ESTA UPDATE
East Side Teachers Association 888 South Capitol Avenue San Jose, Ca 95127 (408) 272-0601
Don McKell, President mckelld@esuhsd.org fax: (408) 272-7569 March 5, 2003
A POINT TO PONDER
If you’re a homeowner, I’ll bet you buy insurance to offset all manner of risks associated with that most important of assets. If you own or operate a car, it’s a safe bet that you have an auto insurance policy to provide protection from all of the bad things that just might happen as a result. Few would argue that these are imprudent investments, even though the odds against your ever having a devastating fire in your home are somewhere around 2000 to 1. The odds against your auto ever being totally destroyed are about 240 to 1. Even so, the security of having these kinds of insurance coverages is worth a lot in peace of mind.
There is an even more important asset that you own. You’ll use it at least 182 days this year: your ability to work. And, if you’re like many teachers, you probably do not have adequate insurance to protect yourself from its long-term loss. What’s worse, you probably think that you do have coverage. Do you know that California teachers are not covered by SDI, the State Disability Insurance program?
Just what would happen to your income if you were suddenly struck by some disability that kept you from working? There are a lot of variables to consider before being able to answer this question. Was your disability incurred as a result of working? An auto accident? Illness? Pregnancy?
Suppose you’re a 30-year-old teacher who suffers some illness-related disability. (By the way, a person of this age is about 50% more likely to suffer a disability of some sort before age 65 than to die.) In my scenario, there’s no one to sue, there’s no worker’s compensation. You’re on your own.
- Your medical benefits coverage provided by the district would likely pay the bulk of the costs of any required hospitalization and physician care. But there’s a big difference between getting out of the hospital and getting back to work.
- You’d continue to get your full paycheck only until your accumulated sick leave days ran out.
- After exhausting your sick leave, you would be eligible to draw differential pay for a period of five months. This means the cost of your long-term substitute (currently: $125/day) comes out of your paycheck. That can be a major piece of your income.
- When your differential pay period ends after five months, your paychecks stop altogether. So does your medical benefits coverage. Ouch. You’d typically apply to the district to go an unpaid leave of absence; you could continue to purchase medical coverage through the district.
- You may qualify for some disability payments from STRS if you meet certain eligibility requirements: (under age 60, at least five years of STRS service in California). The most you could expect would be 50% of the highest average monthly pay in any prior consecutive 36 month period. The waiting period to begin drawing from STRS can be lengthy.
- STRS disability benefits are reduced by any amounts you may receive from other public systems, such as worker’s compensation, social security disability, federal military disability, or any employer-purchased income protection plan.
- Nothing that is provided to you as a district fringe benefit or from STRS will cover the cost of long-term convalescent care, which can easily run to $3,600 or more per month.
When I think about all of this, and insert myself into the scenario, I see my family’s life savings, my house, and my children’s college education swirling down the drain. I’ve seen it happen to others. My goal in this Update is to alert all ESTA members to the realities of the precarious situation into which any of us could be thrust with little or no warning.
As a hedge against catastrophe, there is insurance of one kind or another. Some, such as healthy and prudent lifestyles, is not for sale. Others, like life insurance, long-term disability income protection, and long-term convalescent care, are available from a wide range of providers, with a wide range of coverages, at a wide range of prices.
Not unlike buying a car, the whole experience of gathering information and sorting out the important stuff can be a trying ordeal. That may be one reason why we find it so easy to put off doing it.
Another reason may be that you thought you already had the coverage. If you’ve read this far, at least you now know that’s not the case.
So, what to do? Some have suggested that we bargain with the district to provide long-term care benefits as a built-in component of our fringe benefits package. This idea has a couple of drawbacks. First is that there’s no guarantee that the district would ever agree to spend the money without extracting something from us in some other arena. Second is that income derived from employer-paid (or pre-tax employee-paid) policies may be taxable.
The bottom line at this point seems to be that ESTA members should seriously consider purchasing their own long-term disability and/or convalescent care insurance. Vast as they may be, my resources don’t come close to being able to provide a comprehensive overview of all of the offerings that exist out there in the world. However, I am aware of a few policies that are available only to CTA members that seem to beat any competitor in both premium cost and breadth of coverage.
By the way, time spent away from work childbearing is a "disability" for the purposes of income protection insurance.
ESTA is not in the insurance business, but the ESTA Executive Board did recently listen to a presentation by a representative from UnumProvident regarding its CTA endorsed Group Disability Insurance. As a result, ESTA will support an enrollment campaign from March 1 through March 31, 2003. If at least 157 of our members enroll in the Unum program during that period, coverage for all will be issued on a guaranteed basis. This means no health questions and no disallowance for pre-existing conditions.
UnumProvident Plan Highlights
