Group Short Term Disability
Disability insurance replaces an employee's income if they cannot work due to illness or injury. Short term disability is an important type of coverage for an employer to consider providing for a few reasons. One reason is that it prevents any out of pocket expenses that an employer may feel obligated to provide a sick or ill employee. A second reason why group STD should be offered as a part of the benefit's package, is that it is an alluring benefit that helps to attract and retain quality employees. For most people, their most valuable asset is their income earning potential. Therefore suffering a monetary loss due to disability can severely inhibit their motivation and self-esteem which commonly results in a lack of production or effort in the workplace. Protecting the income of your employees is protecting the success of your business.
Many people consider disability insurance to be as important and in some cases, even more important than life insurance. At any given age the odds of becoming disabled are much higher than they are of dying.
Group STD Policies
Group STD policies are "guaranteed issue," meaning that a medical exam is not necessary in order to prove insurability. Short term disability pays a percentage of an employee's salary if they become temporarily disabled. Temporarily disabled is generally defined as "not able to work for a short period of time due to sickness or injury (excluding on-the-job injuries, which are covered by workers compensation insurance)". A typical STD policy provides an employee with a weekly portion of their salary, usually 50 or 60 percent for somewhere between 13 and 26 weeks.
Generally, an employee will begin receiving money from their STD benefit within one to 14 days after becoming sick or disabled. The actual time will depend on whether an illness or injury was suffered. If an injury is suffered, benefits will be paid immediately. If an illness is suffered, it takes longer because there needs to be enough time to prove that the illness is severe enough to be considered disabling.
The first variable is the amount of monthly benefit. Most disability policies have a fixed monthly benefit that does not increase with time, although additional coverage can be purchased. Often times, a policy will have a rider that offers higher payment schedules. The second variable is the definition of disability, "own occupation," or the inability to perform the duties of a specific occupation, or "any occupation," the inability to perform the duties of any job for specific education and training make one qualified. The third variable is the waiting period, or the amount of time that an employee must be disabled before the benefits begin. These waiting periods can range from one week to two years. The longer the elimination period the less the disability policy will cost. The fourth variable is the benefit period, or how long an employee will receive monthly benefits once the policy starts paying.