If you run or own a small business, you’ve likely already looked into short-term or long-term disability insurance.
According to the Council for Disability Awareness, over 25% of today’s 20-year-olds will become disabled before they retire. As with many types of small business insurance, there are two big reasons to invest in disability insurance: to protect the financial wellbeing of your company, and to protect the financial wellbeing of your employees. And, in some cases, to comply with employer law.
A handful of states require employers to provide disability benefits to employees for an off-the-job injury or illness. If your company employs workers in California, Hawaii, New Jersey, New York, or Rhode Island, you may be required to comply with these states' statutory disability regulations.
Below, we cover a few reasons why disability insurance benefits small- to mid-sized businesses.
Retain Your Talent
If your company wants to retain its best talent, offering benefits that help an employee when he or she is down will help keep great team members on board.
When an employee is unable to work due to an illness or disability, short-term disability insurance (STD) can help replace part of the employee’s income. The details of the benefits provided depend on the insurance company. For example, with some MetLife plans, STD benefits are available after an employee is ill or unable to work for seven days, and may provide partial wage replacement benefits for up to six months.
Learn about the building blocks of a competitive benefits package.
Long-term disability (LTD) insurance begins where STD insurance ends. LTD insurance also replaces part of an employee’s income when an employee is unable to work due to an illness or disability. Once again, the policy benefits will depend on the insurance company. The LTD insurance plan that Justworks offers may go into effect after an employee has been unable to work due to an illness or disability for 180 days. Under certain circumstances, our LTD provides partial wage replacement benefits until the employee is 65 years old, or even later.
Cover Employees with Growing Families
Short-term disability insurance can be beneficial for expectant mothers. Depending on the insurance company, partial wage replacement benefits may be available beginning on the day the mother gives birth. Partial wage replacement may even begin before, depending on different factors, such as required bedrest. Short-term disability insurance for pregnancy-related disabilities generally pays benefits for a limited amount of time after the baby is born and before the mother returns to work.
Related article: Paid Parental Leave: How Much Time is Right For Your Company?
Compete With Larger Businesses
STD and LTD — along with other benefits — are something many large employers offer. Employees who have worked at other companies may expect those benefits. By offering STD and LTD as part of a comprehensive benefits package, you can even the playing field and recruit the best talent out there.
Justworks Can Help
Justworks offers access to all kinds of employer benefits, including STD and LTD through MetLife. We offer employer-paid options, or your employees can purchase coverage individually through Justworks, at better rates than they could find for themselves.
Although the cost of insurance coverage feels out of reach for many small businesses, a PEO like Justworks bundles small businesses’ costs together, giving access to high-quality group insurance on par with enterprise-level companies. You can learn more about us here.