Short Term Disability & Supplemental Insurance Proposal

1. Short Term Disability& Supplemental Insurance Proposal Wright State University Make the Wright choice Do the Wright thing

2. Contents • Why a Short Term Disability & Supplemental insurance Plan? • WSU Disability Policy • Actual WSU Employee Case Study • STD Plans and Recommendation • Insurance Providers, Selection Criteria and Analysis • Provider Recommendation • Payroll Process • Next Steps

3. PerspectiveWhy a Short Term Disability Plan? 2006 U.S. disability statistics: - Someone who is 35 years old has a 50% chance of disability for 90 days or longer before the age of 65. - Approximately 375,000 people become totally disabled every year - 66% of disabilities are not covered under workers compensation - Without a paycheck, the typical American employee’s savings last less than 5 weeks - 46% of all conventional mortgage foreclosures are brought about by a disability - Social Security Disability requirements to receive disability benefits are so strict that only 35% of applicants actually receive benefits - The top three chronic disabling conditions are: back disorders, heart disease and arthritis Source: John Hewitt & Assoc., 2006

4. WSU Disability Policy: Key Points • No Short Term Disability Plan • Long Term Disability engages after 6 months of total disability • What happens during those 6 months? Accrued sick / vacation leave is applied • What happens when leave is exhausted? • What happens when personal savings is exhausted? • No Income and No health insurance Source: WSU HR Website Benefits/Disability, Employee Handbook, 2006-2007

5. WSU employee statistics • Identify employee hardship • How many WSU employees were impacted by similar circumstances? HR • Identify employee financial “cushion” • What is the average accrued sick / vacation leave for WSU employees? HR

6. Disability Case Study • WSU employee case study: Kiel Rottgen - Purchasing • 40 Yr Male – Good condition, no prior heart, cholesterol or blood pressure issues, non-smoker, non-drinker of alcohol, no street drugs • Married, two children, sole provider for a family of four • Hired June, 5 2006 – On March 14 & 16 2007 – Heart Attack, RCA dissection, 5 Stents in RCA • 10 Days in ICU and another 14 days in the hospital • Sick/Vacation leave exhausted in 7 days • Personal savings depleted in 30 days • April 15 to June 30 – No Income • Returned to work part-time on June 1 (Paid for PT hrs on June 30) • Required to pay $156/mo to maintain health insurance with no income • Out of pocket expenses:12 different prescriptions per month, multiple medical appointments w/co-pays, insurance deductible $1,000 • WSU colleague care offering: $250 gift card = Greatly Appreciated!! Solution: Some type of short term disability or supplemental insurance Source: Kiel Rottgen Testimony 2007

7. Short Term Disability Plans Available: • 62% of U.S. employers offer a Short term disability and/or supplemental plans • Group vs. Voluntary Individual • Group Offering • Employer must administrate the plan • Usually employer funded • Available to every employee whether you need it or not • Subject to frequent rate increases • Not customizable • Voluntary Individual Offering • Insurance provider administrates the plan • Usually paid by the employees individually or shared with employer • Completely portable to the employee • Rates are more stable • Customized to the individual Source: John Hewitt & Associates, WSU RFI data research 07

8. Plan Recommendation • Voluntary individual employee paid STD & supplemental insurance plan • Considerations & Benefits: • No cost to WSU • No administration or resource burden to HR • Easy payroll deduction implementation • All claims are processed directly by the insurance provider • Portable to the employee • Simple transition from employee paid to employer paid • Return to work and wellness incentive • Future consideration: WSU to pursue an employer funded program Source: WSU RFI data & research results 2006-2007 John Hewitt & Associates

9. Leading Insurance Providers Offering Voluntary Individual STD & Supplemental Benefits • Aflac • Colonial Life (UnumProvident) • American Heritage (Allstate) Source: John Hewitt & Associates. A.M. Best & Co, Standard & Poor’s, Moody’s Investor Service and Fitch 2006-2007

10. STD Insurance Provider Primary Selection Criteria - Financial strength - Ability to pay • Rates • Individual custom plan design • Problematic claim payment issues Source Criteria: John Hewitt & Associates, Standard & Poor’s, A.M. Best & Co., Moody’s Investor Service & Fitch 2006-2007

11. Comparison of Benefits/Companies Performance Source: WSU RFI data collection & analysis Colonial, Allstate, Aflac 2006

12. Comparison of Accident Benefits/Companies Source: WSU RFI data collection & analysis Colonial, Allstate, AFLAC 2006

13. Comparison of Cancer Benefits/Companies Source: WSU RFI data collection & analysis Colonial, Allstate, AFLAC2006

14. Provider Recommendation • Aflac • No cost to WSU for both STD & Supplemental insurance • Best overall coverage in selection criteria analysis • The best plan proven to pay the maximum “CASH” dollars to the disabled • Average time period to receive cash: 4 days • Employee wellness incentive for consistent health screenings • Strong supplemental coverage options • Accident Plan, Cancer Plan, Life Insurance, etc… • Local and personalized customer service • Provide flexible on campus enrollment services Source: WSU BC Comparison & Analysis 2007

15. Perspective: Payroll • Aflac will create a withholding file and transmit to WSU payroll for uploading once per month • When payroll runs, A/P will issue one check to pay the total amount withheld (payroll requests) • Payroll performs this process for all withholdings • Current examples of payroll withholding programs: • WSU athletic tickets • WSU Pharmacy • United Way • Weight Watchers • Process is in place to implement • No cost to the employer withholding Source: Linda Sykes-WSU Payroll Mgr, Aflac Proposal 2007

16. Next Steps • Executive response and discussion meeting • If Executive review and analysis – HR, Finance, USAC, CSAC, etc… • positive response to move forward • Schedule a meeting with Aflac Account Executive to meet with Executive committee and HR • If negative response to move forward • Discussion • Next steps

17. In the continued Spirit of the Faculty & Staff at Wright State University Make the Wright choice Do the Wright thing