Macewan Manufacturing Ltd: Long Term Disability Insurance Report

This report provides an analysis of Macewan Manufacturing Ltd's long-term disability (LTD) insurance plan. The plan offers benefits to employees who become totally disabled after a 26-week qualifying period, providing 55% of their salary up to $10,000 per month. The report critiques the plan design, highlighting both advantages such as financial support for disabled employees and disadvantages like the cost to the company and potential employee jealousy. Suggestions for improvement include increasing the monthly benefit to 60% of salary (capped at $8,000), continuing retirement contributions, and streamlining the eligibility period. The report also discusses the taxation of disability benefits, clarifying that benefits are generally tax-free if the employer pays a portion of the premium. The analysis is based on the provided plan details and relevant research, offering a comprehensive overview of the LTD insurance policy.

Long Term Disability Insurance

CONTENTS
QUESTION 1..................................................................................................................................1
QUESTION 2..................................................................................................................................1
Critique of Plan Design Feature..................................................................................................1
Suggestions to Improve Plan.......................................................................................................2
Discussion on Taxation of Disability..........................................................................................2
REFERENCES................................................................................................................................3
QUESTION 1
Macewan Manufacturing Ltd is developing a policy regarding long term disability for
those employees who gets disabled while working in the company. The plan is applicable in a
case when the employees is total disables after the qualifying time period of 26 weeks. Disable
person need to quality that period in order to have that pension benefit. This tenure is set so that
pension benefits are offered to employees who actually gets disabled and keeps away other
person who gets minor injury while at work.
While in this period, disable person need to join rehab center so that he/she can able to
recover himself/herself in order to get employment (Loisel & Anema, 2013). The pension plan
says that individual will get 55% of his employment salary which should not exceed $10000
every month. This is an ideal amount, this is because a family can manage its expenses as well
this is a cost to the company so they need to manage the same.
There are several conditions under the policy that is person need to be totally disable.
This states that person is not in a state to work or get employed or earn for himself or his/her
family.
Other than that person need to complete his/ her disability period for 26 weeks then only he/she
can be called as totally disabled. With that co-ordination of benefit also plays important role in
payment to disable person (Perry & Buchanan, 2019).
It is responsibility of organization to provide proper benefit to total disable person. This
state that when the person is proven disable after 26 weeks, he/she should be paid 55% of salary
within $10000. Other than that, benefit is paid to the age of 65 or till the last day when the person

dies. With that when the person is not taking proper treatment of disability, then he/she would
not be paid.
QUESTION 2
Critique of Plan Design Feature
Long term disability pension is a feature which is been proposed by Macewan
Manufacturing for those employees who gets totally handicapped or disabled while working.
This is said as a feature because people get assured that when some injury will take place, they
will be paid.
There are some benefits as well as some disadvantage. Benefits is said because when the
person is really disable, he/she will be paid with the 55% of his/her salary. As well as they feel
that employees are properly taken care. Employee feel that they are important part of the
organization and every employee is given equal important. But it have some disadvantage
because this is cost to the company. Firm need to pay disable person or the person who is not
working or non-productive. With that other employee also get jealous because they are working
and getting paid for that and disable person is not working and still paid. Suggestion is that they
need to communicative to all the employee (Loisel & Anema, 2013). The policy need to
communicate when the person get totally disabled. There need to be some improvements in the
policy so that people can have more benefits and it cost low to the company.
Suggestions to Improve Plan
It is required that Macewan must increase the monthly benefit from proposed 55% of
salary to 60% of the salary but capping the maximum benefits to $8000 per month. Through this,
employee will feel satisfied that he/she is liable for 60% of monthly earning, however, capping
$8000 will assist in saving considerable cost for the company at the same time. Other than that,
retirement contributions are continued by the LTD carrier to the eligible employee’s retirement
account. It is essential to have application process when person first need to apply for that and
need to prove totally disable (Luznar, 2019). Other than that, employee need to provide 6months
old statement so that actual salary can be determined. With that, eligibility period which is for 6
months should be decreased to 3 months or 100 days.

Discussion on Taxation of Disability
They should involve three test while finding disability of the person which include health,
dental and vision text. With that taxation of disability benefit are not there. The income or benefit
that is gained by disable person are tax free, this is because companies have already fixed the
benefit which are given to disable employee. If your employer pays part of the insurance
premium and you pay the rest, then your tax liability will be split as well Snook (Michaels &
Greene, 2013). The part of the benefit you receive that is related to the employer-paid share of
the premium is taxable; any part of the benefit related to your share of the premium is tax free.

REFERENCES
Loisel, P., & Anema, J. R. (2013). Handbook of work disability. Prevention and management.:
Springer..
Luznar, O. D., & Costa, J. (2019). The Prevalence of Employer-Provided Benefits by Industry of
Employment and Implications for Social Security Disability Insurance Claiming
Behavior. Soc. Sec. Bull., 79, 47.
Michaels, C. N., & Greene, A. M. (2013). Worksite wellness: increasing adoption of workplace
health promotion programs. Health promotion practice, 14(4), 473-479..
Perry, E., & Buchanan, A. (2019). Experiences of National Disability Insurance Scheme
planning from the perspective of adults with intellectual disability. Australian Journal of
Social Issues.