No one wants to be the one to do it, but everyone has to plan for accidents. Employees won’t be able to work 100% of the time, and one of the greatest benefits you can provide your employees is the assurance that you will help them through tough times as well as support them when they are doing well.
But when it comes to the kinds of injuries that leave employees unable to work, what kind of coverage should your company provide? Well, disability benefits come in short and long-term forms, and depending on your industry, you will want to provide one, the other or both.
As the name implies, short-term disability insurance helps employees recover from short-term injuries or life events that prevent employees from working for a short time (between three and six months, though some can last up to a year).
When you’re injured or have a life event, the insurance will pay a percentage of your salary only after most of your sick leave has expired (about 14 days). The exact percentage will vary based on your plan, but typically it’ll end up being around 50-70% of the salary you made before you had your leave.
What kind of events can cause an employee to take this kind of short-term leave? According to disability insurance provider Unum, the top causes for disability insurance claims are:
- Pregnancy (28%)
- Injury (11%)
- Joint disorders (7%)
- Digestive issues (7%)
- Cancer (7%)
Short-term disability is meant to cover employees who’ve had some issue in the workplace and need more than their sick leave days to cope, which makes them a popular option with many employers looking to improve retention and offer an attractive benefit to candidates.
Learn when to offer short-term or long-term insurance to your employees:
Long-term disability covers accidents and injuries which can sideline employees for far longer than short-term injuries, including those which permanently prevent them from working (such as a much more severe injury or a terminal disease).
The best of these insurance policies cover employees up until retirement age. Long-term disability is rarer than short-term disability; only 33% of private industry employees took part in long-term disability insurance, versus the 39% of employees who took part in short-term insurance.
The largest causes of long-term disability claims, according to Unum, are:
- Cancer (16%)
- Back disorders (14%)
- Injury (11%)
- Cardiovascular (9%)
- Joint disorders (9%)
Long-term benefits are especially helpful to employees working in less financially-stable environments, such as the 75% of households that lack emergency savings to cover six months of expenses.
Why Not Both?
Ideally, companies would be able to provide both short and long-term benefits to all of their employees, but that is not always so simple. For companies with stricter benefits budgets, choosing the best option for their employees will be a crucial choice in creating the right culture.
Short-term benefits are the safer options for a couple of reasons. For one, employees can only find short-term disability benefits through their employer — there’s no way to buy it otherwise.
Employees can shop for their own long-term disability benefits, which means that if you have to pick one, go with the short-term. Second, depending on your industry, there’s a chance that employees won’t work long enough at your company to use their long-term benefits, meaning you have more of a financial incentive to go for the short-term insurance.
Whether you choose short-term benefits or long-term benefits for your employees, The Olson Group is here to help. Let us guide you through your best options today! Schedule your free consultation.