The value of integrating disability and health plans
Disability insurance is one of the surest ways for employers to protect employees against lost income.
Over the last year, the pandemic has produced several learnings and compelled us to pause and think about our wellbeing in its entirety. For employers, they can play a key role in supporting employees’ overall wellbeing, which goes beyond benefits to support mental and physical health, but also benefits that help preserve their financial health. Disability insurance is one of the surest ways for employers to protect employees against lost income, yet availability to this benefit remains limited. The U.S. Bureau of Labor Statistics reported in March 2020 that only 40% of American workers had access to short-term disability while 35% had access to long-term disability.
Proper preparation and implementation of disability benefits on the employers’ part can ensure employees are fully supported should they experience a disabling condition. Disability plans can include features to help patients recover as quickly as possible and by integrating these benefits with your medical plan can further improve outcomes for both employees and employers.
Related: Has the pandemic taught us anything about disability insurance?
Let’s discuss the different options available to employers, the importance of a comprehensive disability benefits package, why integrating disability benefits with the medical plan should be considered, and how employers can promote disability benefits to let employees know they’re valued and protected.
What options are available to employers?
The options available to employers can be broken down into two categories: short-term and long-term disability benefits. Short-term disability benefits aid employees for a short period of time – whether it’s a few weeks or a few months – by replacing a percentage of income when an employee is unable to work due to a qualifying disability. Long-term disability benefits differ in that benefits can be paid for an extended period, whether that be many months, years or even up until an employee reaches retirement age.
A benefits program that includes both short and long-term benefits ensures employees have the complete financial protection they need, but not all employers are able to provide both benefits due to their budget. When offering both is not feasible, it is critical to, at the very minimum, explore short-term disability options. Short-term disability will be needed by many U.S. workers at some point in their career, especially considering a reported 25% of today’s 20-year-olds are expected to miss work for at least a year as a result of a disabling condition.
Cost becomes a critical component when employers consider the addition of new benefits to their health, vision, and dental plans. Employers can choose to cover the full cost of a disability plan’s premium, cover part of the premium with employees paying the remainder of the premium, or they can provide a voluntary plan where employees pay the full premium on a payroll deduction basis. Disability plans can be set up with the employee’s premium paid on a pre-taxed basis, which can help reduce employee’s tax liability.
The importance of a comprehensive disability benefits package
When looking into a disability package, it’s important to understand the leading causes of qualifying disabling conditions. Some of the most common claims include pregnancy, mental health, and chronic illness, all of which will impact most of the workforce at some point throughout their career.
Pregnancy:
Pregnancy is the most common source of disability claims, accounting for 25% of short-term claims. The majority of women in the workforce are planning to have children, as 86% report having children by the end of their childbearing years. Employers should account for a large percentage of female employees requiring time off after giving birth and optimize their disability offerings to provide the disability coverage that new moms will need as they recover.
On top of the medical risks associated with pregnancy and childbirth – including postpartum depression – the cost of care during this time can financially strain families. For women earning the median U.S. professional salary of $49,764, taking 12 weeks of unpaid leave permitted under the Family and Medical Leave Act totals about $11,484 in lost wages. If both parents need to return to work to make up for lost income, childcare can cost up to $2,000 per month.
Adding the costs of prenatal care and postpartum expenses like formula, diapers, and clothes, having a baby can cost tens of thousands of dollars by the baby’s first birthday. Since short-term disability plans can provide coverage for disabilities due to both complications during pregnancy, as well as for a period following childbirth, new moms are able to receive partial income replacement while on disability.
Mental health:
While disability plans provide coverage for qualifying disabilities due to mental illness. Disability plans often include a member support program with a toll-free number that employees can call at any time, regardless of whether the employee files a disability claim. These member support programs can help with stress, work/life balance, finding childcare, and many other issues. Member support programs often offer tele-therapy or two-way video counseling visits provided by licensed counselors, which have been especially valuable during the COVID-19 pandemic.
The pandemic has taken a toll on Americans’ emotional wellbeing with stay-at-home orders, working from home, children attending school online, and even unemployment. A recent study from the American Psychological Association found nearly eight in 10 adults say the coronavirus is a significant source of stress in their lives.
Additionally, member support programs often provide financial and legal services which can help ease stress and anxiety around finances or legal issues. While current circumstances may be temporary, these services will still be valuable after the pandemic passes as the psychological and financial impact will be long-term. Member assistance programs included in many disability plans can provide the support that employees need during stressful times.
Unexpected injuries:
Additionally, employers should consider unexpected accidents and injuries, including complications from surgery, that can leave employees unable to work for extended periods.
More physically demanding jobs carry higher risks of injury, but an office employee can also get injured after work or during the weekend. In fact, according to the National Safety Council, a disabling injury occurs every one second in the U.S. Accidents can happen to anyone, so disability coverage is a critical component of a financial wellness strategy for all employees.
Why disability benefits should be integrated
Choosing a short-term disability plan that’s integrated with the employer’s medical plan can help improve an employee’s health when they experience a disability, help them get back to work as quickly and safely as possible, and in some cases, even help them avoid a disability claim. A very important benefit of integrated short-term disability and medical plans is reduced costs for both the disability and the medical plan, as well as a streamlined claims process helps employees get their benefit quickly when they’re unable to work due to disability.
A benefits strategy that connects disability and medical plans offers earlier identification and better management of health conditions that can lead to disability. A well-designed integrated disability and medical plan can deliver improved health outcomes by ensuring employees receive the right resources and services when they need them, lower costs for both employees and employers, and promote an overall better health care experience for employees who experience a disabling condition.
What can employers do to promote disability benefits?
Given the role of disability insurance to help in providing income when employees can’t work due to qualifying disability and its ability to offer additional supportive services, employers should educate themselves on their disability plans offerings so they can effectively communicate to their employees what is available to them by enrolling in disability insurance.
They can provide information to new employees to help them understand why it’s in their best interest to enroll or, for plans that provide a buy-up option, to elect the higher disability benefit. Disability carriers usually provide resources to employers to help them promote their disability plans.
It’s also important for employers to promote the previously mentioned member support programs to employees as well so they’re aware of ways to get the help they may need.
Even though disability insurance is a key component to a well-designed benefits package, it can often be overlooked. This shouldn’t be the case as well-rounded, integrated health and disability benefits can drive better outcomes for employees with chronic and disabling conditions and reduce overall health care costs. The advantages are clear, which is why it is in employers’ best interests to fully support employees by providing comprehensive disability benefits and educating them about the value of enrolling.
Scott Towers is president of specialty products at Anthem Blue Cross and Blue Shield.
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