Monday, July 4, 2022

Why Do Employers Offer Disability Insurance To Employees

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Can You Contact Your Employees While Theyre On Short

Short and Long Term Disability Insurance

You have the right to contact employees while theyre on short-term disability as long as you dont ask them to perform any sort of work. For example, if you have a quick question or two about their benefits, or about a work-related procedure, you can reach out.

Unlike some other programs like the Family Medical Leave Act and the Americans with Disabilities Act that provide time off for employees, short-term disability doesnt offer any sort of job protection. Employees on short-term disability also arent entitled to the same job position when they return from it. Its up to your company how youd like to set return-to-work policies.

More Than 16 Employees

If you have more than 16 employees, its very possible that you may have already sponsored an employee benefits plan.

Whether you have already sponsored a plan, or if this is your first, it should not be an off the shelf cookie-cutter plan. It needs to be configured to maximize the value its giving your business and your employees. Each company is different, so what works for one company isnt necessarily the best fit for another company.

At GroupHEALTH, we can support different classes of employees across different divisions in different locations. Working with our Advisor Partners, you can customize the coverages you will provide as well as the coverage levels that make the most sense for your business.

With larger businesses, you can also look at alternative options like ASO. ASO stands for Administrative Services Only. In this situation, the employer self-insures their benefit plan, and an independent third party administers the plan and pays claims. ASO arrangements work well for companies with a long history of stable claims.

Remember that ASO arrangements can be riskier for some businesses, especially when it comes to prescription drugs. High-cost specialty drugs can cost hundreds of thousands of dollars. For a company that is self-insuring, a single employee requiring specialty drugs can be detrimental to the entire plan.

Does Maternity Leave Count As Short

Youve probably heard of circumstances where people use their short-term disability for pregnancy and maternity leave. Doing so is fairly common, but whether or not youre able to do so yourself is also dependent on your plan.

We actually see a lot of short-term disability policies that specifically address maternity leave, explains Bartolic. These plans also will explain how much time off is offered for maternity leave, which can vary based on things like whether the mother had a vaginal birth or a c-section.

Some employers exclude maternity leave from their short-term disability plan and have an entirely separate program to address paid leave for childbirth.

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Should My Company Offer Disability Insurance

There are some states that have state-mandated disability insurance requirements so youll need to see what is required in your area. If you have employees in one of those states, it is important that you understand how to comply with the law.

What about if you arent required to offer disability insurance? Should you?

It depends. Its an additional cost to your business and if you cant afford it, its obviously not a good idea. However, should your business be able to afford it, the benefit might act as an additional motivator to attract and retain skilled, talented employees. For example, disability insurance covers part of womens pay during pregnancy and maternity leave.

Employees that want to take time off for pregnancy or a new baby need to consider what is actually covered by these policies. For example, a short-term disability insurance policy will only pay benefits if you are disabled due to the pregnancy. The typical timeframe that youre considered disabled following delivery of the baby, without complications, is six weeks eight weeks if a C-section was performed. Benefits may be paid before the delivery of the child if your doctor has put you on bedrest due to the pregnancy.

If you decide to offer disability insurance, let employees know how important wage replacement can be if theyre ever disabled and cannot work. Even though the benefit will not cover 100% of the employees base wages, having some money coming in each month will help your employees.

What Is The Insurance Plans Definition Of Disability

Disability Insurance from Allstate Benefits

To qualify for benefits if you file a claim, youll have to meet your insurance plans definition of disabled. The key language to pay attention to is whether the plan considers you disabled if you cant perform the duties of your own job or any job.

Typically, group disability insurance will pay you if you cant do the duties of your own occupation during the first 24 months after becoming disabled. Then it will pay after 24 months if you cant do the duties of any occupation based on your education, training and experience, Olmstead says.

The more generous policy is one that pays if you cant perform the duties of your own occupation. For example, if you are a surgeon and injure your hands, you want a policy that pays if you can no longer perform surgery. Otherwise, you might have to settle for a lower-paying job if you have a plan that only pays if you cant perform the duties of any job.

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Can A Disability Insurance Company Monitor Your Phone

They are not legally allowed to monitor text messaging on cell phones and I have never seen a disability insurance company use this tactic. Global Positioning Systems is a new technique used by some investigators, but it has been ruled illegal in some states and in most cases is considered trespassing.

How To Improve Benefit Participation

Cover a Greater Percentage of Premium: Employers continue to shift the cost of employee benefits onto workers’ shoulders, and disability insurance is unfortunately no exception While the upside here is that the benefits will be tax-free if employees pay for the coverage themselves with after-tax dollars, the downside is that fewer employees will enroll in coverage to begin with.

Reducing employee premium expense will undoubtedly improve enrollment. If that’s not possible through cost shifting, then consider covering 100% of a core basic benefit that replaces 40 percent or 50 percent of income, while offering workers the opportunity to “buy up” to more generous income replacement of 60 percent or 70 percent. The benefit will be cheaper for the employer to put in place and this will at least ensure that everyone has some level of income protection.

Auto-Enroll Your Workforce: As the book “Nudge” suggested through a tactic known as “choice architecture”, employers who pre-select disability insurance for their employees during the enrollment process enjoy remarkably higher enrollment rates than those who do not. By simply pre-checking a box , employers ever-so-gently “seed” the idea of disability insurance as a “no brainer”. In doing so, they leverage the human tendency of inaction to help overcome a status quo bias.

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Why Are Fewer Employers Offering Group Disability Insurance

Fewer businesses are offering their employees long-term disability insurance as part of their employer-paid benefit packages. Many are still offering employees disability insurance plans, but workers have to pay for the plan themselves. That means that fewer Americans have long-term disability insurance, leaving them at risk for financial disaster if they become ill or injured.

The number of employers offering disability insurance dropped from 220,000 to 214,000 between 2009 and 2013, according to the survey by the Council for Disability Awareness. The group represents disability insurance providers. During that same time period, the number of employees with long-term disability insurance dropped from 34 million to 32.1 million. That drop is even more significant when you consider that the number of American workers increased by 6.6 million between December 2009 and December 2013.

According to insurance providers, one reason for the decrease in employer-provided insurance is the uncertainty surrounding how their health benefit costs will change as the result of the Affordable Care Act. Because businesses dont know what to expect, disability insurance is an easy target, according to a senior account executive for one insurance company.

Why Should I Offer My Employees Short Term Disability Insurance

Why you should pay for disability insurance

Short Term Disability is one of the fastest-growing benefits. Its critical to the financial health of the family, and less expensive than you think!

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In honor of Saint Patricks Day, with everything possible being turned green, lets focus on a product that brings us some greenmoney that is, when we need it most. Im talking about wage replacement money, when an employee cannot work due to illness or has to miss work as a result of an accident.Short Term Disability is one of the fastest-growing ancillary benefits being offered by employers. From an employers perspective, it eliminates the need to have to make a very difficult decision: when to stop paying an employee after sick pay runs out, if you dont know when the employee will return to work. From an employee perspective, Short Term Disability is a very popular benefit for expectant moms, employees who suffer a debilitating accident, and employees who need a few weeks to recover from surgery or illness.

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So How Does Disability Insurance Work

Both short and long-term disability insurance are meant to supplement a persons income in the event they become ill or disabled and are unable to work. As the names suggest short-term disability insurance is for shorter periods of time and long-term disability insurance is for lengthier periods of time .

Anything could happen that would cause someone to use their short or long-term disability insurance policy: a car accident, major surgery, cancer, or stroke, just to name a few. In any of these cases, the employee could require an extended leave of absence from work. Eligible workers could file for FMLA, but employers arent required to pay employees for that time away from work, leaving them vulnerable at a time when theyre likely to be incurring additional medical bills.

Because of this, short-term disability is often used to supplement womens income during maternity leave. How many weeks the insurance will pay for is dependent upon how complicated the delivery is , but can be between six and eight weeks, at which point unpaid leave would begin.

While neither type of disability insurance covers a persons entire salary, having even part of it covered is often helpful, especially for those who dont have a lot of savings .

Disability Insurance Benefits And Taxes

Generally, if you pay the entire amount of the disability premium yourself, your disability benefits will be tax-free. This may bring your income while on disability closer to your current take-home pay.

If your employer pays all or part of the disability premium, your disability benefits will be subject to income taxes.

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How Much Time Off Do You Get With Short

While I might sound like a broken record, a concern like, How long is short-term disability? is another aspect that can vary depending on your own plan.

By definition, its short-term, but it can range in duration. Ive seen be as short as 30 days and as long as one year, Bartolic says, pointing to the maximum covered benefit periods hes seen in his own practice. It depends on the overall structure of the disability benefits through the employer.

Your time off also depends on your specific health problem. The medical field has guidelines as to how long recovery should take, explains Bartolic. That provides a roadmap for your employer or plan provider to establish a reasonable amount of time for you to be out of work.

What if things are really serious and youre not looking at a few weeks or even months away from the jobbut much longer? That would fall under a long-term disability benefit, if your employer offers such a thing.

As the names imply, short-term disability is used to cover injuries or illnesses that persist for a shorter amount of time . In contrast, long-term disability comes into play for any issues that will take you out of work for longer than that.

What Is Long Term Disability Insurance And How Does It Work

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When you think of a disability, youre likely thinking of a permanent disability, such as paralysis or a serious illness, that impacts a persons ability to work and earn an income.

For example, consider a construction worker who becomes paralyzed from the waist down after a car accident. Hes no longer able to perform the duties of his normal job and earn his income, so what does he do? How can he continue to support himself and his family?

Thats where Long Term Disability Insurance comes in.

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How An Independent Insurance Agent Can Help

An independent insurance agent can be your knight in shining armor when it comes to figuring out your disability insurance. When you feel like its hopeless to find the right kind of coverage at the right price, they gallop in with coverage options that all fit right inside your budget.

And when it comes to getting answers on questions like tax deductions and so on, theyve got your back. Go on, give your local independent insurance agent a call and get going on your short-term disability insurance before its too late.

Attract And Retain Top Talent

Prospective employees are looking at an employers benefit plan when weighing their job options. The more comprehensive the plan, the better, and Disability Insurance is near the top of the priority list. Employers who want to remain competitive when it comes to acquiring and keeping their talent should look carefully at Disability Insurance options.

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How Do I Choose Disability Insurance

There are many factors to consider when choosing a disability insurer. If your employer offers a group short- or long-term disability insurance option, that may be an affordable option to consider. Of course, you can also purchase individual and/or supplemental coverage on top of that, to further protect yourself and your income.

When choosing a disability insurance policy, youll want to look at the elimination period options, benefit coverages offered, available riders, and whether the policy is non-cancelable. In some cases, you might also want to consider whether a medical exam will be required and if you can buy coverage online or if youll need to chat with an agent.

How Do You File For Short

How Do I Qualify for Disability Insurance Benefits?

If you believe that youll need to take advantage of your short-term disability benefit, your first step is to make sure that your illness or injury is well-documented, as youll have to provide some medical evidence or backing.

Consult with your doctor and find out what youre up against first. Make sure you speak honestly about your symptoms and the things that you are experiencing. That medical record will be reviewed by an insurance company, so start out with a strong pronouncement of, Hey, Im having this problem, advises McDonald.

Then, approach your HR department to begin the process of filing a claim . Dont have an HR department? Connect with your manager or consult your plan documents to understand exactly what you need to do to submit your claim.

Be aware that short-term disability plans have a requirement for how many days you need to be out of work before you can claim disabilityits called an elimination period. The reason is that they dont want to invoke short-term disability for something that could be covered by sick days, says Bartolic.

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Should I Purchase Short

Although illnesses and injuries can’t be predicted, they’re likely to affect your workplace at some point in the future. For comprehensive protection, employers may consider offering a combination of both short-term and long-term disability insurance to employees. These policies are an important complement to any group health insurance plan and help to minimize the impact of debilitating illnesses and injuries on both your employees and your business.

What Is A Long Term Group Disability Plan

Long Term group disability plans pays a part of the employees salary. The employer determines the benefit. The benefits start paying between 90 days and 1 year of the employees illness or injury. Benefits pay for 2 years or more. Some plans reduce the benefit by social security disability benefits.

For the employer, offering group long term disability plans is a tool to keep employees. When offered, it is worth spending some time educating employees on the risk of disability.

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Evidence Of The Effects Of Health Insurance

Are employers perceptions of the value of health and health coverage consistent with the evidence from empirical studies? Is health coverage associated with measurable gains in health and productivity? Is absenteeism reduced? Do the benefits of health coverage justify its costs? The existing empirical research can shed some light on these questions, but it is hardly conclusive. Substantial gaps in research remain.

Short Term Disability Vs Fmla

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People also sometimes confuse short-term disability with the Family and Medical Leave Act . The FMLA is a federal law that protects workers who need time off for various family and medical reasons. It stipulates that you must be given up to 12 weeks of unpaid time off for:

  • Having children.
  • Health problems.
  • Taking care of sick family members.

The law also protects you from being dismissed from your jobs while taking a leave of absence that is covered by the law.

However, the law does not provide a replacement for any income you might lose while taking leave . Plus, there are several qualifications to be eligible for FMLA leave:

  • Employees must have worked at the employer for 12 months and 1,250 hours.
  • Also, it only applies to employers with 50 or more employees.

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