A quarter of all working Americans now in their 20s will suffer a period of short-term disability before they retire. A worrying number of them don’t realize this and therefore, have not planned for it. According to a 2014 study by the Council for Disability Awareness, almost three out of five underestimate the risk, believing they have less than two percent chance of suffering temporary disability while working. This matters to employers since the majority of their employees are not insured against the consequences.
Some employers choose to take out group short-term disability insurance for their employees as a benefit. While short-term disability laws in the US protect employees from losing their jobs in the event of a prolonged absence on medical grounds, these laws don’t protect their income, unless that absence was caused by something that happened on the job. Short-term disability leave is guaranteed by the Family and Medical Leave Act if the disability occurred off-the-job (and 95% of disabling injuries and illnesses are not job-related). It provides 12 weeks of unpaid leave to qualified employees, usually after they have used up their sick leave and or vacation days. Even these legal protections only apply to companies with more than 50 employees.
Some other countries are more generous. In the UK, employees are entitled to fixed statutory sick pay (roughly $125) for the first 28 weeks of leave related to short term disability. A significant percentage of the workforce will be in need of short-term disability leave and US law (with the exception of six states) doesn’t guarantee any compensation. By having an employer short-term disability policy a part of your overall company policy handbook can make all the difference if and when something does go wrong.
Still not sure it’s worth your while as an employer? Here’s three reasons why it might be a good idea:
1. Productivity and retention
Nearly two-thirds of all personal bankruptcies are attributed to medical problems, according to a 2007 report. Although many may have been cases of sole-proprietors, many will have inevitably included employees. Aside from the human tragedy, this translates into a costly loss to the workforce. Employment benefits have been identified as a good way to power up efforts at reinforcing and retaining a productive workforce. By providing your employees with paid short-term disability coverage, you will give them added peace of mind. This may be a great contributing factor to having happier employees who will want to stay with you longer and work better.
2. An opportunity to attract top talent
Nearly half of all educated professionals have no short term disability coverage, according to a 2015 report. The proportion of uninsured employees in less qualified positions is even higher. This imbalance offers a great opportunity for an employer who is willing to invest to gain competitive advantage. By taking out insurance and having a good short-term disability policy you can reinforce your claims to being an employer who cares and provides for the well-being of their employees. The cost for access to short-term disability coverage has an average of $0.15 per hour for all workers, according to the bureau of national statistics. This is a cost that could be easily covered by the bump in performance typically associated with a secure and qualified workforce.
3. A way to provide maternity leave
Statutory paid maternity leave is non-existent in the US. Employers may choose to compensate their employees by drafting a maternity leave policy, thus building a more engaged and happy workforce. Conveniently, the definition of short-term disability in the US is quite broad to the point that it includes pregnancy and childbirth. Hence, short-term disability insurance policies may cover six weeks of pay after childbirth; longer in cases of complications. By having this provision, you can offer payment to your employees at a time they need it. Also, a policy will ensure maternity leave pay is consistently paid to all employees. Otherwise, you may be tempted to pay a more valuable employee more money to retain them, and that way you are risking a lawsuit.