1. Strategic Benefit Planning for an Aging Workforce
Trisha Gibo, Esq.
Ryan Loeffers, Esq.
April 6, 2016

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January 18, 2019

3. EMPLOYEE DEMOGRAPHICS
Traditionalists/Silents
Born prior to 1946
Ages 71 or older
Baby Boomers
Born
Ages 52 – 70
* Based on statistics collected by Pew Research Center
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January 18, 2019

4. Increased Expected Retirement Age
AGING WORKFORCE
Increased Expected Retirement Age
Financial constraints
Inability to “downshift” into retirement
Lack of personal support system
Multiple dependents (adult children & aging parents)
High healthcare costs
Traditionalists (less than 4% of workforce)
Born prior to 1946 (Ages 67 or older)
Baby Boomers (39.8% of workforce*)
Born (Ages 48 – 66)
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January 18, 2019

5. Increased health concerns
IMPACT ON EMPLOYERS
Increased health concerns
Physical impairments
Impact of brain related injuries/illnesses
Increased absenteeism
Statutory Leaves (FMLA, HFLL, disability leave)
Extended Medical Leaves of Absence
Prevalence of disabilities
Employee’s unable to perform essential functions of the job
Unreasonable to provide accommodations
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January 18, 2019

6. Benefit Plan Tools for Transitioning Aging and Disabled Employees
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January 18, 2019

7. LEAVE OF ABSENCE & MEDICAL COVERAGE
Medical leave of absence
Paid leave (vacation, sick, PTO)
Unpaid leave under company policies
Continued medical coverage
Hawaii Prepaid Healthcare Act
Coverage for at least 3 months after the month in which disability begins
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January 18, 2019

8. TEMPORARY DISABILITY INSURANCE (TDI)
Requirement by Hawaii Statute
Wage replacement for non-work related injuries or illness
Eligibility
Worked in Hawaii for least 14 weeks
Paid at least 20 hours and $400 in the 52 weeks preceding first day of disability
Currently Employed
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January 18, 2019

9. TEMPORARY DISABILITY INSURANCE (TDI)
Benefits for statutory plans
7 day wait period
58% of employee’s average weekly wages (up to maximum)
Maximum benefit period of 26 weeks
Paid leave
Supplement TDI benefit (if allowed under company policies)
Continue medical insurance coverage for employee
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10. CAFETERIA PLANS
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11. CAFETERIA PLANS: LONG TERM DISABILITY INSURANCE (LTDI)
Relatively cheap “rider” insurance plan
Provides continued wage replacement
Effective after TDI benefits are exhausted
Apply for coverage before TDI benefits end
Eligibility
Physician certification of total disability
Must be unable to return to work
Currently employed
Copyright 2016 ES&A, Inc. All Rights Reserved Confidential and Proprietary
January 18, 2019

12. CAFETERIA PLANS: LONG TERM DISABILITY INSURANCE (LTDI)
Benefits
Waiting period varies
Commonly days
Percentage of wage replacement
Generally 60% of base wages
Duration of benefit
Able to return to work or social security retirement age
Continue medical insurance coverage for employee
Supplement with paid leave
Wait period or LTDI benefits (if allowed by policy)
Copyright 2016 ES&A, Inc. All Rights Reserved Confidential and Proprietary
January 18, 2019

13. CAFETERIA PLANS: LONG TERM DISABILITY INSURANCE (LTDI)
Offered through an IRC Section 125 Cafeteria Plan
Will be an ERISA plan that requires:
Plan Document
Summary Plan Description
Can allow employer and employee contributions
Insurance can be paid for with pre-tax dollars
Can contract with a service provider to:
Draft required ERISA documents
Administer the Plan
Educate your employees
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January 18, 2019

14. CAFETERIA PLANS: OTHER OPTIONAL BENEFITS
Other specialized benefits that can be provided through your Section 125 Cafeteria Plan:
Cancer Insurance
Accident Insurance
Hospitalization Insurance
Health Savings Account
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15. RETIREMENT PLANS
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16. RETIREMENT PLANS - OVERVIEW
Governed by federal tax law
Failure to follow the law will “disqualify” the plan
Loss of tax-exempt status
Generally cannot distribute benefits prior to “normal retirement age”
Exceptions:
Permanent disability
Early retirement with reduced benefits
Law allows but does not mandate the exceptions
Exceptions must be written into your retirement plan document
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January 18, 2019

17. RETIREMENT PLANS – DISABILITY RETIREMENT
Employee is able to reach their retirement benefits if they become permanently disabled
Employee is required to exit the workforce
Plan should also define “disability”
Combine with Social Security Disability benefits
Copyright 2016 ES&A, Inc. All Rights Reserved Confidential and Proprietary
January 18, 2019

18. RETIREMENT PLANS – EARLY RETIREMENT
Employee is at least age 55 and has severance from employment
Reduced monthly benefit may be concern for employees
Employee may not qualify for Social Security Disability
Copyright 2016 ES&A, Inc. All Rights Reserved Confidential and Proprietary
January 18, 2019

19. “Normal Retirement Age” is generally age 65
Retirement Plans – Lowering Your "Normal Retirement Age" (Certain Industries Only)
“Normal Retirement Age” is generally age 65
IRS regulations define “Normal Retirement Age” as “[the] age that is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.”
Common to have a lower “Normal Retirement Age” for physically intensive professions
i.e., construction industry
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January 18, 2019

20. NON EMPLOYMENT CONSIDERATIONS
Copyright 2016 ES&A, Inc. All Rights Reserved Confidential and Proprietary
January 18, 2019

21. SOCIAL SECURITY DISABILITY INSURANCE (SSDI)
Effective after other insurance benefits end
Application
Via phone or online through Social Security Administration
Apply before insurance benefits lapse
Eligibility:
Total disability: medical condition that is expected to last at least one year or result in death
Meet earnings requirement based on age or number of years worked
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January 18, 2019

22. NON-EMPLOYMENT CONSIDERATIONS
Connecting with family members
Reach out ask for help to transition the employee out of work and into retirement
Helping former employees feel valuable in the community
Develop relationships with local non-profits or community groups that can utilize elderly volunteers
Connect former employees with non-profits to stay active, develop new relationships, and feel valuable
Connect former employees to retiree groups
Unionized employees frequently have retiree groups established through their union
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January 18, 2019

23. NON-EMPLOYMENT CONSIDERATIONS
Disabled employees with no support system
Contact Adult Protective Services to assist with finding former employee long-term care
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January 18, 2019

24. ANY QUESTIONS? If you have any follow up questions, email us at
For access to these materials,
Please visit our website for more resources:
Our next webinar will be on May 4, 2016
Topic to be determined – stay tuned!
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January 18, 2019