Long-term disability replaces lost income for employees who are ill or disabled for an extended period.
Nixon & Lindstrom Insurance helps businesses large and small in Springfield and southwest Missouri shop for group long-term disability insurance plans with competitive rates. Our independent agents work with a number of leading insurance carriers, including Mutual of Omaha, MetLife and UNUM. Request a quote today for detailed long-term disability plans and pricing.
Group long-term disability insurance is a benefit that replaces lost income for employees who are ill or disabled for an extended period. Without long-term disability benefits, employees who are unable to work for several months or even a year may lose the ability to earn a living or provide for their families. Employer-provided disability benefits can have a significant impact if tragedy strikes.
With long-term disability insurance, the employee receives a portion of their lost wages—usually between 50% and 67%—while disabled. Depending on the policy, a disabled employee will typically receive replacement income for up to three years. Some plans, however, pay out long-term disability benefits for an even longer period or until employees reach retirement age, when Social Security takes effect.
Group long-term disability insurance is about more than providing financial security for ill or injured employees. These policies also protect the employer’s interests by creating a practical framework to help employees offset ongoing living expenses and return to work in the shortest time possible. Some policies even include rehabilitation incentives to expedite the process.
Employers usually cover the bulk of the cost to provide long-term disability coverage, with enrolled employees paying their share through monthly premiums. The insurance company underwriting the plan not only reviews claims but pays out the long-term disability benefits when an employee’s claim is approved. Cancer, as well as debilitating musculoskeletal and cardiovascular conditions, are typically covered by long-term disability insurance, which kicks in after an elimination period (often 90 days).
Being able to financially assist disabled employees facing long-term recovery without having to assume the full cost is a major plus for employers. Only a handful of states legally require companies to offer long-term disability insurance. Many employers, however, offer these plans for the reasons mentioned above and because they come with a federal tax deduction.
In a competitive job market, an employee benefits package that includes disability insurance can be an influential tool to help employers attract and hire quality employees. If your business employs laborers who perform dangerous or high-risk work, long-term disability insurance is a prudent investment.
When considering the lost productivity from an injured employee and costs associated with turnover if he or she doesn’t return, long-term disability insurance is the better alternative. According to the U.S. Bureau of Labor Statistics, 34% of private industry workers and 38% of state and local government workers had access to long-term disability insurance plans in 2018.
The employer cost of offering long-term disability insurance depends on industry, geographic location, plan design, amount of covered payroll, number of employees and other factors. However, according to BLS data, most U.S. employers offering disability insurance pay the full cost of coverage for employees. In 2018, employers paid the full cost of long-term disability coverage for 94% of private industry workers and 83% of state and local government workers.
If your business is ready to offer long-term disability insurance to employees, contact Nixon & Lindstrom today to start comparing plan options. Whether you’re a small or large business, our experienced agents can help you decide which plan is a good fit and assist you in rolling it out to your team.