Baltimore, MD 6/29/04 Presented by: Michael J. Kelly, CHU, RHU Qualified Sick Pay Plan Presentation
Mar 27, 2015
Baltimore, MD
6/29/04
Presented by:
Michael J. Kelly, CHU, RHU
Qualified Sick Pay Plan Presentation
Welcome
Purpose – Desired Outcome Market Potential Existing Clients Opportunity To Improve Bottom Line
Identify Prospects / Problem
Typical Scenario Salary Continuation Without A Plan
Ad Hoc Consequences Solutions The Logical Solution
Presenting The Problem And The Solution
Insured Qualified Sick-Pay Plan
The success of your business depends on the hard work and talents of your employees.
But what if one of your key employees gets sick or injured and can’t work?
The Odds…The Odds…Consider the chances of a long-term* disability striking one of your employees.
Age Number of People in a Group
1 2 3 4 5 6
25 57.81% 82.20% 92.49% 96.83% 96.66% 99.44%
30 55.14% 78.97% 90.35% 95.56% 97.97% 99.07%
35 50.10% 75.10% 87.57% 93.80% 96.91% 98.46%
40 45.33% 70.11% 83.66% 91.06% 95.11% 97.33%
45 39.64% 63.57% 78.01% 86.73% 91.99% 95.17%
50 32.87% 54.93% 69.75% 79.69% 86.37% 90.85%
55 24.63% 43.19% 57.18% 67.73% 75.66% 81.67%
60 14.17% 26.33% 36.76% 45.72% 53.41% 60.01%The group of people consists of an average of males and females in all occupation classes both sexes and all classes were waited equally.Based on the 1985 CIDA table and the 1980 CSO table.*Long-Term Disability is defined as lasting 90 days or more.
Employer Concern…Employer Concern…
Where will the money come from?
Employee Concern…Employee Concern…
“How will I continue my employees salary?”
“How will I continue to support myself and my family?”
Your Alternatives…Your Alternatives…
No plan
Self-Funded Qualified Sick-Pay Plan
Insured Qualified Sick-Pay Plan
Which will you choose?
No Plan…No Plan…
You lose the tax deduction. (The IRS doesn’t consider disability compensation a business expense.)
You lose productivity. (You’re paying an employee who isn’t producing.)
You lose employee morale. (It isn’t clear who’ll get paid. Or when.)
Can you afford not to have a plan?
Self-Funded Qualified Sick-Pay Plan…Self-Funded Qualified Sick-Pay Plan…
Put a plan in writing and you’ve started to solve the problem.
Compensation paid during disability is a tax-deductible business expense.
Employee moral is boosted.
But you are still paying a nonproducing employee.
Where will you get the money?
Insured Qualified Sick-Pay Plan…Insured Qualified Sick-Pay Plan…
The Plan is funded with disability income insurance.
You make tax-deductible premium payments.
Those premiums aren’t added to your employee’s taxable income.
The insurance company makes claim decisions.
Plus…
Insured Qualified Sick-Pay Plan…Insured Qualified Sick-Pay Plan…
The insurer pays benefits so… you no longer pay nonproducing employees.
Premiums are waived when a covered employee becomes disabled.
Security for your employees. And you.
The affordable solution.
The Cost…The Cost…Let’s compare the annual cost of just one disabled employee.
*Assume a 34% corporate tax-rate**Typical annual premium on an individual policy for a 40-year-old employee.Premiums on coverage for disabled employees are waived during disability.
No Plan Self-FundedQualified Sick-Pay Plan
InsuredQualified Sick-Pay Plan
Pre-Tax Profit $100,000 Profit $100,000 Profit $100,000
Income Tax* 34,000 Sick-Pay 50,000 Premium** 1,500
Net Profit 66,000 Pre-Tax Profit 50,000 Pre-Tax Profit 98,500
Sick-Pay 50,000 Income Tax* 17,000 Income Tax* 33,500
Net Cash Flow
$16,000 Net Cash Flow
$33,000 Net Cash Flow
$65,000
Individual-Group Combination…Individual-Group Combination…
Key employees covered by all individual disability income.
All other employees covered by economical group coverage.
OR Key employees covered by a combination
of individual and group coverage. All other employees covered by economical
group coverage.
Group Long-Term Disability…Group Long-Term Disability…
Cost effective.
Ease of administration.
Coverage available to employees on every job level.
Benefits may be varied among occupational classes.
Individual Disability Income…Individual Disability Income…
Premiums are guaranteed.
Coverage is non-cancelable.
Coverage is portable.
Liberal benefits are tailored for key employees.
QSPP Documents
Board of Directors Resolution Plan Letter
Creative Solutions
All Individual DI Combination Plans Executive Bonus Split $ / Split Benefit Periods
Conclusions
Unique – Market Differentiation Appointments / Presentation Cross-Selling Opportunity Problem Solver Information Needed Proposals Follow-Up