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Employers

Employer Bulletin

All Employers
Vol. 17, No. 10
April 20, 2000

Disability Premium Waiver Processing Changes

The Group Insurance Board recently approved an amendment to the Wisconsin Public Employers Group Life Insurance contract that affects the way in which a waiver of premium request is processed. The revised process no longer requires the employer to certify that an employe is disabled. It does, however, require that the employer provide employment information necessary to process a premium waiver.

The procedure has also changed so that all requests for premium waiver will require medical evidence of disability. Minnesota Life Insurance Company (MLIC) will be responsible for requesting medical evidence directly from the employe and determining whether the employe qualifies for a premium waiver. This procedural change is effective immediately.

A copy of the revised Request for Disability Premium Waiver (ET-5306) is attached. It is also available on the ETF Internet site, http://badger.state.wi.us/agencies/etf under Employer Forms and Brochures. You can print a copy of the form, complete it, make a copy for yourself, and forward the original to the Department of Employe Trust Funds (ETF).

You may also obtain a supply of the revised Request for Disability Premium Waiver (ET-5306, REV 04/2000) by using the attached order form. This form is now a single-ply form. After you complete it, make a copy for yourself and forward the original to ETF. Please note: Once you receive your supply of the new Request for Disability Premium Waiver (ET-5306) form, destroy the old Disability Premium Waiver (ET-5306) form with revision dates prior to April 2000.

Eligibility Criteria

When an employe under age 70 and insured under the Group Life Insurance Program becomes totally disabled from all gainful activity, and is likely to be disabled for the indefinite future, group life insurance coverage can be continued without payment of premiums. An employe may qualify for a waiver of premiums even though he or she does not qualify for a WRS disability annuity (Wis. Stat. 40.63) or Long-Term Disability Insurance (LTDI) benefit administered by ETF under Wis. Admin. Code ETF 50.

Examples of disabilities that may qualify because the date of recovery is unknown include cancer, heart disease, tuberculosis, disabling back injury, and mental illness. Examples of non-qualifying disabilities because the date of return to work is somewhat predictable include fractured arm, pneumonia, normal pregnancy (not high risk), or an appendectomy.

To be eligible for a disability premium waiver, the following criteria should be considered:

  1. Insurance coverage must be in force at the time the employe becomes disabled and must be in force continuously until the effective date of the premium waiver.
  2. The employe must have stopped receiving earnings. "Earnings" means all payments reported to the WRS under Wis. Stat. 40.02 (22), including sick leave and vacation, but it does not include temporary worker's compensation benefits that are reportable under Wis. Stat. 40.29. The employer may submit the Request for Disability Premium Waiver (ET-5306), while earnings are still being paid.
  3. An employe may be eligible for a premium waiver after termination of employment only if the disability commenced before the insured employe terminated while insurance was in force. A disability that began while the employe was on unpaid leave of absence is eligible, provided coverage was in force.
  4. An employe who qualifies for a WRS disability annuity or an LTDI benefit will automatically qualify to have life insurance premiums waived if the employe has coverage in force when the annuity or insurance benefit becomes effective. A Request for Disability Premium Waiver (ET-5306) must be filed as soon as possible to provide the necessary last day paid, last premium paid, and coverage information. Premiums must continue to be paid by the employe and/or employer until informed by MLIC in a letter to the employe with copies sent to both the employer and ETF that premiums have been waived.
  5. An employe who receives a Duty Disability benefit under Wis. Stats. 40.65 will not automatically qualify to have life insurance premiums waived. In these cases, the employer must submit a premium waiver form, and MLIC will request medical evidence of disability from the employe.

Submitting a Request for Disability Premium Waiver (ET-5306)

Whenever the employer becomes aware that an insured employe may qualify for a premium waiver, the employer should file a Request for Disability Premium Waiver (ET-5306) with ETF. The Request for Disability Premium Waiver filing deadline and processing steps are as follows:

  1. The request must be submitted within 36 months after the last day for which earnings are paid. An insured employe who becomes disabled while on union service leave of more than 36 months duration, may file a waiver more than 36 months after the last day for which earnings were paid.
  2. Employer completes the Request for Disability Premium Waiver (ET-5306), makes one photocopy for their records, and forwards the original copy to ETF.
  3. MLIC will contact the insured to request medical documentation that verifies that the individual is not working due to total and continuing disability.
  4. For state employes, approval of the Request for Disability Premium Waiver is acknowledged with a Coverage During Disability (ET-5806) notice. It is mailed by MLIC to both the employer and the employe.
  5. For local employers and employes, a letter is sent from MLIC acknowledging the approval of the premium waiver and certifying the life insurance coverage during disability.
  6. Unless the employe also qualifies for a WRS disability annuity under Wis. Stat. 40.63, or an LTDI benefit, MLIC will review the employe's status annually.

Amount of Coverage during Premium Waiver

The amount of insurance continued while an employe is disabled is the amount in effect on the last day that the employe was on the payroll. Employes may not apply for any new coverage that may be offered by their employer until they return to WRS-covered employment.

Premium waivers take effect on the later of:

  1. The first of the month following the date the disability began, or
  2. The first of the month following the last day for which the employe receives earnings (including sick leave and vacation but not including temporary worker's compensation benefits).
  3. Continue to collect premiums until notified by MLIC that the Request for Disability Premium Waiver has been approved. Please note that the employe must pay premiums for any month in which earnings (including paid leave) are received, even though the employe may also qualify for a disability annuity or LTDI benefit that will become effective in the same month. As premiums are paid two months in advance, you may need to refund any premiums that have been collected for periods for which a waiver has been approved.

Cancellation/Termination of Waiver

MLIC will request annual medical recertification of the disability until the employe reaches age 65, unless the employe qualifies for a disability annuity or LTDI benefit. The waiver will be canceled if medical evidence indicates that the employe has recovered or if the employe fails to provide medical information when requested. The following situations illustrate an employe's eligibility to continue waiver of premium:

1. If an employe does not qualify for a disability annuity under Wis. Stats. 40.63 or an LTDI benefit and returns to employment in any job or occupation, the premium waiver is canceled. The following steps should occur:

  1. Upon return to WRS-covered employment, premium deductions should resume effective the first of the month following the return to work. No application is required unless new coverage was offered while the employe was on leave.
  2. As usual, premiums should be collected two months in advance. It may be necessary to collect several months' payment in one month.
  3. The employe will have the same amount of coverage that they had while on premium waiver.
  4. The employe may also enroll for any new coverage levels that were added while the employe was on a premium waiver.
  5. The employer should notify MLIC of the employe's return to work by submitting a written memo, e-mail or FAX. The employe's name, Social Security number, and the date the employe returned to work should be provided.
  6. If the leave lasted three full consecutive calendar months or more, beginning in January of the next year coverage will be based on the highest of the employe's:
    • Estimated earnings for the next 12 months, or
    • Actual prior year's WRS earnings, or
    • Current coverage amount.

2. If an employe who qualifies for a disability annuity under Wis. Stats. 40.63 or an LTDI benefit returns to work, the waiver of premium remains in force.

  1. If the employe exceeds the earnings limit, the disability annuity or LTDI benefit will be temporarily suspended. However, suspension of the benefit does not affect the waiver of premiums.
  2. If a disability annuity or LTDI benefit is terminated, the premium waiver may terminate. MLIC will request medical proof of continued disability from the employe in order to maintain the premium waiver.

3. If the waiver is canceled prior to the employe's insurance reduction age, the employe has the following options:

  1. If the employe remains on an approved leave of absence, the employe may continue group coverage as an employe for up to 36 months after the last day paid by resuming premium payments.
  2. If employment has terminated, the employe may continue group coverage if he or she meets the requirements, by filing a Continuation Application (ET-2154) form within 31 days of cancellation of the premium waiver.
  3. If the employe is not eligible to continue group insurance, he or she may convert to an individual policy with MLIC by filing a Conversion Application (ET-2306) form within 31 days of cancellation of the premium waiver.

MLIC will notify the employe of these options when the premium waiver is canceled.

4. The premium waiver terminates when a disabled employe reaches his or her insurance reduction age. The insurance reduction age is age 65 if the employe has already terminated employment; otherwise, it is the date employment terminates or age 70, whichever occurs first.

An employe insured under waiver of premium on the date he or she attains the insurance reduction age is entitled to premium-free, post-retirement insurance coverage at the level provided by his or her former employer (50% or 25%). All other coverage (Supplemental, Additional, and/or Spouse and Dependent) ceases.

For more information about premium waivers contact Nicole Muller at Minnesota Life Insurance Company, P.O. Box 259708, Madison, WI 53725-9708. Phone: (608) 277-8690; FAX: (608) 277-8665; e-mail: nicole.muller@minnesotamutual.com.

Ordering New Request for Disability Premium Waiver (ET-5306) Forms

If you do not copy the Request for Disability Premium Waiver (ET-5306) form from ETF's Internet site, you can order a supply from ETF. Please allow three weeks for delivery. To order new forms, please use one of the following methods:

Call Supply and Mail Services at (608) 266-3302.

  • Complete the attached order form and mail it to ETF, PO Box 7931, Madison WI 53707-7931.
  • Fax a copy of the completed order form to ETF at (608) 267-4549.
  • E-mail ETF by clicking "contact us" on our Internet site, etf.wi.gov and provide the same information requested on the order form.

Remember to destroy your old supply of the Disability Premium Waiver (ET-5306) forms with a revision date before April 2000 once you receive your new supply.

 

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