Case Studies

The Employer

Headquartered in New York City, this diversified media and information services company focuses on creating and distributing authoritative and engaging content to consumers and businesses in the United States and throughout the world.  The company comprises of business units across a range of media, including: news and information services, book publishing, digital real estate services, and digital education that are distributed under some of the world’s most recognizable and respected brands.  The employer delivers its premium content to consumers across numerous distribution platforms consisting not only of traditional print, but also through an array of digital platforms including websites, applications for mobile devices, tablets and electronic readers.

The employer has six distinct business units with their own cultures and branding.  Although benefit plans are uniform among these business units, they are communicated separately through each unit’s benefits team.

The Group Long Term Disability (LTD) Benefit

The Group LTD plan has the following features:

• $12,500 maximum monthly benefit
• 60% replacement ratio
• Base salary replacement only
• Employer-paid premiums resulting in taxable benefit payments

The Group LTD plan design is adequate for most employees.  For many executives, though, the Group LTD leaves coverage gaps because of their significant bonus compensation and high tax rates.

The Need

Close the coverage gaps for executives through enhancement of the employer’s Long Term Disability (LTD) benefit by:

• Increasing the benefit maximum
• Adding bonus compensation protection
• Providing tax free benefit payments
• Increasing the replacement ratio
• Adding an element of portability

The Challenge

The employer wanted to roll out a new Executive Disability benefit to 700 of their most highly compensated executives; those making $200,000 or more.  Thus they needed to be sure that communications regarding the benefit were sophisticated and high quality while the overall enrollment was executed flawlessly.  The communications needed to be customized for the six distinct business units and then approved by each of the separate benefits staffs.

In addition, the firm was consolidating payroll platforms so they needed an experienced administrative partner to work with the new, single platform for all the business units.

The Solution

The benefits groups decided to launch an Executive Disability benefit insured with Individual Disability Insurance.  They engaged Covala Group to enroll and administer the benefit.  The new benefit is employer-sponsored so the individual disability policies are provided on a guaranteed standard issue basis and the firm negotiated a 20% premium discount on the policies.  The benefits groups leveraged Covala Group’s capabilities to achieve their enhancement goals and outsource all enrollment and administration work.

The Outcome

• The new Executive Disability benefit:
  • Covers bonus compensation
  • More than doubles the LTD benefit maximum (the maximum increased by 120%)
  • Increases the replacement ratio to 75%
  • Pays tax free benefits
  • Provides full portability through individual disability policies
• Over 25% of all eligible executives elected the new benefit (industry average is about 13%)
• A high quality enrollment was completed at no cost to the employer
• All payroll deductions were charged correctly and in the correct payroll cycle

Detailed Description

Making the Launch of a New Benefit Easy…and No Cost

The employer was aware that many executives with significant bonuses who were in higher tax brackets had gaps in their disability coverage.  And they knew that a supplemental, Executive Disability benefit would address this issue.  The challenge was how to offer such a benefit without adding to an already complex benefits offering and without incurring additional cost.  A voluntary individual disability insurance benefit supported by an enrollment firm with an exceptional track record was the best solution.

With regards to the coverage, the firm negotiated a product solution – portable individual disability insurance at a 20% discount with no medical exam.

With a product solution in place, the benefits teams turned their attention towards the enrollment which could be challenging due to a number of factors:

• Multiple business units: the six business units required their own logos, customized communications, separate communications’ signatories, and benefits team reviews
• Size: there were over 700 executives eligible
• Many locations: Eligible executives were located throughout the United States
• New payroll platform: the benefit needed to be added to a new, consolidated payroll platform that was going live the first month in which the Executive Disability billing would start

A Specialty Firm as the Outsource Solution

The Executive Disability offering was to be made to the highest paid, most influential and vocal employee segment.  So the execution of the enrollment and administration had to be perfect.  The benefits teams wanted an enrollment firm that had worked on large, complex enrollments in the past and which had deep experience working exclusively with executives.  So they sought out the best qualified partner.

For the enrollment and administration, the employer chose Covala Group, a specialty firm, with 21 years of experience, exclusive focus on Executive Disability benefits and extensive work with Fortune 500 firms.  Covala Group also has deep experience working with outsourced payroll and benefits administration platforms at vendors such as Aon Hewitt, ADP, Empyrean and Xerox Business Services.

In addition to providing a full outsource solution for the enrollment and administration, Covala Group’s superior track record with voluntary enrollments enabled the firm to negotiate significant underwriting concessions from the insurance carrier, including a waiving of the participation requirement.

Employer Achieves Their Business Goals Through Covala Group’s Expertise and Support

Covala Group met with the benefits teams representing all the business units to describe the Executive Disability benefit and develop an implementation timeline.  Weekly phone calls were conducted with each benefits group as well as with the outsourced payroll entity throughout the implementation process.

Covala Group produced customized mail communications and websites for each of the six separate business units.  All communications were approved in writing by the appropriate business unit benefits team and the insurance carrier.  As part of its quality assurance process, Covala Group coordinated User Acceptance Testing of the benefit calculations and the communications with each of the business units.

The enrollment timeline needed to be executed perfectly as it began right after Labor Day and had to wrap up before the employer’s annual enrollment period.

Covala Group delivered a series of communications to eligible executives that allowed them to learn about and enroll in the Executive Disability benefit through whichever medium they preferred – paper, web-based, email or phone.  Covala Group conducted multiple live webinars for interested employees and also made a pre-recorded webinar available.  Onsite meetings for interested employees at selected sites were conducted.  Covala Group associates handled over 150 phone and email inquiries.  Responses were personalized, expert and quick.

The benefits teams at each of the business units felt they were managing the communication and enrollment process but did not need to expend significant resources on the execution.  Covala Group enabled them to spend their time on more important issues such as the payroll platform integration.  The benefit was a hit with the eligible executives.  Over 25% enrolled in the benefit.  No complaints or concerns were received from this financially sophisticated group with high service expectations.

To learn more about Covala Group and its Executive Disability capabilities please call Mike Griffin at 212-527-8011.