Economic, demographic and societal trends have led to an increasingly mobile, diverse and older workforce. In addition to this, increased stresses in the workplace and home are taking a toll on overall employee health, productivity and safety. The result is higher health care and disability costs that have a measurable impact on employers and the employee benefits packages that they offer. Many employers aren’t aware of group disability insurance options or they don’t understand the full benefits of them. So, what is group disability insurance and is it really necessary? We map out the basics below.
What is group disability insurance?
Group disability insurance provides income protection for employees. For employers, it covers the cost of overtime and hiring a replacement. For employers, lost time on the job due to a disability can significantly impact workplace productivity and profitability, so investing in a group disability insurance plan can help. Most employers also offer salary continuation plans, which is when the employer gets the full income and benefits after a disability prevents an employee from working. California, Hawaii, New Jersey, New York and Rhode Island also mandate temporary disability insurance, which requires employers to provide benefits equivalent to those working in non-statutory states.
Why is group liability insurance necessary?
The possibility of becoming disabled is very real for working Americans, and so are the financial consequences and costs associated with employee absence. Over 36 million Americans currently classify as disabled. Moreover, an illness or accident will keep one in five workers from working for at least a year during their career. It’s not pleasant to think about this potential scenario, but preparing your insurance plan in advance will save the employer and employee a great deal of stress.
The population is aging, which in turn causes rising benefit utilization and cost. Beyond that, unscheduled absences disrupt workflow and increase cost, while human resource pressures are impacting the ability to dedicate adequate time and attention to situations where working time is lost. Group disability insurance protects your organization and employees alike, making it necessary if you want to protect your business.