Disability illnesses and injuries can create significant financial stress when employees are unable to work, and this stress often comes as employees face medical bills and other costs. For this reason, many employers offer disability insurance among their employee benefits packages.
Disability insurance generally provides compensation if employees can’t work due to a covered medical issue. Although most employees believe themselves to be at relatively low risk for suffering a disability, data from the Council for Disability Awareness shows otherwise:
Many employers choose to improve their employees’ compensation by providing disability coverage among the offered benefits. Disability may be a standard benefit for some high-skilled and/or high-risk vocations, and workers at less-skilled positions often appreciate the coverage because they’re more likely to live paycheck-to-paycheck.
For employees who don’t have savings and can’t individually qualify for disability coverage, group coverage through an employer can be especially important.
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Group disability coverage generally covers employees as a collective rather than individually. This can allow employees deemed high-risk to still be included in coverage, since they’re balanced out with lower-risk employees.
The difference between short-term and long-term disability coverage lies in how long disabilities are coerced.
Short-term coverage normally begins paying relatively soon after an employee becomes disabled, but the coverage may only pay for a denied period of time. Some policies only cover a few weeks or months of disability.
Long-term coverage usually begins paying only after a prolonged time of not working, which can be months or even a year-plus in some cases. Long-term policies frequently pay for years, sometimes up to retirement if an employee remains unable to work.
Employers may offer either or both types of disability coverage. If offering both, an insurance broker who specializes in disability coverage can help set up a short-term and a long-term policy that complement each other well.
The difference between income-replacement and own-occupation disability coverage is to what extent employees must be disabled.
Income-replacement coverage normally only covers claims when employees are entirely unable to work. Even if an employee earned six figures and now can only work minimum wage jobs, the coverage likely still wouldn’t pay for their disability.
Own-occupation coverage usually covers disabilities that render employees unable to work in their chosen field. With this coverage, an employee who went from six figures to minimum wage likely would receive benefits.
Which type of disability coverage an employer provides depends on how much they want to pay and what level of protection they want to give employees. Income-replacement coverage usually provides much more limited protection but also frequently costs substantially less.
Either employers or employees may pay for group disability coverage, and the premiums can also be split. Employers should consider employees’ benefits expectations and salaries when considering premiums and how to pay them.
For help setting up group disability insurance, contact the insurance brokers at QuieTrack Insurance Services. Our brokers are familiar with many aspects of employee benefits, including group disability coverage. We’ll work with you to ensure that the group disability coverage you offer employees truly improves their benefits package.