July 6, 2020

UFLAC Active Member
1571 W Beverly Blvd
Los Angeles, CA 90026

RE: UFLAC Long Term Disability Plan Clarifications

Dear UFLAC Member,

We have become aware that there has been false information distributed to our membership regarding the UFLAC Long Term Disability (LTD) plans. Any information communicated regarding the UFLAC LTD plans by anyone other than the UFLAC Trust and specifically, by the California Association of Professional Firefighters (CAPF), is used to market their LTD plan and is not accurate.  False statements are made and are intended to mislead membership into buying their product.

As your UFLAC Benefits Trustees, we want to make sure that you are well informed of the comprehensive and enhanced LTD options available to you as UFLAC members. As a reminder, the UFLAC LTD plans are the only long-term disability plans endorsed by your Union.

Why did UFLAC leave CAPF?

CAPF is a “pay-as-you-go” system, which means the plan does NOT reserve for active or future claim payouts. “Pay as you go”, is a system in which current collected premiums are used to pay for active benefits and little to no money is put aside for potential future benefits. This means that if too many members become disabled in a brief timeframe, the plan could collapse, and benefits would not be paid.  Additionally, because the CAPF product is not insured, the benefits are not guaranteed and are only paid if enough money is collected. As of 2013, CAPF only had total assets of approximately $3.5M, although they insured around 16,000 participants.

For comparison, the current UFLAC LTD plans are fully-insured through Reliance Standard Life Insurance Company, a company with over $30B in assets and reserves that can be used to pay plan participants. As of July 1, 2019, Reliance Standard had set aside nearly $4.2M in reserve just to pay future UFLAC LTD benefits for those currently out on claim.

This reserving process is extremely important for member benefits and security; if our current fully-insured LTD plan does not adequately or appropriately reserve, Reliance Standard Life Insurance Company will be subject to legal action.  And no matter what, the benefits owed to our members are GUARANTEED TO BE PAID.

Moreover, CAPF has been found by a federal court to have violated ERISA by engaging in self-dealing. In addition, firefighter Barboza and the Department of Labor raised concerns that CAPF failed to undertake annual actuarial reviews, monitor the fund’s solvency, or adopt an adequate funding policy. On the next page, please find a comparison between CAPF’s “pay-as-you-go” LTD plan vs. the reserved fully-insured UFLAC LTD plans.

CAPF UFLAC*
Funding “Pay-as-you-go” Fully-Insured
Current enrollment 16,000 members 1,854 members
Reserves for current claimants only None reported $4,200,000
Insured No – Not guaranteed Yes – Guaranteed

*As of July 1, 2019

How do the UFLAC LTD plans work?

The UFLAC LTD plans provide you with a monthly benefit in the event that you are unable to work due to an injury or illness, so long as your physician deems you as disabled. UFLAC offers members two fully-insured LTD options through Reliance Standard Life Insurance, the Premium and Standard plans. Below, is a comparison of the two UFLAC LTD plans:

Benefits Premium
LTD Plan
July 1, 2019
Standard
LTD Plan
July 1, 2019
Percentage of Covered Monthly Earnings 70%
(INCLUDES overtime)
60%
(EXCLUDES overtime)
Maximum Monthly Benefit $10,000 $10,000
Minimum Monthly Benefit $100 $100
Elimination Period 90 days 180 days

Please note, this is not a complete list of the UFLAC LTD benefits. Review your certificate of coverage for more details. 

How long do the LTD benefits last?

During the first 24 months, (known as the Own Occupation period), the plans pay benefits if you are unable to perform the duties of your own occupation with the LAFD. After 24 months, the plan pays benefits if you are unable to perform the duties of any occupation based on your education, training, or experience, which is known as the Any Occupation period. If you continue to meet the requirements of being Totally Disabled, benefits are payable up to the Social Security Normal Retirement Age (SSNRA). If you are not approved for disability during the Any Occupation period, your benefits will end.

Why did I receive a benefit payment less than 60% or 70% of my covered monthly earnings?

While you are using your LTD benefits, any income you receive or are entitled to receive because of your disability may be used to offset your monthly LTD benefit. Your monthly LTD benefit may be reduced if you are eligible to receive one or more of the following sources of Other Income Benefits as a result of your disability:

  • Other Group Disability Benefits including LAFRA
  • 4850-time (IOD Pay)
  • Workers’ Compensation (State-Rate)
  • Retirement Benefits

Please be aware that your accrued sick time, prior to your date of disability, is not considered an eligible Other Income Benefit and will not offset your monthly LTD benefit.

Please note, this is not a complete list of Other Income Benefits. Review your certificate of coverage for more details.

If you are already receiving more than your calculated maximum monthly LTD benefit from another source of disability income, the UFLAC plans will still provide you with a minimum monthly benefit of $100. The following examples are provided to help explain how the LTD benefits coordinate with Other Income Benefits.

Injured on Duty (IOD) LTD Claim Example

IOD Claim Example Year 1: A member is enrolled in the UFLAC Premium LTD plan and is injured on duty. The member earns $120,000 per year (including overtime), which translates to a maximum monthly benefit of $7,000 (70% of $10,000/month). The member is also receiving $8,000 from 4850-time for their first year of injury. Under this IOD scenario, the UFLAC Premium LTD plan would provide the minimum monthly benefit of $100, because the member’s LTD benefit is fully offset by their earnings from 4850-time for the first year.

IOD Claim Example Year 2: The same member’s disability continues beyond the first year of 4850-time. Now the member is eligible to receive a lower dollar amount from State-Rate, $6,000 per month. Under this IOD scenario, the UFLAC Premium LTD plan would provide a $1,000 monthly benefit to cover the gap between the member’s calculated $7,000 benefit vs. what they are receiving from State-Rate.

IOD Claim Example Year 3: The same member’s disability continues beyond the second year of State-Rate, and the member is still considered disabled in accordance with the LTD policy. Assuming the member is not receiving any other income, the UFLAC Premium LTD plan would provide the member’s calculated maximum monthly benefit of $7,000. Please note, this scenario also assumes that the member has been approved for benefits during the Any Occupation period.

Please note, if you experience an off-duty injury and you are not eligible to receive any other source of Other Income Benefits, LTD benefits will be paid in accordance with the Year 3 example above. As long as you continue to be considered Totally Disabled, benefits are payable up to the Social Security Normal Retirement Age (SSNRA).

As evidenced by this communication, the UFLAC Trustees believe CAPF to be engaging in predatory and false marketing to our represented members. They have been aggressively targeting our members to enroll in an unendorsed, non-payroll deducted, and non-guaranteed product. We hope the information included in this communication will help provide our members with better transparency on the benefits available through the UFLAC LTD plans and empower them to make an informed decision for themselves and their families.

UFLAC is here to serve you – our Los Angeles City Firefighters. We want to make sure our members are well informed about ALL benefits available to you. For more information, please visit www.uflacbenefitenrollment.com or contact the UFLAC Benefits Staff at 213-977-9014, Ext. 2.

UFLAC v CAPF Plan Comparison Flyer

Very truly yours,
UFLAC Trustees