Can you explain how our medical benefits work with disability insurance? When does medical insurance terminate for an employee who is not working due to a short or long term disability? Does disability insurance cover any of the employee’s medical expenses? (We are covered with a private disability insurance, not through SDI).
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Thank you for your inquiry regarding the interplay of medical benefits and disability insurance.
Some of the answers to your questions will depend on the terms of your organization’s insurance policies (both the private disability insurance and the medical insurance); however, I can provide some general guidance as to how these plans typically intersect. For more detailed information you may wish to also contact your benefits providers for specifics on your plans’ terms.
Generally, private disability insurance does not cover medical expenses. Rather, the disability coverage serves as a form of supplemental income, providing workers with a percentage of pre-disability earnings for the set duration of the STD or LTD policy.
With regard to health insurance coverage, when and whether the employee’s group insurance coverage can be terminated will depend on the circumstances of each worker’s medical condition and leave from employment. In other words, is the worker still employed by your organization, but out on a specific form of temporary medical or disability leave, or has the worker left employment permanently due to the disability?
For example, let’s say the worker qualifies for and is using unpaid FMLA leave (supplemented by the STD/LTD income benefits) for the related medical condition. If this is the case, then your organization must continue to provide the same health insurance benefits – for the duration of that leave – to the employee as if he or she were actively working.
If the employee exhausts or does not qualify for FMLA, but has been allowed to take extended leave as a reasonable accommodation under the ADA, then the employer must continue the employee’s health insurance benefits only if it would do so for other non-ADA protected employees in a similar extended leave status. So this will be a matter of existing policy and/or practice within the workplace.
If the employee is out on an extended leave that is governed solely by your company’s internal policy or practice – not a state or federal law – then the continuation of health benefits will depend on the terms of your group health insurance plan in conjunction with your company’s prior practices (if other employees have taken similar leave).
Unless the worker is protected by a specific law or statute (such as FMLA or ADA or comparable state laws), most health benefits providers require a minimum number of hours to be worked per week in order for an employee to remain enrolled in the group insurance policy.
If the employee exhausts all of his or her available leave and is permanently unable to return to work, then the employee’s benefits may terminate (because he or she has left employment) and the COBRA enrollment process may begin.
If you have questions related to a specific employee’s status and benefit eligibility, then we recommend contacting your benefits provider for additional guidance on his or her benefit options.