The Council for Disability Awareness (CDA) has identified a significant problem for American workers: a lack of access to adequate disability insurance.
The CDA stated, “The absence of emergency savings, rising medical costs, and an overall trend of fewer employers offering benefits to workers has created a critical blind spot for many American workers and their families,” the CDA continued, “Without some income protection, more Americans are experiencing severe financial difficulty if they need to miss work due to illness, injury, or pregnancy.”
They go on to talk about the problems workers face when they find themselves temporarily or permanently disabled. An inability to work can cause immediate financial stress and long-term damages. Because most working Americans don’t have enough savings to cover more than three months without a paycheck (see page 26 of this federal report).
How Many Workers Have Disability Coverage?
Their examination shows that in 2008, 39% of private industry employees had access to short term disability coverage and that only increased to 42% by 2018. Long term disability access in the private sector was 32% in 2008 and just about the same in 2018 at 34%.
Fewer federal and state employers offer short term disability than private employers, with the number at 23% in 2008 and 26% in 2018. However, federal and state workers are more likely than their private-sector peers to have access to long term disability. In 2008, long term disability access for public employees was at 35%, and that number increased to 38% in 2018.
These numbers reveal a stark reality: millions of Americans are working without protections against things like disability, pregnancy, and injury.
CDA says, “A 2014 study of consumer bankruptcy filings identified the following as primary reasons: medical bills (26%), lost job (20%), illness or injury on the part of self or family member (15%).”
What Is A Group Disability Policy?
Group disability is a safety net for workers. In this plan, an employer provides a group insurance policy that covers all eligible and enrolled employees as members. Employers can buy policies for short term coverage, long term coverage, or both.
There are several ways to cover the premiums. Some employers include the full cost of the premiums, while others split the premiums between themselves and their employees.
Still, other companies provide disability insurance that is funded entirely by employees paying the premiums. (Need advice figuring out how to choose the right premium coverage strategy? Talk to us at Peter Green Insurance!
What Does Short Term Disability Cover?
Short term disability (STD) provides benefits for less than 26 weeks to eligible employees who are temporarily disabled. If a worker can’t perform the responsibilities of their job for a short time, they will likely utilize short term disability coverage.
Short term disability covers things like recovery after childbirth or surgery or dealing with an illness that lasts for several weeks or months.
What Does Long Term Disability Cover?
In contrast, long term disability (LTD) can far exceed 26 weeks. Some companies limit long term disability to a specific number of years (4 or 5 years is a typical term), but in general, LTD provides coverage until the employee returns to the job.
LTD usually begins after short term coverage is utilized. Workers who face a longer recovery after an injury, suffer a mental health condition, deal with chronic illness, or fighting cancer are likely to utilize long term disability.
How Is This Different From Worker’s Compensation Insurance?
Worker’s compensation covers medical costs and missed income when a worker is injured on the job or becomes sick because of the work environment. Disability insurance, however, covers injuries and illnesses entirely unrelated to the workplace.
The main focus of disability insurance is on what happens when a person is unable to physically work anymore because of their health or disability circumstances.
Why Should Employers Offer Disability Coverage?
The first group of people usually identified as beneficiaries of disability coverage is, of course, injured or disabled workers. You will learn about the risks of becoming disabled and how difficult it can be to maintain financial security after such a life change when you learn and understand the benefits of disability coverage.
CDA says that the odds of experiencing a period of disability in your life are pretty high. They state that 30-year-old men who work jobs that require physical labor face some pretty steep chances of becoming disabled.
The risk is almost one-in-two of experiencing a disability before 65. Even someone in a job that is not as physically dangerous can still become disabled.
The CDA says that a 20-year-old woman in an office job still has a one-in-five chance of becoming disabled before reaching the typical retirement age of 65.
But even if it looks like employees are the only ones who benefit from disability insurance, that isn’t the case. There are several reasons why employers should offer short and long term disability to their workers.
- Taking care of your employees improves morale and retention. It’s not just about morality. It’s also about building a company culture where your whole team feels valued and secure.
- Employers want to take care of their workers when they are hurt or sick because it is a morally sound thing to do. Providing disability insurance is an ethical decision.
- Disability insurance prevents you from having to make difficult decisions about whether or not to continue employing a worker who is unable to work through no fault of their own.
- Providing great benefits is one of the best ways to recruit excellent workers who could go anywhere. You want to hire the best candidates, and providing excellent benefits is a way to attract those top tier applicants.
- Disability plans are often less expensive than you would expect, and we can almost always find a plan that meets your budget.
- When an injured or disabled worker has good coverage, they can focus on getting better instead of stressing about their finances. Then they can get back to work, which is where they want to be!
What Should Business Owners Do About Disability Insurance?
Are you currently providing short term or long term disability coverage to your employees? Is the coverage adequate? Are your workers satisfied with what you are providing? Are the costs within your budget?
Speaking with an experienced insurance agent is the best method to learn about your options. A knowledgeable trusted agent will know of reliable carriers who will prepare proposals. Talk to us about Disability Insurance! We look forward to hearing from you. We can assist you in providing DI and other benefits to your workers!
Since 2010, Peter Green Insurance Agency LLC (PGIA) has provided businesses and individuals with “Asset Protection and Financial Security”™ by selectively using insurance coverages as a hedge against inherent financial risks.
Peter W. Green is the managing member of PGIA and a Certified Insurance Counselor (CIC). CIC is an internationally recognized designation awarded by The National Alliance for Insurance Education and Research to those who make the investment in dollars, time and study to gain a unique level of expertise.
Need answers to an insurance question? Have a specific insurance concern? Would you like a review of your policies prior to renewal? Call our office, 714-258-2800. Would you like to better understand disability insurance policy specifics? Call and ask for Peter. If you rather, contact Peter by email. Our agency offers a unique level of customer service rarely found today. Let’s talk.