Employee benefits can include a host of insurance programs, such as short term disability, that are designed to help injured people receive an income when they are unable to perform the normal duties required at work. This particular benefit is designed to help employees who are injured when they are off the job. As long as the employer of the employee was paying into this program, there will be no need to worry about money if someone is hurt in an accident or otherwise when they are not at work.
Who Pays For It
This form of insurance is optional in most areas and therefore there are few regulations regarding the source of payment. Some states in the US do have legal requirements about the types of businesses that must offer this coverage and how long that coverage must endure. Depending on the company for which you work, the responsibility for payments may be up to the employer or the employee. In most cases, employers bear the burden of this coverage. If employees pay for the insurance, then they should check into the potential tax implications this may have for them.
Regardless of who pays for this disability insurance, it can be obtained in one of two ways. The employer can contract a plan with a major insurer that offers such coverage. This leaves the employer as essentially the conduit through which payment goes to the insurer, who will actually handle responses to claims. Some employers fund their own plan and set aside money to cover employees with such disabilities. In this latter case, the employer will have to handle claims and disbursement of funds.
How Much It Costs
The average yearly premium for this sort of insurance costs a little more than $200. The amount can be this low because the policies are usually bought for large groups of insured individuals. This sort of insurance is also usually included with the rest of an employer’s health plans, which are much more expensive. When issued in a group this way, the policies are called guaranteed issues because the applicants do not have to take any medical exams to qualify for coverage.
Who Receives Funds
Anyone who works for a company that offers these benefits may or may not be eligible. However, studies show that about 30% of the people entering the workforce today will suffer a period of disability during their careers. Nearly half of those individuals will be disabled for more than five years before they retire. Due to this possibility, more and more employers are making arrangements to offer this kind of coverage in some fashion to their employees.
When It Is Used
Typically, coverage for this type of plan begins during the two weeks following an employee report that he or she cannot carry out his or her regular functions due to accident or illness. This allows time for paperwork regarding the injury or illness to be processed. An employer will probably require some sort of notice from a medical professional about the reason behind the claim. Each company will have its own regulations surrounding the disbursement of funds in response to a claim.
A company may require its employees to use all their sick days before activating short term disability insurance. Only at that point will they be able to begin receiving insurance funding for their injury. This measure is often the one used if the employee’s complaint regards an illness which cannot be immediately identified as something grave enough to require a significant amount of time away from the job.
Terms Of Coverage
Since these policies are optional, each company has its own terms of coverage. Some of the typical terms pertain to an employee’s status within the company. In most cases, this insurance will only apply to employees who have been with the company for a previously agreed-upon period of time. This may be a period of weeks or months.
Most employers only offer this sort of coverage to their full-time employees. Definitions of full-time vary from company to company. Most employers consider anyone who works for them more than 30 hours per week as a full-time employee. It is most likely that coverage under such a plan pertains in the same way as other employer benefits do.
The exact benefits will differ from company to company. A typical benefits package will include details about the amount of money paid out weekly. It will also explain the exact length of the term under which this money will be disbursed and how it will be paid.
The weekly salary paid under the terms of such coverage will probably be equal to a percentage of the employee’s standard salary, rather than a flat fee or the full salary. A review of most policies shows that the standard rate of pay falls somewhere between 50% and 70%. How this money is disbursed is up to either the employer or the insurer.
While some states require these disability policies to cover a minimum period, most do not. Therefore, most employers can decide how long they will extend such benefits to an employee. The duration of benefits has a maximum level in most cases. Generally, this is anywhere from 10 to 26 weeks of payments at the previously mentioned rate.
Each company will have specific guidelines about the maximum amount of time that short term disability insurance can be used. As with sick-day usage prior to the onset of this insurance, an employer may require that this policy is used before the onset of a long term disability insurance plan. Transitioning from one plan to another plan will be handled either by the employer or the insurer.