Disability insurance is an important component of your employee health benefits plan. While prescription drug and dental coverage are likely top of mind for employees, disability benefits should be there as well. If an employee has an unexpected illness or accident that makes them unable to work, disability benefits will soon become a deeply valued element of your benefits plan.
In order to receive disability benefits, an employee must be unable to work due to an unexpected illness or accident. Insurance companies look at disability in two ways (both relate to an employees’ ability to work).
- Own Occupation Disability– This definition means an employee is medically unable to perform the essential duties of their own job. This means the employee is unable to return to work in their previous role.
- Any Occupation Disability – This definition means an employee is unable to perform essential duties of any occupation for which they are reasonably qualified by training, experience, or education.
These definitions become important when examining disability coverage.
The Impact of a Disability
When you start to explore the impact that a disability can have on an employee and their family, it is easy to see the value in providing disability coverage as part of your employee benefits plan.
A disability can leave your employee unable to work and support their family. In the short term, savings can help, but an extended absence can cause serious financial hardship. Your employees’ financial commitments don’t stop when they are disabled. Without coverage, an employee may have to make serious changes to their lifestyle and living arrangements. The financial toll of a disability without coverage can impact the employee and their family for the rest of their lives.
As an employer, including disability coverage as part of your employee benefits plan helps protect your employees’ financial wellbeing. Employees do have the ability to purchase disability coverage privately, but when purchased by an individual it can be very costly.
Disability benefits provide income replacement – usually between 60%-90% of the employees’ income. Long-term disability benefits are most common, but you can also choose to include short term or mid-term disability benefits as part of your plan.
A disabled employee has to wait a specified amount of time after being disabled, before receiving disability benefits. This is called an elimination period. If short-term disability is part of your benefits plan, the elimination period for long term disability is usually the length of time it takes for short term disability coverage to run out. The elimination period can vary from a few months to a year. A disabled employee has to wait a specified amount of time after being disabled, before receiving disability benefits. This is called an elimination period. If short-term disability is part of your benefits plan, the elimination period for long term disability is usually the length of time it takes for short term disability coverage to run out. The elimination period can vary from a few months to a year.
Often, disability benefits provide “own occupation” coverage for two years, then “any occupation” coverage thereafter. This means if an employee can’t do their own job after two years, they may have to seek another occupation. It’s easier to qualify for disability benefits during the “own occupation” period than during the “any occupation” period.
Disability Management Institute
The Disability Management Institute (DMI) is a third-party organization focused on effectively managing disability claims for employers. There are many good reasons to use a third party who specializes in disability; so much so, that GroupHEALTH includes these services with all long-term disability plans.
First off, managing a disability claim at your organization is complicated. There is a lot of administration/paperwork involved in a claim, and you must take care to respect your employees’ right to privacy and confidentiality about their health. At the same time, you also need to plan for how the absence will be managed at your organization, and for how long.
The Disability Management Institute acts as the liaison between you (the employer), your ill or injured employee and the insurance company. They manage paperwork, regulations, and status updates. They also work directly with the disabled employee. This means helping the employee navigate all aspects of the absence; this can include helping with paperwork that needs to be submitted, resources that can be accessed and maintaining a connection to the workplace. Being off work due to disability can be very isolating, so maintaining a connection to the workplace is important.
Providing you, the employer, with non-confidential updates means you can plan more effectively for coverage while your employee is absent.
Working closely with the disabled employee, DMI then creates a customized return-to-work plan for the employee. The plan focuses on the employee’s functional capabilities and can help get the employee back to work sooner.
There are two good reasons to get a disabled employee back to work as soon as they are able. Firstly, research shows that the sooner an employee returns to work, the more likely they are to return to pre-disability health. This is good for the employee and their family.
The second reason to get a disabled employee back to work as soon as they are able is to help minimize claim costs. Disability claims are a huge cost driver for benefit plans, so working with DMI to effectively manage a disability claim can help keep costs down. This is important for the sustainability of the plan.
Good advice is key
Are you looking for more info on disability coverage and why it’s an important component of your benefits plan? Review your options with one of our licensed advisors on the phone or in-person or contact us for a comparison quote.
Whether you’re looking for extended health and dental coverage, disability coverage, or life and critical illness coverage, GroupHEALTH has affordable benefit packages that work as hard as you do.