%)
$250,000 to $499,999
500 to 2,499 employees (25%)
2,500 to 24,999 employees (21%)
>
$500,000 to $999,999
500 to 2,499 employees (7%)
>
2,500 to 24,999 employees (16%) >
500 to 2,499 employee (7%)
$1 million to $1.49 million 2,500 to 24,999 employees (12%) >
$2 million or more
2,500 to 24,999 employees (17%) >
25,000 or more employees (61%) >
2,500 to 24,999 employees (17%)

Approximately what percentage of the premiums for the base
long-term disability plan are paid for by the employee?
Note: n = 818. Only respondents whose organizations offer a group long-term disability plan were asked this question. Percentages do not total 100%
due to rounding. Note that only responses that were greater than 0% are shown in the graph above.
Based on 3,033 responses, 73% of the respondents indicated that employees pay 0% of the premiums for the
base long-term disability plan. Based on the 818 responses that were greater than 0%, the mean percentage of
the premiums for the base long-term disability plan that employees pay for is 80%.
1% to 25%
25% to 50%
52% to 75%
76% to 99%
100%
13%
14%
5%
2%
67%

Approximately what percentage of the premiums for the base
long-term disability plan are paid for by the employee?
It is more likely in smaller staffed-size organizations than in larger organizations for the employee to pay 0% of
the premiums for the base long-term disability plan. It is also more likely in the financial services industry than in
industries such as manufacturing for the employee to pay 0% of the premiums for the base long-term disability
plan.
500 to 2,499 employees (76%)
2,500 to 24,999 employees (72%)
> 25,000 or more employees (49%)
Financial services (83%) >
Manufacturing (69%)
Computer and electronic products/technology (82%)
Utilities (82%)
Professional , scientific and technical services (79%)
> Wholesale and retail trade (63%)

With post-tax
dollars
With pre-tax
dollars
A combination
of pre-tax and
post-tax dollars
69%
25%
5%
Is the employee portion of the long-term disability base plan paid
for . . . ?
Note: n = 821. Only respondents whose organizations offer a group long-term disability plan and whose employees pay more than 0% of the premium
for their base long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis.
Percentages do not total 100% due to rounding.

Is the employee portion of the long-term disability base plan paid
for . . . ?
Organizations with 2,500 to 24,999 employees are more likely than organizations with 100 to 499 employees to
pay the employee portion of the long-term disability base plan with pre-tax dollars whereas organizations with
100 to 499 employees are more likely than organizations with 2,500 to 24,999 employees to pay the employee
portion of the long-term disability base plan with post-tax dollars.
Post-tax dollars 100 to 499 employees (76%) > 2,500 to 24,999 employees (59%)
Pre-tax dollars 2,500 to 24,999 employees (33%) > 100 to 499 employees (19%)

With your base plan, once employees go on long-term
disability, for how many years do they receive benefits?
To age 65
To age 65 or
SSNRA*, whichever…
SSNRA*
Two years
Five years
Other
33%
24%
22%
12%
4%
4%
“don’t know” were excluded from this analysis. Percentages do not total 100% due to rounding. An asterisk (*) refers to Social Security Normal
Retirement Age, which varies from age 65 to age 67 depending on year of birth.

With your base plan, once employees go on long-term
disability, for how many years do they receive benefits?
Larger staff-size organizations are more likely than smaller organizations to provide benefits for two years once
an employee goes on long-term disability. Organizations with 100 to 499 employees are more likely to provide
employees with benefits until Social Security Normal Retirement Age than those with 2,500 to 24,999
employees.
Two years
2,500 to 24,999 employees (14%) > 100 to 499 employees (9%)
500 to 2,499 employees (11%)
2,500 to 24,999 employees (14%)
Social Security Normal Retirement
Age (SSNRA)
100 to 499 employees (25%) > 2,500 to 24,999 employees (18%)

How long do employees need to wait once they become
disabled before they can start receiving benefits under your
group long-term disability plan?
1 day to less than 30
days
30 to 59 days
60 to 89 days
90 to 179 days
180 to 364 days
365 days or more
9%
4%
12%
41%
33%
1%

Smaller staff-size organizations are more likely than larger organizations to require employees to wait 90 to 179
days before they can start receiving disability benefits. In addition, law firms/legal services and financial
services are more likely than manufacturing, telecommunications, wholesale/retail trade and utilities to require
the 90-to-179-day wait as are organizations located in the South compared with those in the Northeast.
Organization Staff Size Organization Industry Organization Region
1 day to less than 30
days
2,500 to 24,999 employees (8%)
- -
60 to 89 days - -
West (14%)
South (13%)
Midwest (13%) >
Northeast (7%)
90 to 179 days
100 to 499 employees (48%) >
500 to 2,499 employees (35%)
2,500 to 24,999 employees (29%)
Law firms and legal services (62%)
Manufacturing (35%)
Utilities (28%)
South (45%) >
Northeast (36%)Accounting/architectural (48%) >
Utilities (28%)
Professional, scientific and
technical services (49%) >
Manufacturing (35%)
Utilities (28%)

group long-term disability plan? (continued)
Larger staff-size organizations are more likely than smaller organizations to require employees to wait 180 to 364
days before they can start receiving disability benefits. Utilities are more than twice as likely as many other
industries to require employees to wait 180 to 364 days. Organizations located in the Northeast are more likely
to follow the 180-to-364-day wait than the Midwest, West and South.
180 to 364 days
500 to 2,499 employees (38%)
2,500 to 24,999 employees (49%)
Manufacturing (42%) >
Accounting/architectural (26%)
Professional, scientific and technical
services (20%)
Northeast (42%) >
Midwest (34%)
West (30%)
South (29%)
Utilities (85%) >
Accounting/architectural (26%)
Computer and electronic
products/technology (26%)
Information services (26%)
services (20%)
100 to 499 employees (28%) >
Pharmaceutical and medicine (46%)
Telecommunications (34%) >
services (20%)

Approximately what is the percentage of employees’ base salary
that is covered by your base long-term disability plan?
50% or less
51% to 60%
61% to 66⅔%
67% to 70%
Other
10%
57%
25%
6%
2%

Approximately what is the percentage of employees’ base salary
that is covered by your base long-term disability plan?
Smaller staff-size organizations are more likely to cover 51% to 60% of employees’ base salary through their base
long-term disability plan than larger organizations. Financial services; professional, scientific and technical
services; manufacturing; and other industries are more likely than utilities to cover at this percentage.
Organizations located in the Midwest, Northeast and South are more likely to cover employees’ base salary at
51% to 60% compared with the West, although the West is more likely than any other region to cover at 61% to
662/3%.
50% or less
2,500 to 24,999 employees (15%)
- -
500 to 2,499 employees (10%)
51% - 60%
100 to 499 employees (63%) >
2,500 to 24,999 employees (51%)
services (61%)
Manufacturing (60%)
Other industries (59%) >
Utilities (43%)
Midwest (60%)
Northeast (60%)
South (57%) >
West (50%)100 to 499 employees (63%) >
500 to 2,499 employees (54%)
61% - 66 2/3% - -
West (32%) >
South (24%)
Midwest (23%)
Northeast (23%)
67% - 70%
- -

What is the maximum benefit amount per month of your base
Less than $2,500
$2,500 to $4,999
$5,000 to $7,499
$7,500 to $9,999
$10,000 to $14,999
$15,000 to $19,999
$20,000 to $24,999
$25,000 or more
7%
14%
29%
12%
25%
7%
2%
3%
“don’t know” were excluded from this analysis. Percentages may not total 100% due to rounding.

What is the maximum benefit amount per month of your base
Smaller staff-size organizations are more likely than larger organizations to indicate that the maximum benefit
amount per month paid to employees through the base long-term disability plan was $5,000 to $7,499. In
addition, organizations with 1 to 99 employees were less likely than larger organizations to indicate the
maximum benefit amount as $10,000 to $14,999 per month. The computer and electronic products/technology
industry is more likely than manufacturing, other industries and wholesale/retail trade to indicate the maximum
as $10,000 to $14,999 per month as are organizations in the Northeast than the Midwest.
Less than $2,500 - - -
$2,500 to $4,999 -
Wholesale and retail trade (21%) >
services (10%)
Midwest (16%) >
Northeast (11%)
$5,000 to $7,499
100 to 499 employees (35%) >
500 to 2,499 employees (22%)
2,500 to 24,999 employees (19%)
- -
$10,000 to $14,999
500 to 2,499 employees (27%)
2,500 to 24,999 employees (27%)
Information services (35%)
Northeast (29%) >
Midwest (22%)
Computer and electronic
products/technology (37%) >
Manufacturing (21%)
services (32%) >
$15,000 to $19,999
500 to 2,499 employees (11%)
2,500 to 24,999 employees (11%)>
- -

Do you believe the maximum benefit amount is adequate?
Yes
No
83%
17%

Why don’t you believe the maximum benefit amount is
adequate?
It does not
cover/adequately cover
highly compensated
employees
It does not provide enough
to live on for most
employees
Benefits are taxable, so
employees get even less
than the benefit amount
Other
45%
39%
14%
2%
Note: n = 485. Only respondents whose organizations offer a group long-term disability plan and do not believe that the maximum benefit amount is
adequate were asked this question.

Why don’t you believe the maximum benefit amount is
adequate?
Organizations with 100 to 499 employees are more likely than organizations with 2,500 to 24,999 employees to
believe that the maximum benefit amount is not adequate because it does not cover/adequately cover
highly compensated employees.
It doesn’t cover/adequately cover
highly compensated employees
100 to 499 employees (54%) > 2,500 to 24,999 employees (33%)

Thinking about your base plan, which of the following is closest to
the definition of disability in your group long-term disability plan?
Any occupation—employees cannot
perform the material duties of their
occupation and are NOT gainfully
employed. If the employees return to
work in a new and unrelated
occupation, benefits are offset by new
earnings
Own occupation—the inability of
employees to perform the material duties
of their job, though they can return to
work in a new and unrelated occupation
and still receive benefits
Dual definition such as own-occupation
for some benefit period and changing to
any-occupation definition
43%
35%
22%

Thinking about your base plan, which of the following is closest to
the definition of disability in your group long-term disability plan?
Larger staff-size organizations are more likely than smaller organizations to indicate that the definition of
disability is “any occupation” in their group long-term disability plan. Smaller organizations are more likely to
adhere to the “own occupation” definition. Law firms/legal services are also more likely to use the “own
occupation” definition than other industries, telecommunications, wholesale/retail trade, manufacturing and
utilities. However, the utilities industry is more likely than financial services to use the “dual definition.”
Organization Staff Size Organization Industry
Any occupation —employees
cannot perform the material duties
of their occupation and are NOT
gainfully employed. If employees
return to work in a new and
unrelated occupation, benefits are
offset by new earnings
500 to 2,499 employees (41%)
-
Own occupation —the inability of
employees to perform the material
duties of their job, though they
can return to work in a new and
unrelated occupation and still
receive benefits
1 to 99 employees (42%) >
500 to 2,499 employees (34%)
2,500 to 24,999 employees (26%)
Computer and electronic products/technology (46%)
Manufacturing (29%)
Utilities (22%)
100 to 499 employees (38%) >
2,500 to 24,999 employees (26%)
25,000 or more employees (25%) Law firms and legal services (63%) >
Manufacturing (29%)
Utilities (22%)
500 to 2,499 employees (34%) >
2,500 to 24,999 employees (26%)
Dual definition such as own-
occupation for some benefit
period and changing to any-
occupation definition
500 to 2,499 employees (25%)
2,500 to 24,999 employees (29%) >
Utilities (35%) >

For dual definition, after how many months does the change to
the second definition occur?
Note: n = 475. Only respondents whose organizations offer a group long-term disability plan and use a dual definition in their group long-term disability
plan were asked this question.
Among organizations with a group long-term disability plan that uses a dual definition, on average, it takes two years
to change to the second definition.
Less than 1 year
1 year to less
than 2 years
2 years to less
than 3 years
3 years or more
4%
9%
78%
9%

Demographics

Approximately what percentage of regular, full-time and part-
time employees are eligible for employee benefits at your
organization?
Less
than
25%
25% to
49%
50% to
59%
60% to
69%
70% to
79%
80% to
89%
90% to
99%
100%
Full-time
Employees
(n = 4,182)
1% 1% 1% 1% 2% 4% 12% 78%
Part-time
Employees
(n = 3,470)
66% 3% 5% 1% 2% 3% 4% 16%

Which of the following is closest to your job title?
Manager
Generalist
Director
Chief Human Resource Officer
Vice President
Administrator
Supervisor
Associate Director
Specialist
Associate Vice President
Senior Vice President
Analyst
Chief Executive Officer
President
Chief Human Capital Officer
Senior Executive Vice President
Executive Vice President
Other
32%
23%
19%
9%
6%
2%
1%
1%
1%
1%
1%
1%
0%
0%
0%
0%
0%
3%
n = 4,394

Demographics: Organization Staff Size
1 - 99
employees
100 - 499
employees
500 - 2,499
employees
2,500 - 24,999
employees
25,000 or
more
employees
25%
33%
18%
17%
7%
n = 4,382

Demographics: Organization Profit Status
Privately
owned for-
profit
Publicly
owned for-
profit
72%
28%
n = 4,402

Demographics: Organization Region
Midwest
South
West
Northeast
35%
26%
22%
17%
n = 4,106

Demographics: Organization Industry
Percentage
Manufacturing 16%
Wholesale and Retail Trade 14%
Financial Services A
10%
Professional, Scientific and Technical Services 8%
Energy, Gas, Oil B
6%
Telecommunications 6%
Accounting/Architectural C
4%
Computer and Electronic Products/Technology D
4%
Health Care Services E
4%
Utilities 4%
Information Services F
3%
Pharmaceutical and Medicine G
2%
Law Firms and Legal Services 2%
Physician and Dental Offices 1%
Other industries 16%
n = 4,402
A Includes Banks, Insurance Companies, Securities and Commodities, Other Finance and Insurance Services categories.
B Includes Energy Extraction and Refining, Gas and Oil, and Other Oil, Gas, and Energy Extraction and Refining categories.
C Includes Accounting, Tax, Payroll Services and Architectural, Engineering categories.
D In the survey labeled as Manufacturing: Computer and Electronic Products/Technology.
E Includes Hospitals and Other Health Care Services categories.
F Includes Publishing, Motion Picture, Broadcasting (except Internet) and Other Information Services categories.
G In the survey labeled as Manufacturing: Pharmaceutical and Medicine category.

U.S.-based operations only 66%
Multinational operations 34%
Single-unit organization: An organization
in which the location and the
organization are one and the same.
26%
Multi-unit organization: An organization
that has more than one location.
74%
Multi-unit headquarters determines HR
policies and practices
64%
Each work location determines HR policies
and practices
4%
A combination of both the work location
and the multi-unit headquarters determines
HR policies and practices
33%
Is your organization a single-unit organization or
a multi-unit organization?
For multi-unit organizations, are HR policies and
practices determined by the multi-unit
headquarters, by each work location or by both?
Does your organization have U.S.-
based operations (business units)
only, or does it operate
multinationally?
n = 4,387
n = 4,398
Note: n = 3,410. Percentages do not equal 100% due to rounding.
Corporate (companywide) 74%
Business unit/division 15%
Facility/location 11%
n = 3,407
What is the HR department/function for
which you responded throughout this
survey?
Demographics: Other

• Response rate = 10%
• 4,402 HR professional respondents from a randomly selected sample of a
variety of industries in SHRM’s membership
• Margin of error +/- 2%
• Survey fielded: July 10, 2012 to August 3, 2012
SHRM Survey Findings: 2013 Employer Perspectives on
Disability Benefits—Base Group Long-Term Disability Plans
Survey Methodology

39Disability and Executive Benefits Survey ©SHRM 2012
About MassMutual
Founded in 1851, MassMutual is a leading mutual life insurance company that is
run for the benefit of its members and participating policyholders. The company
has a long history of financial strength and strong performance, and although
dividends are not guaranteed, MassMutual has paid dividends to eligible
participating policyholders every year since the 1860s. With whole life insurance
as its foundation, MassMutual provides products to help meet the financial needs
of clients, such as life insurance, disability income insurance, long-term care
insurance, retirement/401(k) plan services, and annuities. In addition, the
company’s strong and growing network of financial professionals helps clients
make good financial decisions for the long-term.

About SHRM
The Society for Human Resource Management (SHRM) is the world’s largest
association devoted to human resource management. Representing more than
250,000 members in over 140 countries, the Society serves the needs of HR
professionals and advances the interests of the HR profession. Founded in
1948, SHRM has more than 575 affiliated chapters within the United States and
subsidiary offices in China and India.

• For more survey/poll findings, visit www.shrm.org/surveys
• For more information about SHRM’s Customized Research Services, visit
www.shrm.org/customizedresearch
• Follow us on Twitter @SHRM_Research
About SHRM Research

SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits--Base Group Long-Term Disability Plans

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