Benefits and Compensation, HR Management & Compliance

Do You Provide Disability Insurance?

Does your organization provide short- and long-term disability insurance for employees? If not, is this something the organization has considered adding to your benefit package?

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Typically, disability insurance provides at least partial income (often around 60%) to an employee in the event they become temporarily or permanently disabled and unable to work. Millions of individuals are disabled, and only some of them have the benefit of disability insurance from their employer. Without it, many individuals end up losing their jobs, or are forced to look elsewhere for a job that may be better able to accommodate their disability and still earn an income. Some drop out of the workforce entirely, either because they’re no longer able to work or because they’ve given up trying to find a job that will accommodate their needs. Some even get discouraged and lose hope, even when there could be options for them.

The Benefits Can Pay for Themselves

Employers who are considering offering disability insurance for employees should remember there are a lot of benefits to doing so. For example, many individuals now look to this as a non-negotiable benefit, knowing that it is increasingly likely to be something that will be useful in the future should an injury, accident, or illness render them temporarily unable to work. It can also be a way for employers to keep employees who are temporarily recovering from such a situation—without having to lose that individual permanently. In other words, it can be a recruiting and retention tool. Employers should also note that disability insurance is typically viewed as an affordable benefit because employers can get a group rate and cover all employees for less per-person than each individual could get on their own.

If this is something you’re considering, be sure to shop around for the right coverage. There are many critical differences between policies. Different policies have different definitions of what constitutes a disability, when benefits will kick in, how much of the previous pay will be covered, how long coverage will last, how long the waiting period is before coverage begins, and more. There may be maximum payout amounts. Not all policies cover things like rehabilitation. Not all policies include employee total compensation when calculating how much they will pay. Some of these differences can be quite significant, so they’re worth looking into in more depth before settling on a plan to offer.

If your organization decides to offer disability insurance, this can be a recruiting tool and set the organization apart from other competing employers. It can also help both the employer and employee by offering rehabilitation services to help a temporarily disabled individual get back to work faster. It may mean employers are less likely to lose an individual when something happens that means they cannot work for a while. Overall, this is the type of benefit that can help both the employer and employee.

What has been your take? Does your organization offer short- and/or long-term disability insurance? Why or why not?

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.