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Understanding Disability Coverage

Understanding Disability Coverage

As an employer, you want to offer fair coverage to all your valued employees. After all, if someone is injured or ill, you want to be sure they aren’t worrying about their job while they recover. That’s where several types of disability insurance as well as federal and state programs come into play. Each offers specific coverage for different reasons.

Short-Term and Long-Term Disability

Both short-term and long-term disability coverage refer to optional insurance policies offered to employees. Only employers can purchase short-term coverage, but anyone can buy long-term disability, and some employers offer it. Short-term coverage must be exhausted before long-term coverage kicks in and covers the rest of someone’s time out from work.

Most policies require that an employee’s personal, vacation and sick time are exhausted before short-term disability coverage begins. Short-term disability insurance typically covers several weeks of time off due to an accident or illness. After that, long-term covers the remainder. Long-term is usually a span of several months or more when someone is recovering from a serious illness or injury and cannot work.

Both short-term and long-term disability are considered optional insurance that many employers choose to offer as part of their benefits package. Short-term disability is paid for by the employer. Long-term may be paid in whole or part by the employer, employee or both.

Should You Offer Disability Benefits?

In the past, many companies paid entirely for disability benefits. These were included as part of an employee’s benefits package. Today, many companies are offering long-term disability as an optional benefit. Employees are either enrolled automatically and must opt out, or they can choose to enroll with weekly payroll deductions.

Offering long-term disability to your staff may be a smart idea. It’s an added perk that makes your company’s benefits package all the more attractive when wooing star candidates away from competitors, and it usually doesn’t cost much.


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