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Long Term Disability Referendum

The issue of LTD premium rates going up every year needs to be addressed.  As the LTD plan is not part of our Collective Agreement, the only way to ensure our membership has an opportunity to weigh in on the issue is through a separate referendum process.

We have compiled a lot of information below, as well as anticipated FAQs but will also be hosting a series of virtual town halls to share information and answer questions. 

These sessions will be Zoom meetings and an RSVP is required to get the meeting link.  If you would like to attend one of these meetings, please email Tricia, our Administrative Assistant, and indicate which session you would like to attend.

The sessions are all at noon and will be held on June 8th, 9th and 11th.

LTD Referendum Results

LTD Referendum Results

The results of the LTD referendum are as follows:

Total Votes: 763

No change to Plan Design: 362 (47.4%)

Remove COLA and Reduce benefit to 70% net income: 401 (52.6%)

These results are also published on our Unifor Simply Voting site.

This means that as of July 1, 2020, any new LTD claims will be administered under the new plan design.  The benefit payment rate will be 70% of net income and there will be no COLA provisions. The Union will notify the University and you can expect to see communications from them relating to LTD rates for the 2020-2021 benefit year.  We do know that our LTD premium rate as of July 1, 2020 will see a small decrease from 2.59% to 2.49%.

We had a lot of good conversation with our membership over the course of the referendum, and appreciate that the financial costs of the LTD premiums were a burden for the majority of our membership.  As expressed through the town hall meetings, the membership was provided all of the information to make this choice.  We thank all that attended or sent questions, your feedback and conversation was valuable. 

Thank you to everyone who voted. 

LTD Referendum Options and Impacts

No Change to Plan Design

Fairly self-explanatory in that the present plan design will continue to be effective on-going. 

LTD rates as of July 1, 2020 will be 2.96%

Rates as of July 1, 2021 will be set based on previous benefit year usage.

Fully Insured accounting means as of July 1, 2020 any deficit/surpluses will be borne or absorbed by SunLife.

The deficit the plan presently has will be paid off over a period which will be determined by the premium rates that are set each benefit year.

Plan Design Changes

Removal of COLA provisions will begin for all NEW claims as of July 1, 2020.*

LTD benefit payments will be 70% of net income as of July 1, 2020.

Rates as of July 1, 2020 will be 2.49%

Fully Insured accounting means as of July 1, 2020, any deficit/surpluses will be borne or absorbed by SunLife.

The deficit the plan presently has will be paid off over a period which will be determined by the premium rates that are set each benefit year.

*COLA is the cost of living adjustments that are made to LTD payments.  Those on LTD for a shorter period will see little to no impact from this change.  Those who are on LTD for years however will see their income frozen regardless of how long they are on LTD.  What this means is that those who are permanently disabled will see their income remain the same as the cost of living goes up.  To be clear, this will likely create serious financial hardship for those on LTD for a longer period of time.

LTD Options Cost Comparison Chart by Grade

Chart on historical and proposed LTD rates if no plan design changes are made.

How we got here.

Since 2016. our premiums have been rising consistently every year.  Prior to 2016 we were in a shared plan with MUFA and TMG so the shared group spread the risk across a larger pool.  Since the split, with our group being on our own, the pool is smaller so even relatively small increases in LTD usage will result in higher premiums.

We have been looking at this problem for a quite some time. 

It is worth noting that LTD is not easy to access, nor does Sunlife allow LTD claims on a whim.  The claims process does require submission of medical that supports the LTD claim, and continues to require that documentation throughout the LTD period. This is not a problem of people inappropriately accessing LTD.

Not having a LTD plan at all is not an option.  It is a requirement of our employment at McMaster and is very much tied into our salary continuance program.  It is also an important benefit.  Our experiences with other units that do not have LTD have made that very clear.

Frequently Asked Questions

No, if the membership elects to change our LTD Plan provisions, it will be for new claims going forward.  It will have no impact on previously approved claims.

This is a complicated question as there are many factors that are at play.  The reality is, we aren’t able to point to one specific factor.  If we were, we would address that factor first.

We have been consulting Unifor National’s Pensions and Benefit department throughout this process, and the research we are seeing is that our usage is consistently higher than industry averages.

Whichever option the majority of the membership votes for will be the plan design going forward.

Our plan is employee paid, which means that those who are in receipt of LTD payments do not pay tax on it.  If the University contributes any money to the plan, it would jeapordize this status.

The LTD plan is not optional.  Participation in the LTD plan is a condition of employment.  This is mandated in our Collective Agreement.  It is also tied to our Salary Continuance wage protections.

McMaster and the Union are in agreement that moving from a ‘Refund Accounting’ plan to a Fully Insured Plan is a good step forward in addressing some of the challenges with our LTD plan.  This will not have any impact on our present rates or past deficit.  It will however simplify the setting of LTD rates going forward.
Traditionally SunLife has used Refund Accounting when setting rates and calculating what, if any, deficit and surpluses exist at the end of the LTD benefit year.  Refund accounting at one point worked well as years that there were deficits were offset by years that had surpluses.  With our plan going into deficit over a number of years, we are now having to repay that deficit, and we can not anticipate that our trend of LTD usage will go down to mitigate those deficit years. 
The Fully Insured model will work similarly in that our rates will be based on plan usage, however, instead of the ‘risk’ being on the membership, it will be on Sunlife.  Sunlife will set our LTD rates based on the previous years usage, however, if they set the rate too low, Sunlife bears the burden of any plan deficit.  The flip side of course is that if the plan rate is set, and usage is lower than expected, any surplus generated is absorbed by Sunlife. 
McMaster University will negotiate the rates on a yearly basis as they do now, and those will be implement at the start of the benefit year, July 1.

The deficit in our plan funding came about through a variety of factors.  The two main contributors were artifically low premium rates, and accounting errors that were discovered in LTD payments during the RFP process back in 2016. 

When the University was going through the RFP process to consider options for providers for our benefits and LTD plans back in 2016, it was the first such review they had conducted in 40 years.  It was during this process that MUFA elected to leave the shared pool and go to a model they preferred, which in essence, divided the shared pool into individual employee groups.   As part of the Sunlife’s proposal to the University, they offered a guaranteed LTD premium rate for each of the groups for a two year period. This low rate, combined with the shrinking of our risk pool resulted in our group consistently under-funding our LTD plan.

The second contributing factor was the discovery that a significant number of LTD recipients had been underpaid, in some cases for many years.  The initial calculations indicated that there was enough money remaining in the reserve funds funds to cover the repayments, but when the final accounting was finalized, there was an amount owing above what was available in the reserve fund.