What Can Employees Do When Temporary Disability Runs Out?

Post updated on November 15, 2020

Covid-19 has brought many challenges to business owners, HR directors, and employees across the Northeast. It has also created many questions regarding temporary disability benefits and eligibility.

As a trusted insurance broker, it helps to have answers to frequently asked questions regarding temporary disability and long term disability payments. One of the most frequently asked questions, recently, addresses employees with lingering illnesses or injuries not incurred in the workplace: “What can I do when temporary disability runs out?”

Fortunately, there are multiple solutions. As a P&C insurance broker with The DBL Center’s vast network of top-rated carriers behind you, you’re equipped to assist with at least two of these:

  • Private disability insurance (DI), sometimes called Disability Income coverage
  • Group Long-term disability (Group LTD)

If a customer asks what their employee can do when statutory short term disability (TDB in New Jersey, DBL in New York, and PFML in Massachusetts and Connecticut) or private group short-term disability (STD) runs out, here are some options you can suggest.

Social Security Disability Insurance (SSDI)

Some people with an illness or injury may try to apply for Social Security benefits. However, to qualify for Social Security / Disability benefits, you must be unable to work for at least one year, or have an illness that will lead to death. The time between 26 weeks and a year is a long span to live without any income if you are unable to work.

Group Long Term Disability Coverage (Group LTD)

Group long-term disability insurance increases the length of time of coverage up to 60 months. Employers can choose from “same occupation” or “any occupation” coverage. Class I coverage, for the executives in a company, offers up to 60% of income replacement up to $15,000 per month.

The cost to the company is actually very small, especially if the employer purchases coverage bundled with statutory benefits or other ancillary benefits, like dental, vision, and Group Life / AD&D.

Group LTD benefits higher level employees in the same way enriched DBL does in New York, providing income replacement at a minimal cost. Employers can avoid tapping into their 401K or selling other investments. Let’s face it – especially in today’s market, selling stocks may not be the best answer for high-earners to free up capital for living expenses!

In addition to providing company owners and high-level executives with a safety net and peace-of-mind should they become injured or disabled, a generous group LTD package can also benefit the company as a whole.

It may help entice star talent, but, more importantly, it can help a business retain high-quality employees after they bounce back from an illness or injury. If a company takes care of someone in their time of need, they will return to work with a degree of loyalty. In fact, due to the strain financial difficulties place on a person’s health, having disability coverage to provide for themselves and their family could, in fact, help make a return to work after injury or illness possible.

Private Long-Term Disability (LTD) Insurance

For business owners who don’t want to make the investment in Group LTD, or for self-employed individuals, independent contractors, and solopreneurs, private long-term disability insurance provides an income replacement solution.

Since the premiums on this insurance are paid out-of-pocket, after taxes, the disability income is not taxable. Claimants receive their full benefits when they need the money most.

Why Healthy Individuals Need Disability Insurance More than Ever Today

Disability insurance may seem like a tough sell when it is not mandated by the state. But the coronavirus pandemic has made many people come to terms with their own health and even their mortality. More than ever, people are thinking about their financial future should they be unable to work for any length of time. This includes COVID-19 long-haulers, those who experience symptoms even after the worst of the illness has passed.

The Social Security Administration estimates that a 20-year-old employee faces a three in ten chance of becoming disabled before age 65. Other reports say one in four workers becomes disabled during their working life. These odds increase for heavy smokers, people who are overweight, or those who have a chronic condition such as heart disease, diabetes, or high blood pressure. And these numbers have undoubtedly risen since the pandemic.

Yet, only 45 percent of millennial workers have long-term disability insurance, according to The Hartford Financial Service Group. More than 20 percent of millennials said they would need help from family or friends or move back in with their parents if they were unable to work due to illness or injury, while another 20 percent would have to rely on credit cards or borrowing against their 401K retirement account.

While employees don’t want to consider being one of the 25 to 30 percent of people who become disabled, it’s a reality. And most disabilities are caused by illness, not injury. Knowing they are protected, whether through private income replacement insurance or employer-funded long-term disability benefits offers peace-of-mind and greater financial security.

Guide Your Customers to the Best Financial Decisions and Grow Your Book-of-Business

As a broker, remind your customers  that temporary disability coverage doesn’t have to be “all-or-nothing.” Voluntary group long-term disability coverage can be fully employee-funded, with no out-of-pockets costs for the employer (other than the employer’s insurance premiums to cover themselves). Since this is a pre-tax benefit, some employees may enjoy the tax benefits, too, although it means they will have to pay taxes on their disability income if they ever make a claim.

Employers also have the option to split the costs of group LTD with their employees, or to fund the benefit completely as an incentive to recruit and retain top talent. You can help your customers weigh cost factors with the benefits of employee recruiting and retention based on their industry and region.

It costs more to gain a new customer than to upsell an existing account. In these challenging financial times, consider Group LTD, along with other ancillary benefits, as a means to grow your book-of-business and increase your commissions.

And don’t forget to use your Broker Dashboard to track it all! Schedule your free demo of this state-of-the-art statutory insurance net revenue tracker today.

 


Why New York State Employers Should Offer Enriched DBL Coverage

Five ways it benefits employers to provide a living wage for workers on NYS DBL.

In the months leading up to the election, there’s been a lot of talk about Americans having the opportunity to earn a living wage. While some states have minimum wage laws in line with their costs of living, the Federal minimum wage as of 2016 is only $7.25 as of July 2016. Most of us reading this might remember earning that much during high school or college—it’s certainly not enough to raise a family or buy a home. New York State workers—and their employers—face another wage challenge: Mandatory NYS DBL payments cap out at 50 percent of an employee’s paycheck, up to $170 per week. This is not a living wage. And the financial burdenNYS-DBL-Businesspeople is even greater if the employee is facing medical bills and co-pays or the birth of a newborn and the added expenses that come with a child.

But there is a solution.

It’s important for New York State business owners, CFOs, and HR directors to understand why they should offer enriched DBL coverage in New York to provide employees on temporary disability with a living wage. If you’re a broker, please share this information with your customers to start earning commission on these enriched mandatory benefits today.

1. Enriched DBL coverage can encourage employee retention.

An injured or ill employee on temporary disability shouldn’t have to worry about how they will pay their bills. If your organization isn’t taking care of them, they might use their time off to polish up their resume and look elsewhere.

2. A robust benefits package helps attract top talent—even across state borders.

Today’s employees, particularly millennials, want to have it all in a job: Salary, flexible hours or work locations, and a robust, customizable benefits package. Providing enriched DBL—even if the majority of your employees don’t use it—lets you beef up your benefits package.

Additionally, New York-based businesses in Manhattan or on the New York / New Jersey border should consider that they are competing with New Jersey-based businesses—which already have a generous mandatory disability benefits package—for top talent. A NYS DBL package that rivals New Jersey’s Temporary Disability Benefits might help you attract the best employees from over the bridges.

3. As far as benefits go, enriched DBL provides employers and HR directors with a lot of “bang for their buck.”

With minimal employer contributions, which can be shared with employees at a rate of one-half of one percent of the employee’s wages up to 60 cents per week on pre-tax dollars, employers can offer generous NYS DBL coverage of up to $850 per week. Few benefits cost so little yet provide so much value.

4. With New York introducing Paid Family Leave in 2018, enhancing DBL benefits to keep pace will improve employee morale and loyalty.

In states that offer Paid Family Leave, this benefit for new parents and anyone caring for an ill or injured loved one has been shown to improve employee morale and loyalty. More importantly, co-workers don’t mind helping out to cover for employees taking Paid Family Leave.
Offering enriched NYS DBL benefits for employees who are ill or injured can help ensure co-workers won’t resent those who are out on PFL, because they know they have the same protection should they ever be unable to work.

Additionally, New Jersey employers found that the state’s generous paid leave package helps reduce stress amongst employees who took leave, as well as their co-workers, which can impact the company’s bottom line, according to the National Partnership for Women and Families.

5. Top executives benefit, too.

When you enrich your DBL benefits package in New York, your disability benefits package will increase, too, up to the maximum of $850/week or $1020/week with in-hospital coverage. You can also add an Accidental Death & Dismemberment (AD&D) rider to the policy, with a tiered plan that will provide your C-suite with the most coverage available.

Find out more about Enriched DBL in New York State in this post, or bind your NYS DBL quote for a company with fewer than 50 lives here.