loss of one hand, one foot, or the sight of one act of war; or death due to drugs, unless pre- Under certain circumstances, benefits are not paid at all. Coverage is not provided for losses resulting from or caused directly or indirectly by bodily or mental infirmity, disease, or illness of any kind; suicide or attempted suicide while sane or insane; an infection, other than a pyogenic (pus-producing) infection of an accidental cut or wound; taking part in, or as a result of taking part in, the commission of a felony; any Since the inception of the Employee Benefits Survey in 1979, the incidence of both life insurance and AD&D benefits has been fairly stable.3 (See table 1.) Blue-collar workers were the more frequent recipients of AD&D benefits, in part a reflection of provisions for these benefits in many major collective bargaining agreements. Another factor that may lead employers to provide AD&D benefits more frequently to blue-collar workers is the traditionally more hazardous nature of blue-collar work. Benefits generally are provided for accidents on as well as off the job. In 1988, 92 percent of all full-time employees in medium and large firms had life insurance coverage; 76 percent of employees with life insurance also had AD&D protection. Eighty percent of the 13 million blue-collar workers with life insurance had AD&D coverage, while 72 percent of the 15 million white-collar workers with life insurance were covered. Employees in life insurance plans paying a flat dollar benefit were more likely to have AD&D insurance than those in plans with benefits linked to earnings, but the difference was slight. Table 1. Percent of full-time employees with employer-sponsored life insurance, and percent of life insurance participants with accidental death and dismemberment coverage, medium and large private firms, 1979-86 and 1988 Seventy-nine percent of the workers whose life insurance was a specified dollar benefit had AD&D protection, while 74 percent of the workers in earnings-based life insurance plans were covered. This finding can be explained largely by differences between blue- and white-collar workers. In addition to being more likely to have AD&D protection, about half the production and service workers in 1988 had flat dollar amounts of life insurance, compared with less than a fifth of the white-collar workers. The large majority of AD&D plan participants (93 percent) had benefits expressed in the same manner as their regular life insurance benefit. (See table 2.) For example, both life insurance and AD&D benefits might be expressed as a multiple of salary, or both might be a flat dollar amount, such as $10,000. Eighty-two percent of the nearly 22 million employees with AD&D COVerage had a benefit equal to the amount of life insurance coverage, 9 percent had lower coverage, and 2 percent had greater protection. (Indeed, the last group had protection equal to two or more times the life insurance benefit amount.) The life insurance benefits from which the AD&D amounts were derived averaged 1.5 times earnings in plans based on salary, and $11,300 for flat dollar amount plans, in 1988. Five percent of all AD&D participants were in plans paying a flat dollar benefit, while the amount of their life insurance was proportional to earnings. Flat amounts ranged from less than $2,000 to more than $30,000, but most commonly ranged from $5,000 to $15,000. Life insurance plans that pay a multiple of earnings commonly specify a ceiling on dollar payments. For example, a plan might pay two times the annual salary, up to a maximum of $100,000. In these instances, a maximum other than the basic life insurance maximum seldom applies to the AD&D benefit. Only 8 percent of all employees in plans with AD&D protection had a specified maximum benefit different from the life insurance maximum. White-collar workers were more likely than blue-collar workers to have a dollar ceiling on benefits, largely because white-collar workers' insurance frequently was based on an earnings formula, while blue-collar workers more commonly had a flat dollar benefit. Where separate maximum benefit amounts for AD&D were provided, they varied widely, ranging most commonly from $50,000 to $500,000. (See table 3.) Where AD&D benefits were limited to the basic life insurance maximum, the maximums averaged about $225,000 in 1988. However, the largest group, approximately 60 percent of participants in AD&D plans, had no maximum limit placed on benefits. A note on the public sector In 1987, the Employee Benefits Survey covered full-time employees in State and local governments. Data from this first-time survey were published for workers in three occupational groups: teachers, police and firefighters, and regular employees (that is, all other employees). Two out of three public-sector life insurance participants had additional AD&D coverage, slightly below the rate in medium and large private firms the previous year. The following tabulation shows the percent of full-time employees in the State and local government survey who participated in employer-sponsored life insurance and the percent of life insurance participants with AD&D protection: Table 3. Percent of full-time participants in accidental death and dismemberment plans by maximum benefit provision, medium and large private firms, 1988 While AD&D benefits in both the private and public sectors are nearly always combined in a package with regular life insurance benefits, variations are occasionally encountered in this pattern. For example, employees who have the opportunity to choose their benefits through a flexible benefits program may be able to receive life insurance without AD&D, or AD&D without life insurance. A flexible benefits program gives individual employees choices among a variety of benefits, such as several health care options, several levels of life insurance, and added vacation days. In rare cases, employees surveyed chose AD&D benefits and waived all life insurance coverage. Two insurance coverages that resemble AD&D are not included in the preceding tabulations. First, personal accident plans generally offer employees the opportunity to purchase varying amounts of protection against accidents. For example, a plan might offer coverage from $10,000 to $500,000, in multiples of $10,000, at the employee's option. Benefits are paid to the employee or a beneficiary should an accident occur. But these plans are almost always offered to employees at their own expense and, therefore, are not included in this survey of benefits for which employers pay at least part of the cost. Second, travel accident insurance is not included in the tabulation of AD&D benefits. Travel coverage protects an employee against injury or death that occurs while traveling on employer business. It is not a form of continuous protection. The Employee Benefits Survey tabulated the availability of this benefit, which is almost always completely employer paid, in 1987 and 1988. Sixteen percent of State and local government full-time employees in 1987, and 49 percent of employees in medium and large private firms in 1988, had travel accident insurance coverage while on business trips. THE RANGE OF ACCIDENT PROTECTION—AD&D insurance, personal accident plans, and travel accident insurance-coupled with workers' compensation benefits for occupational accidents, provides substantial risk protection for employees. These benefits have grown out of a concern for worker safety and are likely to remain common features of employee benefits packages in the foreseeable future. Footnotes The policy of paying greater benefits for accidental death than for natural death is debated in Leonard L. Berekson, "Group Accidental Death Benefits: An Inherent Contradiction," Benefits Quarterly, First Quarter 1985, pp. 65-68. 2 Key findings of the 1988 survey are reported in Employee Benefits in Medium and Large Firms, 1988, Bulletin 2336 (Bureau of Labor Statistics, 1989). In addition to examining life insurance and accidental death and dismemberment plans, the survey explores the incidence and detailed characteristics of health, short-term disability, and longterm disability insurance; retirement and capital accumulation plans; and a variety of paid time-off items. It also reports on eligibility for numerous other benefits. 3 Employer-provided life insurance was introduced in 1911, but did not become widespread until after World War II. AD&D coverage became a regular feature of employerprovided life insurance benefits beginning in the 1950's, after the Federal Government began offering such benefits to its employees. For more details on life insurance history, see 1988 Life Insurance Fact Book (Washington, American Council of Life Insurance, 1988). 4 Major findings of the 1987 survey are reported in Employee Benefits in State and Local Governments, 1987, Bulletin 2309 (Bureau of Labor Statistics, 1988). For comparisons of public- and private-sector practices, see William J. Wiatrowski, "Comparing employee benefits in the public and private sectors"; Allan P. Blostin, Thomas P. Burke, and Lora M. Lovejoy, "Disability and insurance plans in the public and private sectors"; and Lora Mills Lovejoy, "The comparative value of public and private pensions,” Monthly Labor Review, December 1988. Employee income protection Most workers in medium and large firms WILLIAM J. WIATROWSKI The vast majority of workers in medium and large firms are protected against loss of income during temporary absences from work due to nonoccupational sickness or accident. However, degree of protection and duration of coverage vary widely. Short-term disability protection was provided to 94 percent of these employees in 1983 in the form of paid sick leave plans, or sickness and accident insurance benefits, or both. Data on short-term disability protection are from the 1983 Bureau of Labor Statistics survey of the incidence and characteristics of employee benefits.' The survey provides information on the amount of income protection available to employees, but not on the actual usage of this benefit. Data were tabulated for all full-time employees and for three employee groups: professional-administrative, technicalclerical, and production employees. In this article, the first two groups are frequently combined and labeled white-collar workers, in contrast with production or blue-collar workers. Short-term disability protection provided white-collar workers differs considerably from that provided blue-collar workers. Just over 90 percent of the white-collar employees were covered by sick leave plans in 1983, more than double the percentage of blue-collar employees. Conversely, two-thirds of blue-collar employees had sickness and accident insur William J. Wiatrowski is an economist in the Division of Occupational ance plans, compared with only one-third of the white-collar workers. (See table 1.) This difference partly reflects contrasting wage payment practices for white- and blue-collar employees. The former typically are salaried, and their regular weekly or monthly pay can be continued during periods of disability. Pay continuation is more difficult to administer for blue-collar workers, who usually receive a rate per hour worked rather than a fixed salary; in such instances, sickness and accident insurance provides an alternative vehicle for income protection. Paid sick leave plans Sick leave, available to two-thirds of all employees covered by the survey, virtually always continues full pay for at least part of the duration of disability. Sick leave is always financed entirely by the employer out of operating funds, rather than through insurance carriers. Full-pay benefits may be accompanied by benefits at less than full pay for some additional period, and duration of benefits may vary by length of service or remain constant over the worklife of an employee. Benefits are seldom subject to a waiting period, but may require medical proof of illness. Although sick leave provisions are generally spelled out in formal plansgiving employees reasonable assurance of receiving benefits under the stipulated conditions-some plans are informal, with benefits at the discretion of a supervisor. Only formal plans were included in the survey. |
