Inside Iowa State

October 7, 2005

Disability helps those who can't work, those who can work some

by Linda Charles

Iowa State employee Dan D. is in a car accident. He spends weeks in the hospital, followed by months of physical therapy. And, while he makes great strides, he will never be able to work again.

ISU employee Leslie A. is at the gym when she starts having chest pains. An ambulance takes her to the emergency room. Diagnosis: heart attack. Due to complications, Leslie is told she will be able to work only part time for at least a year.

Fortunately for the hypothetical Dan and Leslie, the university has a disability program that pays employees a portion of their salaries while they are unable to perform their normal job duties due to long-term illness or injury, said Tim Ashley, human resources manager.

Disability insurance does not cost Iowa State employees anything; the university pays 100 percent of the premium under both the ISU Plan (for faculty, P&S staff and supervisory merit employees) and the State of Iowa Plan (for organized merit staff), he added.

90-day waiting period

Qualifying for long-term disability is a complex process, said Jerilyn Rasmusson, human resources specialist. "Part of the process includes a 90-day waiting period, which consists of 90 consecutive work days."

During the waiting period, employees can cover their absences by using their accrued sick and vacation leave, and for those who qualify, catastrophic donations (a Board of Regents, State of Iowa, plan that allows qualified employees to donate vacation leave or converted sick leave to other qualified employees to use as sick leave).

Disability taxable

"Long-term disability is considered income replacement and is taxable income," Rasmusson noted. Those on full disability receive 75 percent of the first $1,000 of their gross monthly wage and 60 percent of the remaining salary.

Take the case of the hypothetical Dan, who was earning $4,000 a month at the time he qualified for disability. Under full disability, he would receive $2,550 a month. His check computation would look like this:

Dan (on full disability)

ISU salary: $4,000/month gross pay

Hours worked in a month: 0

Monthly gross pay on full disability:

• $750 (75 percent of first $1,000)
• $1,800 (60 percent of remaining
• $3,000)

Total: $2,550

The amount of benefit Leslie would receive on partial disability could vary.

"There are several factors used to calculate the monthly disability benefit for partial disability," Rasmusson said. "The benefit will vary from person to person and must be calculated on an individual basis."

Faculty, P&S staff and supervisory merit staff have a second option for disability insurance that bases their benefit on 50 percent of their annual wage.

Some keep positions

Being on disability does not necessarily mean that employees lose their positions with their departments.

"If departments choose, they may hold the position of a person on full disability for up to one year," Rasmusson said. "However, departments also may opt to 'separate' someone on full disability, with the exception of faculty. Once separated, the person on disability no longer is considered an employee and the department may fill the position."

Partial disability also is an option for some. To qualify for partial disability, employees must be released to work part time by their physicians, and their departments must agree to accommodate their part-time schedules, Rasmusson said.

"When employees have been on partial disability and find they no longer are able to perform their normal job duties or their departments no longer are able to accommodate them, they are moved to full disability," she added.

Disability pays for other things

"Disability insurance may do more than partially replace employees' salaries," Rasmusson noted. "If employees are approved for disability, contributions are made into their TIAA/CREF retirement accounts. No contributions are made to employees' IPERS retirement accounts.

"If employees are enrolled in life insurance at the time of disability, the benefits continue at the current value until the employees no longer meet the definition of disability. Employees also are allowed to continue on their Iowa State medical and dental plans while on disability."

Because the university is self-insured, payments made under the disability plan come from a pool of university funds set aside especially for disability, Ashley noted. The university has contracted with the Principal Insurance Company to handle disability claims.

Currently, there are 10 employees on partial disability and 125 on full disability.

Apply right away

Rasmusson urged everyone unable to perform their normal job duties due to injury or illness for an extended period of time to start the application process for disability. If they apply and then are able to return to work after all, it's easy to stop the process.

"Most employees want to work," Rasmusson said. "Therefore, they are reluctant to start the process. But it is always in the best interest of the employee to apply for disability at the beginning of the 90-day disability waiting period."

About the long-term disability process, contact the Benefits Office, 4-7680.