February 24, 2018
CAI Insurance Agency

Short & Long Term Disability Programs for Employers

Health Insurance - IMA414.jpgGroup Disability Programs provide income replacement for your employees in the event that they cannot work due to illness or injury. Disability Programs are designed to assure that your employees can continue to pay their bills and focus on recovery instead of worrying about how to make ends meet. Short Term Disability Programs typically provide protection for periods of 30 - 90 days, while Long Term Programs can provide up to 66% of salary for periods of two to five years - or even until age 65. Voluntary plans are offered to employees at little or no cost to the employer, or Companies can choose to contribute to the premium expense on behalf of their workers.
The U.S. Census Bureau estimates that workers have a 20% chance of becoming disabled at some point during their working lifetime. The most common causes of Long Term (greater than 90 days) disability include cancer, back or spinal injuries, complications from pregnancy, accidents, and heart disease. The average long term disability lasts 2.5 years. Most employees (estimates are as high as 71%) live from paycheck to paycheck, with little or no savings to fall back on in the event they can no longer earn the paychecks on which they depend. Despite these sobering statistics, the Social Security Administration estimates that 70% or workers have not invested in a Personal Long Term Disability Policy.

Workers Compensation and Social Security are not typically viable alternatives: only an estimated 1 in 10 disabling injuries are work related. The average Social Security Disability Insurance benefit is slightly more than $1000 a month - plus fewer than 50% of those that apply for these benefits are approved.
Group Disability plans may be the single most important benefit you provide to your employees other than Group Health Insurance. Group plans typically have limited underwriting requirements - or none at all - meaning all of your employees will qualify for coverage. Some plans allow your employees to convert their Group coverage to an Individual Policy if they move on - which can be a huge benefit for attracting new employees. 

Some criteria we consider when recommending a Group Disability program for our clients:

  • Contribution Strategy - Will you contribute toward the cost of premiums or provide a strictly voluntary benefit? Some employers will pay for a basic level of benefits (e.g. 2 year benefit program) and allow their employees to "Buy Up" their coverage.
  • Duration - Is a short term program the best fit for your employees or is long term coverage more appropriate?
  • Benefit Level - Long Term policies can be structured to provide anywhere from 50% to 66% of salary
  • Return to Work - Some insurers encourage a quick return to work through the structure of their benefits. Others will work to manage disability claims to speed recovery and get employees back to work.