Short-term and Long-term Disability Insurance Will Protect Your Employee\’s Paycheck
The term disability leave is often used as a blanket term for a few different types of leave, including medical, sick, short-term disability and long-term disability. However, there are a few important distinctions between federally-mandated sick leave and employer-sponsored long-term disability leave. Read on for what employers need to know about different types of disability leave.
Reminder: What is Disability Leave?
Disability leave in general refers to a work leave of absence or reasonable accommodation for employees who are substantially limited in one or more major life activities, physically or mentally.
The term disability leave can sometimes refer loosely to sick leave or medical leave. This means time off from work for health reasons, whether paid or unpaid, not covered under an employer’s disability policy. An example of this would be the federally-mandated Family and Medical Leave Act (FMLA), which provides qualifying employees with unpaid time off for multiple reasons, one of them being if an employee has a serious health condition and is unable to work.
It’s also important to note that the Americans with Disabilities Act (ADA) requires reasonable accommodation—which includes a change in workplace policies, facilities, or how work is done—from employers with 15 or more employees.
What is Short-Term and Long-Term Disability?
Short-term and long-term disability insurance are meant to supplement an employee’s income should they experience a medical illness or injury that prevents them from being able to work. For example, if someone cannot work due to severe mental health reasons, a serious car crash, or cancer, and they have disability insurance, they receive direct payments based on their policy and level of coverage.
The main difference between short-term and long-term disability is the length of time that the disability insurance benefits last. While the amount of time disability lasts depends on each policy, short-term is usually 3-6 months. Depending on the plan, long-term disability can provide coverage anywhere from 5-20 years, or until retirement.
There’s also a waiting period—called the elimination period—before a covered employee will start receiving payments from their long-term disability plan. Depending on the policy, the amount of time is usually 90 days, whereas short term disability payments will kick in much sooner.
Is Offering Short-Term and Long-Term Disability Required?
Employers are not required to offer short-term or long-term disability leave as benefits. It’s a lot like paid time off—with a few federally mandated exceptions, it’s thought of as a benefit that employers offer to attract and retain top talent, take care of their employees, and make their company more competitive.
That being said, it’s important to remember that some employers are required to offer medical leave mandated by the Family and Medical Leave Act (FMLA), which provides certain employees with up to 12 weeks of unpaid, job-protected leave per year and that their group health benefits be maintained during the leave. This law applies to all public agencies, public and private elementary and secondary schools, and companies with 50 or more employees. Again, this is different from short-term and long-term disability leave.
What Happens if an Employee Isn’t Covered by Short- or Long-Term Disability?
It’s very possible that an employee requires time off due to a medical injury or illness, but they don’t have disability insurance and they’re not covered by FMLA. In this case, there are a few things HR can consider:
The employee can use accrued paid time off (PTO) if they have it available to them.
Establish an administrative personal leave policy, which typically spans 6-8 weeks and enables employees to take a period of leave when FMLA does not apply. This would be different from PTO policies and would apply to a certain set of circumstances, perhaps mirroring FMLA.
If the employee can return to work, a return to work form from a physician should be provided to document any restrictions or a full release. If restricted, the company may want to evaluate if there is any job the employee could be able to perform at reduced capacity.
If there is a not a role available, reduced or otherwise, the employee can be terminated and can reapply at a future date for any jobs they feel they may be qualified for.
The Cypress Benefit Solutions\’ team specializes in short- and long-term disability benefits and can help you protect your employees\’ income.
Source: Bernie Portal