There are a variety of benefits that fall under the umbrella of disability benefits. The most common are short- and long-term disability insurance, and employers have the option to provide both. While there isn’t a law requiring employers to offer long-term disability insurance, about half of large and mid-sized employers offer it to their employees.
Here are a few things you need to know about employer based disability plans:
Short-term disability plans:
Employers have the option to offer short-term disability insurance plans, which typically replace all of part of income due to a temporary disability. It’s important to note that these plans do not provide job protection. There are requirements in place to retain an employee’s position and reinstate it after a disability leave. These are usually determined by an employer’s policies mixed with state and federal laws (like the FMLA or ADA). Short term plans have a front-end waiting period for benefits to kick in (around seven days). The reason for the waiting period is because many employers have paid time off programs that allow for short term absences. The waiting period also discourages the abuse of disability insurance, which happens more often than you think.
The income benefits are paid on a scheduled basis, and the amount will be a certain percentage of your pay. This typically lies between 60-75%, and the benefits might be given in conjunction with other income, like paid sick leave. This ensures that the income benefits don’t exceed 100% of your base pay. An employer has the say so on whether or not the supplement of paid sick leave benefits or any other benefits coordinate with the short term disability insurance.
Long-term disability plans:
Many employers also offer long-term disability plans. These plans usually fall in place with short-term plans, so that income replacement benefits under the long-term plan replace the short-term benefits when they end. Long-term benefits for someone who is permanently disabled can continue through the individual’s normal retirement date (or until the employee is eligible for SSDI). Some policies provide limited income replacement benefits, like 24-36 months. Paid long-term income benefits also work in conjunction with income from other sources if available.
Like short-term benefits, long-term insurance doesn’t provide an employee with job protection. There are requirements in place to hold an employee’s job, and reinstate the employer after the long-term absence, just like short-term benefits.
We hope this helps you better understand employer insurance policies!