Why do we write so much about non-evidence maximums (NEM) on employee group benefit plans? Because these heart-wrenching e-mails usually accompany a disability claim.
“… is unable to return to work and his LTD is not sufficient, is there any way he can update his medical now and have his disability adjusted?”
AFTER the disability happens is too late.
Within a two-week period, six disability claims (all from different companies) came though ALL with insufficient coverage. In all cases, the employees have access to their coverage details through their benefit booklet, the on-line portal, as well as being provided with the option of applying for additional coverage to the overall maximum according to their salaries.
Not one submitted a medical questionnaire to the insurance carrier for underwriting.
While the hardship is lack of money at the time of claim, many times, the motivation not to complete the form is based on money as well. The employee doesn’t want to pay more in premium for the additional coverage. However, for each and every claim, this is a regrettable choice.
· Truck driver with a right foot injury requiring surgery. He’s on a waiting list where the estimated time may be as long as a year, or longer. Due to the nerve damage, he can’t even drive modified. His disability claim is approved with coverage limited to $3,000, non-taxable a month. The overall maximum he could have received was $6,000.
· Salesperson, earning more than $12,000 a month pre-disability had a stroke. Both short- and long-term disability were applicable. The short-term maximum and non-evidence maximums (NEM) were the same, however, the difference between the NEM and overall maximum for long term disability was $5,300 a month. The NEM was limited to $4,700 and the overall maximum was $10,000. He is receiving only the $4,700 a month.
· A cancerous tumor is expected to be prolonged due to the treatment plan prior to potential surgery. The NEM in this case is $5,700 a month, with the overall maximum being $10,000. The $5,700, according to their salary is fairly close to what they would have received had they applied for more, but the “more” could make all the difference between disability PLUS financial hardship, compared to someone who can concentrate on healing and recovery.
· Emotional mental health claim transitioned from short term to long term with no expected return to work date. On this plan, the overall maximum matched the NEM at $5,000.
· Two claims were for immediate surgeries. One plan included maximum coverage to $5,000 with the NEM at $3,500 and the other had a NEM of $3,700, woefully insufficient to the employee’s expectations.
Non-evidence Maximum (NEM)
Most benefit plans have two maximums that apply to coverage. They are:
· non-evidence maximum (NEM); and
· a benefit maximum.
These maximums can apply to life Insurance, critical illness insurance, short term, and long-term disability coverage, as applicable according to your benefit policy.
Employees enrolling in coverage up to the NEM, do not need to inform or complete a medical questionnaire regarding their health. However, if applying for coverage over the NEM, plan members need to request and complete a health questionnaire. It is common in the industry to refer to this as providing the insurer with evidence, or “proof of good health”.
A benefit maximum is the cap on coverage available to covered employees. Plan members can apply for coverage over the NEM but up to the benefit maximum.
If plan members:
· do not apply for additional coverage; or
· do not qualify for additional coverage,
then they will still have coverage up to the NEM as listed in their benefit booklet. The NEM is the same for all members in the same class. It’s important to review the coverage available under your benefit plan and to consider coverage options.
How much is enough?
Deciding the overall maximum requires reviewing employee salaries and ensuring the coverage is available to match the salary expectations. In many plans, employers have the option to periodically increase their NEM limit as well as the overall limit, and it would be in the best interest of all for employers to check these numbers annually (the renewal is a golden opportunity for this) and update accordingly.
At least once a year, the employees should be reminded that they have the option to increase their coverage and need to be encouraged to refer to their benefit booklet, check their coverage outline profile, and to complete the questionnaire as required.
Let’s avoid the catastrophic by product of terminal illness with financial ruination.
“I don’t know what I should do. $2,370 barely makes ends meet and survive on. How do I do this without losing what little I have? I can’t pay for residence, let alone bills, gas for car to get to all my medical appts, my medicine is expensive and then cell phone, car insurance and I haven’t even mentioned food.”
Conversations like these are where we drive innovation in benefits. Let’s have a chat. Give us a call.
Note: this was written without the aid of Artificial Intelligence (AI)
Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment, taxation, legal vary accordingly. Please seek legal, accounting and human resources counsel from qualified professionals to make certain your legal/accounting/compliance interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.
