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Why Employers Should Consider Adding Short-Term Disability During COVID-19 Pandemic

Disability insurance is one of the most overlooked of all employee benefit plans. Think about it: who wants to think they are at risk for becoming disabled?

In normal times, this happens more often than we would like to think. Today, in the unusual circumstances of the COVID-19 pandemic that we find ourselves in, it is more important than ever for your employees.

As a reminder, disability insurance is income protection in case of disability due to accident or illness. To put it simply, think of it as paycheck insurance. It provides coverage for replacement of a person’s pre-disability income, usually 50-66%. There are two common types of disability plans: short-term and long-term. Short-term disability (STD) insurance can be designed to provide income once a person has been unable to return to work after seven to 14 days, and continues for 10 to 24 weeks. There is a lot of flexibility in terms of these timeframes and the benefit can be voluntary or employer-paid. The cost for STD is comparable to good dental insurance ($15-$40 per month, per employee) and is based on a person’s income and age (in most situations). Long-term disability (LTD) insurance typically picks up where the STD ends and continues to social security normal retirement age (SSNRA). This provides excellent protection for catastrophic accidents and illnesses.

According to the 2019 SHRM Employee Benefit Survey, only 61% of employers offer STD insurance, versus 97% for dental insurance. I am not knocking the importance of a healthy smile (I am married to a dental hygienist!); however, if you or one of your employees are unable to work due to accident or sickness, how will you/they pay necessary bills? I am well aware of the financial stress all businesses are under as the pandemic wreaks havoc on the economy. Offering these coverages as voluntary (no cost to the employer) could be one of the most timely benefit additions a business can make. FBN

By Ed Gussio

For more information, please contact Ed Gussio at Crest Insurance Group (egussio@crestins.com or 928-526-5691).

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