Long-Term and Short-Term Disability
Helping employees get back to work
In addition to offering health insurance benefits, employers may offer disability insurance to their employees. Disability insurance programs help injured or ill employees return to healthy states of productivity.
If you’re an employer, you can choose to offer short-term or long-term disability insurance, or a combination of both. The insurance will replace a percentage of income if an employee is unable to work due to an illness or injury and only takes effect within a specific time period, which varies by plan.
Short-term disability
Short-term disability coverage provides an employee with a certain percentage of their income when his or her sick leave has been used. The duration of short-term disability coverage runs up to six months on average, yet the coverage may vary. Typically, 60 percent of an employee’s income is provided, yet this percentage may also vary by plan.
Events that may be covered by short-term disability coverage include pregnancies, strains, sprains and other quickly resolving conditions in which employees are able to return to work before benefits are exhausted.1
According to the National Compensation Survey of 2008, there was 97 percent take-up rate for employees who had access to short-term disability insurance in New England. This was equal to the national average.2
Long-term disability
Long-term disability coverage provides a certain percentage of earnings to an employee whose disability has disrupted his or her income for an extended period of time. The coverage typically begins when sick leave and short-term disability payments have been exhausted. The income provided by long-term disability insurance can extend anywhere from five years to death.1
As with short-term disability, the coverage is typically 60 percent of earnings provided to the employee. Long-term disability insurance for employees is considered to be a protection against a life-altering injury or illness, and also protects against common medical conditions that may cause an increased impairment over time, such as hypertension, heart disease, diabetes or musculoskeletal conditions.2
According to the National Compensation Survey of 2008, there was a 95% take-up rate for employees who had access to long-term disability insurance in the New England region. This was equal to the national average.
Next Steps
Learn more about disability insurance, and consider offering disability insurance to your employees, if you do not already do so.
If you are interested in offering disability insurance, here are some things to consider while designing your company’s disability insurance plan:
- eligibility factors and determinants of your employees
- benefits selection and funding
- the coordination of all benefits that will be provided to your employees.
Employers may provide or fund a basic plan to protect employees, and provide employees the option of purchasing supplemental coverage to better address individual needs.
Resources
America’s Health Insurance Plans offers a guide for employers to learn more about disability insurance. Included factors you should consider when developing or purchasing a plan.
The Job Accommodation Network addresses frequently asked questions from employers regarding health and disability insurance.
JAN has a Return-To-Work guide which provides guidance on accommodations that employers can provide their employees once they are ready to return to work.
To learn more about reasonable accommodations in the workplace, click here.
1America’s Health Insurance Plans, An Employer’s Guide to Disability Income Insurance, 2007
2United States Department of Labor, Bureau of Labor Statistics, Life and disability insurance benefits: Access, participation, and take-up rates, 2008
