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Group Life & Disability
Disability Insurance is another common insurance benefit
in competitive Employee Group Benefit Programs. Disability
insurance comes in two forms, short and long-term.
Short Term Disability (STD)
Group Short Term Disability (STD) is an
employer provided benefit that is designed to assist an employee
in replacing a % of lost income, due to either sickness or
accident. These plans establish an elimination period before
the employee becomes benefit eligible and will pay benefits
as long as the employee remains disabled up to a maximum number
of weeks as defined in the policy.
A typical plan might reimburse an employee 60% of his or
her salary after that employee has been disabled due to injury
or accident for 7 days, or after the employee has been disabled
due to sickness for 7 days. The goal being that the STD plan
is designed to replace a portion of an employees lost income
that is sufficient to pay for the basic needs of a family.
Benefits might be limited to $750 per week, and are payable
for a maximum of 26 weeks. Disability Benefits can provide
a significant financial cushion to employees when they are
unable to work and earn an income.
The following are some provisions that make up the bulk of
a Short Term Disability contract.
- Maximum Covered Salary: This is determined
by the employer and the total aggregate salary of the employees
in the company.
- Elimination Period: This is the amount
of time that must pass before a disabled employee becomes
eligible for benefits. This can be anywhere from the 1st
day of disability to the 30th day.
- Duration of Benefits: This represents
how long benefits will be payable, i.e. 4 to 26 weeks.
- Residual Disability: If an employee is
disabled and then returns to work, and experiences an earnings
loss of 20% or greater, he/she will still receive a benefit
to offset this earnings loss.
Long Term Disability (LTD)
Long Term Disability plans are similar
in nature to STD plans, but are designed to replace a percentage
of income for employees who will remain disabled beyond the
maximum period of a Short Term Plan. These plans are characterized
by a Benefit Waiting Period (i.e. 90 days, 180 days), and
benefits are usually payable to normal retirement age as long
as the employee remains totally disabled.
A typical LTD plan might reimburse an employee 60% of his
or her salary after the employee has been disabled for 90
days, to a maximum benefit of $5,000 per month. Benefits are
payable as long as the employee remains disabled as defined
by the policy or reaches the age of 65 (or other age defined
by the policy).
LTD Plans provide important security to an individual and
his/her family in the event that an employee cannot earn a
living due to a disabling condition. The primary goal of a
LTD plan is to replace a portion of an employees lost income
that is close to the employee's after-tax take home pay.
The following are some provisions that make up the bulk
of a Long term Disability contract.
- Maximum Covered Salary: This is determined by the employer
and the total volume of salary of the employees in the company.
- Elimination Period: This is the amount of time
that must pass before a disabled employee becomes eligible
for benefits. This can be anywhere from 30 to 180 days.
- Duration of Benefits: This represents how long benefits
will be payable, i.e. to age 65, or standard retirement
age.
- Own Occupation Protection: This feature ensures that
if an employee is disabled, and cannot perform the material
duties of his or her own occupation that they were trained
for--they will still be considered totally disabled. This
can be as short as 2 years or as long as standard retirement
age (ADEA).
- Conversion Privilege: The policy can be converted
to an individual policy if an employee changes jobs.
- Residual Disability: If an employee is disabled
and then returns to work, and experiences an earnings loss
of 20% or greater, the employee will still receive a benefit
to offset this earnings loss.
*Note that this is a partial list of the contractual
features available in LTD contracts.
For more information, please fill out the contact form and
we will contact you within one business day.
| Group Health
| Group Dental | Group
Life Disability | Cafeteria
Plans |
| Health Savings Accounts (HSA's)
| Health Reimbursement
Account (HRA) |
| Employment Benefit Seminars
|
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