What is short term vs. long-term disability insurance?

You can offer disability insurance to your employees as a benefit.

Even though Georgia isn’t one of the states that require employers to have long or short-term disability for their employees, offering them as benefits still give you a leg up on the competition when hiring great people. But how exactly do short and long-term disability work? What are the differences? And how can you use them for the benefit of your business?

Short-term disability insurance

Short-term disability lets an employee get paid a portion of their wages if they’re unable to work for a while. It makes sure that an employee can still cover their living expenses if they have a serious illness or injury. We’re talking about injuries from a car accident vs. a small burn or lung surgery vs. a cold. The latter of these can usually be taken care of through sick leave and not consistent monitoring from a doctor.

Some other conditions that can be covered by short-term disability are:

  • Back problems
  • Arthritis
  • Pregnancy leave and childbirth

Short-term disability coverage can last anywhere from 9 weeks to two years, depending on the policy. However, short-term disability payments usually won’t kick in until about a week or two after the employee is unable to work. These payments are made weekly and again, depending on the policy, could pay out a flat rate of about 40-60 percent of the worker’s wages, or it could start out at 80 percent of the worker’s salary and taper off to 40-60 percent.

Once short-term disability runs out for an employee, it may be time to move them into a long-term disability plan if they still can’t come to work.

Long-term disability insurance

Long-term disability is an extended version of short-term disability. This benefit would cover any type of injury or illness that keeps someone from working for over one or two years (you guessed it – depending on the policy).

First, long-term disability usually covers 50-70 percent of an employee’s salary. The typical length of long-term disability is 5 – 10 years, but a worker can claim disability as long as they are disabled or until they’re 65 and social security benefits kick in.

Conditions that are usually covered by long-term disability are:

  • Cancer
  • Musculoskeletal disorders (such as severe tendonitis or fibromyalgia)
  • Nervous system disorders (like epilepsy or a stroke)
  • Severe car accident injuries

Additionally, due to recent regulations regarding mental illness as a disability, severe, long-term mental health issues that prevent a person from working can also qualify as a disability.

Some details can still be a little fuzzy when you’re deciding whether to offer short-term disability insurance, long-term disability insurance, or both to your employees. It’s important to consider your industry, your budget, and the size of your business when including benefits in your company offerings. Our insurance agents are experts at figuring out the particular details of what will fit your business. So, give us a call at 404.352.0304 or fill out our online form to start getting customized quotes on benefits that could be crucial to your business!

What does an employee need to claim disability?

To claim disability, the employee will need a letter from their doctor to confirm their injury or illness. Georgia law also states that if you do offer sick leave or disability benefits, the employee must work for your company for more than 30 hours a week.

From there, a lot of things are left up to the employer to decide regarding taking disability leave. Some employers require the employee to work for them for a certain amount of time before being eligible for the benefit. Some employers require that the employee use all of their sick days before they qualify for disability. Some employers require full-time status or even additional paperwork for the employee to claim disability.

When you apply for short and long-term disability insurance, your carrier may also place certain exclusions on pre-existing conditions or conditions where disability won’t really help the employee’s condition. So, it really just depends on how you would want it to work for your individual business.

How is disability insurance different than workers comp?

Workers comp is specifically different from disability benefits because the former takes care of injuries or serious illness that happens at work or due to work-related activities. Disability benefits are for injuries that happen outside of work but are still severe enough to put someone out of commission for a while. They’re a great benefit to offer, but unless you’re in:

  • California
  • Hawaii
  • New Jersey
  • New York, or
  • Rhode Island

you’re not required by the national or state government to offer long and short-term disability. There are massive benefits for your business should you choose to offer disability benefits, though.

Why should I offer short or long-term disability?

Companies that offer disability insurance and even other group benefits have major advantage when they’re hiring and retaining talent. According to certain studies:

  • 57% of job seekers consider employee benefits as a determining factor in whether they take a job or not.
  • 84% of employees that are satisfied with their benefits are also more satisfied with their jobs and more loyal to the company.
  • 80% of employees would actually prefer more benefits over a raise.

Employees are also likely to be less stressed, and thus, more productive if they know that they would be taken care of should something happen. You may even be eligible for a tax deduction for offering group benefits.

So, why wait to improve your business from the inside out? Connect with one of our insurance experts today, so that they can get to know you, your business, and what will make your employees the happiest! Just give us a call or fill out our online quote form to get in touch with our team.