Aetna and ICS to Help Employers Throw a Lid on SDI
By Robert Warne - July 23, 2002We all know that staring at the sun can harm one’s eyes. Well just as harmful is staring at the deductions that come out of a paycheck. One of the deductions you’ll find lumped in with Federal and State taxes and other withholdings is for California State Disability Insurance (SDI).
SDI provides benefits to workers who suffer a loss of wages when they are unable to work due to a non work-related illness or injury, or a medically disabling condition from pregnancy or childbirth.
Changes in the California state-mandated disability program (SDI) have made it economically more feasible for employers to set up self-insured alternatives. Both the wage base and employee contribution rate have increased in the last three years, which means employees are contributing twice as much today. Employee contributions are slated to increase again in 2003.
Self-insured employers that maintain a statutory disability benefits plan for their employees now have another option to what the state is offering.
Aetna Group Insurance announced July 22 that in conjunction with Innovative Care Systems (ICS), a Torrance based third party administrator, it would be offering a stop-loss disability program to California companies.
The new program is called the Aggregate Disability Stop-Loss Plan. It is the first plan offered by an insurer that will allow an employer to place a pre-determined ceiling on how much a it will have to pay for a disability claim.
Stop-loss coverage is triggered when a group's disability claims reach a certain threshold based on a percentage of its annual estimated claims cost.
The plan will initially be offered to companies with at least 500 employees and is designed to help employers contain the increasing cost of providing employee benefits.
ICS will administer short-term disability claims on a self-insured basis and Aetna will insure long-term disability claims and stop loss coverage.
“Reducing spiraling benefit costs is the number one priority for many California employers,” said Stephen Miller, regional marketing manager, of Aetna Group Insurance.
“With ongoing increases in the salary cap and employee withholding rate, the state's SDI program is becoming a burden. But without claim experience information, employers are disadvantaged because they don't know whether by opting out of the state plan they would face significant losses or would have savings they could use to expand benefits or lower employee cost. Our new self-insured plan combined with stop loss plan solves that problem. No matter what your claim experience may be, you're covered, Miller explained.”
“For companies that consistently demonstrate better disability experience than the State, but need to have a fixed cost, this new option provides that needed financial ceiling,” said Deborah Kweller, president of ICS.
“To this end, we see many companies being able to accumulate excess employee contributions that can be used to fund new employee benefit programs or alternatively reduce employee contributions, Kweller added.”
Aetna and ICS will offer California employers an evaluation of plan design and employee census data to determine the feasibility of opting out of the state plan, and will tailor a disability plan to meet employers' specific business needs and the risk characteristics of their employee groups. Additionally, employers will receive periodic reports to help them track claim experience and determine their claim spending.
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