1. In collaboration with and commissioned by MassMutual
SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage
In collaboration with and commissioned by MassMutual
September 18, 2013

2. Introduction
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 26).
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—Compensation and Buy-Up Coverage ©SHRM2013

3. Introduction (continued)
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.
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—Compensation and Buy-Up Coverage ©SHRM2013

4. Compensation and Buy-Up Coverage
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

5. Key Findings in Compensation and Buy-Up Coverage
What percentage of organizations includes variable compensation in the income protected by their long-term disability plan? Almost one quarter (22%) of organizations indicated variable compensation is protected by their long-term disability plan. The law firms/legal services, financial services and wholesale/retail trade industries were more likely to include variable compensation in the income protected by their plan.
Among organizations with a plan protecting variable compensation, 93% indicated the compensation is protected at the same percentage as the base plan selection. Organizations with 100 to 499 employees were more likely to report protecting variable compensation at the same percentage as the base plan selection. 
Are organizations offering “buy-up” coverage through their group long-term disability program? Overall, 21% of organizations indicated offering this coverage: 16% of organizations offered this coverage to all employees, and 5% reported this coverage is provided to select employees.
Among organizations that offer “buy-up” coverage, 77% reported that less than 50% of their employees participate in this coverage.
Are organizations concerned that their base long-term disability program does not fully cover employees who have income in excess of the plan limit? Less than one-third (29%) of organizations reported concern that employees with income in excess of the plan limit are not covered. Slightly more than one-half (51%) of organizations indicated that their benefits provider has discussed this with them.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

6. What do these findings mean for HR professionals?
Are select employees being left underinsured with the organization’s long-term disability plan? Currently only a small portion of organizations cover variable compensation (e.g., bonuses and incentive pay) in their long-term disability plan. For employees, especially executives and employees working on commission who rely heavily on such methods of compensation, coverage under traditional long-term disability group plans may not be enough. HR professionals may need to assess if alternative coverage plans should be offered to select employees who may desire additional coverage.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

7. Is variable compensation, such as bonuses or commissions, included in the income protected by your base long-term disability plan?
Note: n = 3,243. 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.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

8. Still thinking about your base plan, is variable compensation, such as bonuses or commissions, included in the income protected by your base long-term disability plan?
Law firms/legal services, financial services and wholesale/retail trade are more likely than manufacturing; professional, scientific and technical services; and energy, gas and oil industries to include variable compensation in the income protected by their base long-term disability plan.
Comparison by organization demographics
Law firms and legal services (37%)
Financial services (33%)
Wholesale and retail trade (32%)
>
Manufacturing (14%)
Professional, scientific and technical services (14%)
Energy, gas, oil (13%)
Telecommunications (26%)
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

9. Is this variable compensation protected at the same percentage as the base plan selection?
Note: n = 617. Only respondents whose organizations offer a group long-term disability plan and include variable compensation in the income protected by their base long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

10. Comparison by organization demographics
Is this variable compensation protected at the same percentage as the base plan selection?
Organizations with 100 to 499 employees are more likely than organizations with 2,500 or more employees to protect variable compensation at the same percentage as the base plan selection.
Comparison by organization demographics
100 to 499 employees (97%)
>
2,500 to 24,999 employees (86%)
25,000 or more employees (86%)
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

11. What percentage of employees are “capped” by the maximum monthly benefit amount of your group long-term disability base plan?
Note: n = 2,525. Only respondents whose organizations offer a group long-term disability plan were asked this question. Percentages do not total 100% due to rounding. “Capped” indicates that employees earn more than the covered limit.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

12. Comparison by organization demographics
What percentage of employees are “capped” by the maximum monthly benefit amount of your group long-term disability base plan?
Organizations with 100 to 2,499 employees are more likely than organizations with 1 to 99 employees to “cap” 10% to 19% of employees by the maximum monthly benefit amount of their group long-term disability base plan.
Comparison by organization demographics
10% to 19%
100 to 499 employees (20%)
500 to 2,499 employees (21%)
>
1 to 99 employees (14%)
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

13. Do you offer “buy-up” coverage that is available through the group long-term disability program to all employees, some employees or none of your employees?
Note: n = 3,332. 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. “Buy-up” coverage indicates that this program does not include any supplemental individual long-term disability plans that the organization may offer.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

14. Do you offer “buy-up” coverage that is available through the group long-term disability program to all employees, some employees or none of your employees?
Smaller staff-size organizations are more likely than larger organizations to not offer “buy-up” coverage to any of their employees. Larger staff-size organizations are more likely than smaller organizations to offer “buy-up” coverage to all employees. The energy, gas and oil industry is almost twice as likely as wholesale/retail trade to offer “buy-up” coverage to all employees.
Comparison by organization demographics
Organization Staff Size
Organization Industry
Not offered
1 to 99 employees (90%)
100 to 499 employees (86%) >
500 to 2,499 employees (77%)
2,500 to 24,999 employees (65%)
25,000 or more employees (52%) -
500 to 2,499 employees (77%) >
2,500 to 24,999 employees (65%) >
Offered to all employees
500 to 2,499 employees (17%)
2,500 to 24,999 employees (27%)
25,000 or more employees (37%) >
1 to 99 employees (8%)
100 to 499 employees (11%)
Energy, gas, oil (25%) >
Wholesale and retail trade (13%)
2,500 to 24,999 employees (27%) >
Offered to some employees
25,000 or more employees (11%) >
500 to 2,499 employees (6%)
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

15. Approximately what percentage of employees participate in the “buy-up” coverage available through the group long-term disability program?
Note: n = 463. Only respondents whose organizations offer a group long-term disability plan and buy-up coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

16. Comparison by organization demographics
Approximately what percentage of employees participate in the “buy-up” coverage available through the group long-term disability program?
Organizations with 100 to 499 employees are more likely than organizations with 2,500 or more employees to have less than 50% of their employees participate in the “buy-up” coverage available through the group long-term disability program.
Comparison by organization demographics
Less than 50%
100 to 499 employees (86%)
>
2,500 to 24,999 employees (70%)
25,000 or more employees (63%)
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

17. What percentage of base salary is replaced by the base plan AND the buy-up amount combined?
Note: n = 495. Only respondents whose organizations offer a group long-term disability plan and buy-up coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

18. What is the maximum benefit amount per month of your combined base and “buy-up” coverage?
Note: n = 391. Only respondents whose organizations offer a group long-term disability plan and buy-up coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to rounding.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

19. Is the “buy-up” coverage paid for with . . . ?
Note: n = 574. Only respondents whose organizations offer a group long-term disability plan and buy-up coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

20. Is it a concern that your base long-term disability program doesn’t fully cover employees who have income in excess of the group base plan limits?
Note: n = 440. The only respondents asked this question were organizations that offer a group long-term disability plan and buy-up coverage, and the percentage of employees “capped” by the maximum monthly benefit amount of the group long-term disability base plan is greater than 0%. Respondents who answered “don’t know” were excluded from this analysis.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

21. Has your benefits provider discussed with you that your base long-term disability program doesn’t fully cover employees who have income in excess of the group base plan limits?
Note: n = 461. Only respondents whose organizations offer a group long-term disability plan and buy-up coverage were asked this question. Respondents who answered “don’t know” were excluded from this analysis.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

22. Do you currently have plans to talk to your benefits provider about your concerns?
Note: n = 199. The only respondents asked this question were organizations that offer a group long-term disability plan and buy-up coverage and that have not discussed with their benefits provider that their base long-term disability program does not fully cover employees who have income in excess of the group base plan limits. Respondents who answered “don’t know” were excluded from this analysis.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

23. Demographics
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

24. 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% 2% 4%
12%
78%
Part-time Employees
(n = 3,470)
66% 3% 5%
16%
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

25. Which of the following is closest to your job title?
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

26. Demographics: Organization Staff Size
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

27. Demographics: Organization Profit Status
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

28. Demographics: Organization Region
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

29. 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
Accounting / Architectural C 4%
Computer and Electronic Products/Technology D
Health Care Services E
Utilities
Information Services F 3%
Pharmaceutical and Medicine G 2%
Law Firms and Legal Services
Physician and Dental Offices 1%
Other industries
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.
n = 4,402
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

30. Demographics: Other
Does your organization have U.S.-based operations (business units) only, or does it operate multinationally?
Is your organization a single-unit organization or a multi-unit organization?
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%
U.S.-based operations only
66%
Multinational operations
34%
n = 4,387
n = 4,398
For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both?
What is the HR department/function for which you responded throughout this survey?
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%
Corporate (companywide)
74%
Business unit/division
15%
Facility/location
11%
n = 3,407
Note: n = 3,410. Percentages do not equal 100% due to rounding.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

31. In collaboration with and commissioned by MassMutual
SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage
In collaboration with and commissioned by MassMutual
Survey Methodology
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
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013

32. 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.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013
Disability and Executive Benefits Survey ©SHRM 2012 32

33. 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.
2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013
Disability and Executive Benefits Survey ©SHRM 2012 33

34. About SHRM Research
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2013 Employer Perspectives on Disability Benefits—Compensation and Buy-Up Coverage ©SHRM2013
Disability and Executive Benefits Survey ©SHRM 2012 34