Disability – Directors
 

Long-Term Disability 

Eligible Directors are provided with Core Long-Term Disability (LTD) Plan coverage, which is entirely paid for by the Company. You also have the option of electing increased LTD Plan coverage at your own expense. 

HOW THE LONG-TERM DISABILITY (LTD) PLAN WORKS 

Definition of Disability
In order to qualify for LTD Plan benefits, you must meet the plan’s definition of disability. For LTD Plan purposes, you are considered to be “disabled” if you are incapacitated due to a non-occupational sickness or injury, and you meet the following requirements: 

  • you are unable to perform the material duties of your regular occupation; and
  • you are unable to earn 80% or more of your indexed monthly earnings (as defined below). 

The Insurance Company may require that you be examined by a doctor or vocational expert to verify your disability. This examination will be conducted at the Insurance Company’s expense. 

Certain types of disabilities are not covered by the plan. See Exclusions and Limitations for more information.

Payment of Benefits
LTD Plan benefit payments are made on a monthly basis. These payments will begin after you have been continuously disabled for 90 days (the "elimination period").

If you qualify for LTD benefits, your benefit payments will begin as of the first day of the month following the end of the elimination period described above. 

The minimum monthly benefit payable under the plan is $100. The maximum monthly benefit payable under the plan is $20,000. 

The maximum period for payment of LTD Plan benefits depends on your age at the time you become disabled. The rules for continuation of LTD Plan benefit payments and the plan’s maximum payment period are explained in the Continuation of Benefit Payments section. 

PRE-EXISTING CONDITION
The LTD Plan does not cover a disability which: 

  • began within 12 months of the date that your coverage became effective; and
  • is due to a pre-existing condition. 

For plan purposes, you have a “pre-existing condition” if: 

  • you have an injury or sickness for which you incurred expenses, received medical treatment, care, or services (including diagnostic measures) or took prescribed drugs or medicines; and
  • you received the above care or treatment within the 3-month period immediately before the most recent effective date of your insurance. 

You can contact Human Resources if you have any questions concerning the LTD Plan’s pre-existing condition exclusion. 

CORE COVERAGE
The Company pays the full cost of your Core LTD Plan coverage. The amount of your monthly Core LTD benefit is determined as follows: 

60% of your monthly earnings up to a maximum of $20,000 per month

                                                                      less

Your Other Income Benefits

OPTIONAL COVERAGE
You have the option of increasing your LTD Plan coverage (the “buy-up” option). You pay for this increased coverage through after-tax payroll deduction contributions. 

The amount of your monthly optional LTD benefit is determined as follows: 

66-2/3% of your monthly earnings up to a maximum of $20,000 per month

                                                                      less  

Your Other Income Benefits

DEFINITION OF MONTHLY EARNINGS
Your “monthly earnings” means your monthly base pay that was in effect immediately before your date of disability. For plan purposes, your covered monthly earnings do not include: 

  • commissions;
  • bonuses;
  • overtime pay;
  • income received from sources other than the Company; or
  • any other extra compensation. 

Indexed Earnings
Your Indexed Earnings are used to determine whether you meet the LTD Plan’s definition of disability, as described under How the Long-Term Disability (LTD) Plan Works (above). 

First 12 Months: For the first 12 months that LTD Plan benefits are payable, your Indexed Earnings equal your covered monthly earnings. 

After 12 Months: After the first 12 months that LTD Plan benefits are payable, your Indexed Earnings are your covered monthly earnings, plus an increase applied on each anniversary of the date that your LTD Plan benefits became payable. The amount of this increase is the lesser of: 

  • 10% of your Indexed Earnings during your preceding year of disability; or
  • the rate of increase in the Consumer Price Index (CPI) during the preceding calendar year.       

OTHER INCOME BENEFITS
When your monthly LTD benefit is calculated, it will be offset (reduced) by your other sources of disability income. These “Other Income Benefits” include any amounts that: 

  • you receive (or are eligible to receive) under any salary continuation or accumulated sick leave benefit sponsored by the Company;
  • you receive (or are eligible to receive) for injury or sickness under any local, state, or federal law;
  • you receive from a retirement plan sponsored by the Company (except for 401(k) or other employee savings plan);
  • you receive under any franchise, group insurance, or similar plan;
  • you receive through settlement, judgment, or arbitration where a third party may be liable;
  • you receive under any work loss provision in mandatory “no fault” auto insurance; or
  • you, your spouse/domestic partner, and children receive (or are eligible to receive) as retirement income or loss of time disability income under Social Security, the Railroad Retirement Act, or other similar law (including Canadian law). 

You should contact the Insurance Company at 1-800-732-1603 if you have any questions about your Other Income Benefits and how they are determined. 

Exceptions
Payments from the following are not considered Other Income Benefits, and will not be deducted from your LTD benefit calculation: 

  • 401(k) plans, thrift plans, or profit-sharing plans;
  • tax-sheltered annuities;
  • stock ownership plans;
  • non-qualified plans of deferred compensation;
  • a retirement plan sponsored by another employer; or
  • Individual Retirement Accounts (IRA). 

LTD PLAN BENEFITS: HERE IS AN EXAMPLE
To illustrate how your Long-Term Disability (LTD) Plan benefit is calculated, assume that you become disabled under the terms of the plan, and: 

  • you have Core LTD Plan coverage (as described above);
  • your monthly earnings (as defined above) are $10,400; and
  • you have no Other Income Benefits (see above for examples). 

In this case, you would receive a monthly LTD Plan benefit of $6,240.00*. These payments will continue until the earlier of: 

  • the end of your maximum benefit period; or
  • the date that your benefits end for other reasons specified by the plan.       

*$10,400 x 60% = $6,240.00 

Optional Coverage Example
Assume that all the facts in the above example apply, except that you have purchased optional LTD Plan coverage (as described above). 

In this case, you would receive a monthly LTD Plan benefit of $6,934.00*. These payments will continue until the earlier of: 

  • the end of your maximum benefit period; or
  • the date that your benefits end for other reasons specified by the plan. 

*$10,400 x 66-2/3% = $6,933.68; $6,933.68 rounded to the next higher dollar = $6,934.00 

See Continuation of Benefit Payments for an explanation of the maximum benefit period and other circumstances under which your LTD Plan payments will end. 

Other Income Benefits
It is important to remember that your monthly LTD Plan benefit will be offset (reduced) by your Other Income Benefits as described above. For example, assume that the same assumptions used in the optional LTD Plan example apply, except that you are entitled to a Social Security disability benefit of $967 per month. 

Your monthly optional LTD Plan benefit would be determined as follows:

                  66-2/3% x $10,400.00                  =             $6,934.00

                                  less          

         Social Security Disability Benefit        =                ($967.00)

              Amount Paid by LTD Plan             =               $5,967.00

In this case, you would receive a $5,967 monthly benefit from the LTD Plan. 

SUCCESSIVE DISABILITY
Your LTD Plan benefits will end as of the date that you are no longer disabled, as defined by the plan (see How the Long-Term Disability (LTD) Plan Works above for a definition). However, a special rule applies if you return to full-time work and suffer a successive disability. For plan purposes, a “successive disability” is a disability which results from the same or related causes as a prior disability for which you received LTD Plan benefits. 

If you have a successive disability, the plan will treat this disability as part of your prior claim if: 

  • you were continuously covered under the LTD Plan for the period between your prior claim and your successive disability;
  • you returned to work in your regular occupation for less than 6 consecutive months; and
  • you earn less than the percentage of Indexed Earnings that would qualify you as disabled under the terms of the plan during at least one month (see the definition of disability above). 

Any disability which occurs more than 6 months after the end of a prior claim will be treated as a new disability. In addition, you will not be eligible for payments under the LTD Plan if you become covered by any other group long-term disability plan (for example, a plan sponsored by a new employer). 

RETURN TO WORK WHILE DISABLED
There may be circumstances in which you return to work while you are still disabled. If this applies to you, the amount of your continued LTD Plan benefit payment (if any) will depend on the amount you earn after you return to work. 

If you return to work while you are still disabled, you should contact the Insurance Company for additional information concerning your eligibility for continued LTD Plan benefit payments. You can also contact Human Resources for additional information and assistance. 

REHABILITATION BENEFITS
Your participation in a rehabilitation program that is designed to help you return to work will not reduce your LTD Plan benefits. If you decide to participate in a rehabilitation program, you should contact the Insurance Company concerning the additional benefits and covered services that may be available to you. 

The Insurance Company may elect to offer you and pay for a rehabilitation program. If the rehabilitation program is not developed by the Insurance Company’s rehabilitation specialists, you must obtain written approval from the Insurance Company before your rehabilitation begins. 

Depending on the nature of your disability, the Insurance Company may ask you to participate in a rehabilitation program. If you refuse this participation, your LTD Plan benefits may be terminated.

HOW TO APPLY FOR BENEFITS
If you become disabled and cannot report to work, you should notify your supervisor and the Insurance Company immediately. 

It is your responsibility to initiate the LTD Plan claim submission process by calling the Cigna Insurance Company at 1-800-362-4462. This toll-free number is available 24 hours a day, 7 days a week. You can also fill out the online claim form on www.mycigna.com. Click on Forms located in the Customer Care tab. 

See Filing Your Claim for more information on LTD Plan claims. 

WHEN YOUR BENEFITS END
Your LTD Plan benefit payments will end upon your recovery from disability (see Continuation of Benefit Payments for details). Your LTD Plan coverage will also end upon your termination of employment, loss of eligibility for coverage, or for the other reasons described under When Coverage Ends

TAX CONSIDERATIONS
Your LTD Plan benefit payments are not taxable to you. You should consult with your personal financial or tax advisor concerning the taxation of your benefit payments. 

SURVIVOR BENEFIT
The LTD Plan will pay a lump sum benefit to your surviving spouse if: 

  • your death occurs while you are receiving LTD Plan payments; and
  • you received at least 3 monthly payments prior to your death. 

The amount of the survivor benefit is three times the last full monthly LTD Plan payment you received prior to your date of death. 

If you do not have a surviving spouse, the survivor benefit will be divided in equal amounts between your children who are under age 21 at the time of your death.

The survivor benefit will be paid to your estate if you do not have a surviving spouse or dependent children under age 21 at the time of your death.