Polaris Benefit Solutions

A.  Members fund a mutual aid (MA) program.

A. An insurance company does not underwrite it nor is it insurance.  This can’t be emphasized enough. An insurance company does not underwrite it nor is it insurance.

A. Each member of the mutual aid association contributes money, which is then distributed to disabled members (in accordance with the plan description/bylaws).

A.  The size of the funds held (with a new program a savings/checking account will fit the bill, mature programs have investment accounts and advisers) would determine the banking vehicles necessary to meet the monthly costs associated with the plan (paying disability benefits and any operating costs the association will have).  The goal is to make sure that the plan always has enough of a reserve to prevent a liquidity problem.  In the case of a new MA, there are some choices: 1) Have an external organization (such as a union or a company) willing to “financially back stop” the plan, this would allow immediate coverage for all the participants; 2) Have a waiting period for benefits until the dues that are collected provide enough capital to give the plan the financial back stop.  Additionally, the plan needs to have enough participation by the members to make the MA sustainable (ideally close to 100%, as this will keep the participants’ costs to a minimum).

A.   The criteria to draw benefits are contained in the plan document and bylaws of the MA.

A. The plan document and bylaws determine what disabilities will be covered.  Because this list would be voluminous, it is easier to disclose what would not be covered (illegal drug use, self-inflicted injuries for example).

A. We recommend that a medical doctor sign a form that gives a description of the disability and the ICD-9 code.  The member stating that he/she is in fact disabled should also sign the form.  The form is then submitted to the plan and payments begin.  A quality assurance check is to have a relationship with the employer so that the plan can be informed of members who are soon to be out of sick leave or paid days off (PDO) (thus indicating a likelihood of going on disability) or are out on disability.  As long as a claim falls into the category of “allowed” per the plan documents, denials are held to a very minimum.  Provisions for a review committee should be included in the plan documents.

A. This is determined by the plan document and bylaws. Most plans want to have an immediate benefit when PDO’s and/or sick leave is depleted.  Many disability plans in the range of 60-65% of pre-disability income.

A.  The plan pays disability payments in accordance with the plan documents and the bylaws, which are tailored to the desires of each client.

A. The plan pays disability payments in accordance with the plan documents and the bylaws, which are tailored to the desires of each client.

A.  Everyone who joins the MA is covered—there is no underwriting (this is not insurance) or review of past medical history.

A.  A preliminary feasibility study of your employee group is conducted (age/sex distribution, income, years of service and other information) to discover if a MA will meet your needs and cost expectations.

A.  The benefit that is paid to members is based on the plan document and bylaws (and spreading the risk across the group).  The plan reserves the right (usually) to adjust the membership dues and benefits.  That being said, the whole idea is to make sure that you have enough money to withstand a “run on the bank via disability” (hence the requirement for a financial back stop) and to set the dues rate at an appropriate level to cover a benefit that is affordable, durable, relevant and organically funded. 

A. The plan document and bylaws clearly define exclusions, so it would be up to the MA to decide what is covered and what is not.  Obviously, some very good legal advice would be advised.   Some states pay disability claims for pregnancy.  The feasibility study takes into account the number of possible members who might use the benefit while pregnant.  The plan could put a “cap” on how long pregnancy benefits would be paid (again, sound legal advice is highly recommended).  Some states (CA, RI, NY, NJ and HI) provide disability payments for pregnancy through the state disability fund that is paid for through employer contributions California state disability pays beginning four weeks before and six weeks after the birth (a total of 10 weeks, the payments are based on the income of the worker up to a maximum).  Other programs allow 16 weeks for the birth of a child.  Polaris recommends that the MA documents be written to reflect the pregnancy disability policies of the employer and be vetted by an attorney.  Polaris can get an idea of the potential liability through our analysis.

A.  We will need to complete a detailed feasibility study.   We will need to have some detailed direction as to what you want for the MA—how much coverage, how long, what’s covered, et cetera.  This will allow us to model a plan and present it to you to give you the best idea if it is in your cost/benefit range.  We will re-run the study once to make any adjustments in order to meet the cost/benefit desires.  Costs for the feasibility study are based on the size of your group plus expenses.   We will present the results of this study to you (either in person or via conference call/web presentation).
If you decide you want to move forward, we will sign a letter of agreement (LOA), which will then get the process started in establishing a MA for your group.  At this point the cost is based on the size of your group plus expenses.  This will include writing the plan document and bylaws.  As outlined above, these two documents become “the heart and soul” of a MA plan.  They are the governing documents.   
We will sign a contract for consulting services to your plan.  These include monitoring cash flows, statistical analysis of disability rates, training for the fiduciaries of the plan, application for Voluntary Employee Benefit Association (VEBA) establishment, et cetera.  Polaris is paid a percentage of the gross income of the plan once all of the deliverables have been achieved and the plan is up and running.

A. The partners of Polaris Benefit Solutions have over 30 cumulative years of MA plan administration, governance and oversight experience.  Three of the partners have served as Chairman for an active plan, all of the partners have held officer positions within an existing plan.  We work as your partners, establishing a plan that will meet the needs of your group not only for today, but also well into the future.  We also have long standing alliances with attorneys, accountants and money managers who understand MA plans—this reduces the plan’s costs should you chose to use these professionals, because they are already “up to speed” on MA’s. 

A.  There are a lot of decisions that need to be made.  Polaris will need to have the ability to speak with the decision maker(s) as the plan comes to fruition.   Our recommendation in order to make this successful is to have all of the employees covered under the MA plan through either a collective bargaining agreement or as an employee benefit.    Without a large majority of the employees participating, MA plans will fail.