No matter how diligent an employer is about workplace safety, accidents happen. Workplace accidents—and employees who lose time due to workers’ compensation claims—can damage company morale and cost employers additional time and money.
However, a recent report shows that 47 percent of large companies who offer disability insurance (DI) show a decrease in workers’ comp claims. In addition, 43 percent of small businesses and 33 percent of mid-sized companies reported a drop in claims. The reduction in claims was substantial for all companies: 15 percent of all employers reported declines of 50 percent or more, and 15 percent reported declines of 25 to 49 percent.
Disability insurance, including mandatory or enhanced DBL coverage in New York, TDB in New Jersey and TDI in Hawaii, as well as private Short Term Disability and Long-Term Disability, typically pays faster than workers’ comp cases, and it’s easier for employees to file a claim. It’s no wonder employees would rather be paid through insurance coverage, especially when the broker can walk them through the claims process and provide white-glove service every step of the way!
In addition, employees could wait months for a workers’ compensation claim to begin paying. Most people cannot live without a paycheck—especially as medical bills begin to add up. After a one-week waiting period in New York, employees can begin collecting DBL benefits for up to 26 consecutive weeks.
It’s faster and easier for employees to file disability insurance claims than workers’ compensation claims. And it’s also faster and easier for employers, with less paperwork to fill out. Additionally, many workers’ compensation cases end up in court to prove the extent of the injuries. Disability insurance claims do not require the business to retain legal counsel to defend itself in a workers’ comp case, saving employers both time and money.
While it should be obvious that workers’ comp only applies to on-the-job injuries, the reduction in claims when other options, such as state-mandated disability coverage, short-term disability, or long-term disability insurance—is offered might make HR directors and other business leaders wonder about the incidence of workers’ compensation fraud. Fraudulent claims hurt everyone, costing employers in real dollars, wasted time, and damaged employee morale.
It’s important to reiterate that workers’ comp should only cover on-the-job accidents or injuries. But off-the-job injuries are far more likely to occur, with 729 people injured every 10 minutes, according to the National Safety Council. Businesses collectively lose more than $15 million from these injuries.
While a good disability benefits package won’t eliminate these costs, it can improve employee retention following an accident, and alleviate some of the financial burden on an injured or ill employee—perhaps resulting in a faster recovery and return to work.
If you own a business in the state of New York, New Jersey or Hawaii, you already provide your employees with mandatory disability coverage (DBL, TDB, and TDI, respectively.) An enhanced benefits package may help reduce workers’ comp claims further by enabling better claim service and greater benefits. Businesses in other states should also consider offering STD or LTD coverage to their employees to reduce workers’ comp claims and save money.
The DBL Center Ltd. can help.
by Dawn Allcot