Auto Enrollment .... For LTD?

The ERISA Advisory Council, which advises the Department of Labor on ERISA issues, held a meeting this week to present its recommendations to the Employee Benefits Security Administration (EBSA). Its website says the EBSA’s mission is to assure the security of the retirement, health and other workplace related benefits of America's workers and their families, by developing effective regulations; assisting and educating workers, plan sponsors, fiduciaries and service providers; and vigorously enforcing the law.

The Council held several hearings this summer, including a couple that focused on the role that disability plans need to play in providing financial security for American workers.

Among the Council’s recommendations this week was one calling on the EBSA to issue guidance for plan sponsors and plan administrators on the permissibility of “auto-enrollment” for long term disability plans where employees pay some or all of the cost of coverage.

Long a staple in the retirement plan world, auto-enrollment is where employees are enrolled in a benefit plan requiring some level of employee contribution, without requiring the employee to affirmatively enroll in the plan. On the disability side though, employers have traditionally been reluctant to adopt such an approach, even though a person’s group LTD coverage is typically $20-25 per month.

While it may take some time for the DOL to actually make such recommendations and for all this to “flow down” through the employee benefits infrastructure, it seems like the climate on this may be changing. The DOL seems to be recognizing that the value of and need for disability coverage (for all stakeholders, including the government) is on par with that of retirement plans, and that maybe therefore the time has come to green light auto-enrollment in the effort to help swell the ranks of those with disability coverage.