What does the disability of a key employee, including yourself, cost - both in foregone income and lost productivity? Perhaps a lot more than you think, particularly if you have to bring in additional personnel to pick up the slack. So take a minute to make an estimate. If you are realistic, you will probably want to learn more about ways to mitigate the risk.

1. Toll Free: 877.880.4477
Phone: 281.880.6525
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Employee Disability: A Personal and
Financial Risk that Can be Mitigated

2. What does the disability of a key employee, including yourself, cost --
both in foregone income and lost productivity? Perhaps a lot more than
you think, particularly if you have to bring in additional personnel to pick
up the slack. So take a minute to make an estimate. If you are realistic,
you will probably want to learn more about ways to mitigate the risk.
www.hrp.net
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Also, including coverage for short-term disability and long-term disability
in your benefits line-up can make your company appeal to more
prospective new-hires. This is true even if the disability coverage is
primarily voluntary, which means the employees pay for it themselves.
Group disability policies are typically easier and less expensive for
employees to acquire than in the individual market, so employees can
benefit even if they are picking up all or most of the tab.
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3. According to the Council for Disability Awareness (CDA), the average
annual per-employee premium for employer-paid short-term disability
coverage is $210, and $260 for long-term.
Average long-term disability premiums, as a percentage of employee
income, are:
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• .50 percent for employer paid group;
• .75 percent for group voluntary; and
• Between 1.50 and 3.0 percent when purchased by the employee on
an individual basis from the insurance carrier.

4. Income Replacement
Recall that disability insurance doesn't pay for medical services, but,
depending on the duration of the disability, replaces a portion of the
insured's lost income. Short-term policies typically cover 13 or 26 weeks of
disability, and kick in promptly, and long-term policies generally begin after
90 or 180 days. Short-term and long-term policies should be synchronized to
avoid a coverage gap.
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Insurance companies that focus on the group side of the business generally
include rehabilitative services in their packages, to accelerate disabled
employees' return to work -- depending on the nature of the disability.
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The manner in which those services are offered often varies according to
company size; larger employers might have a rehab specialist employed by
the insurance company based at your site. The idea is to make disability
expertise readily available not only to manage disability cases but to conduct
programs intended to head off avoidable disabilities in the first place.
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5. Don't Count on Workers' Comp
Keep in mind, 95 percent of disabling accident and illnesses are not work-
related, and therefore not covered by Workers' Comp. Also, 90 percent of
disabilities are due to illness, not accidents, according to the CDA. The leading
culprits: cancer, heart attack, diabetes, neck and back pain -- conditions
(except cancer) which often are lifestyle related, and can be combated with
effective health promotion programs (see table).
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6. Here are some more sobering statistics from the CDA:
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• Just over 25 percent of today's 20 year-olds will become disabled
before they retire.
• Over 37 million Americans are classified as disabled; about 12 percent
of the total population. More than 50 percent of those disabled
Americans are in their working years, from 18-64.
• Nearly nine million disabled wage earners -- over 5 percent of U.S.
workers -- were receiving Social Security Disability (SSDI) benefits at
the end of 2012.
• In December of 2012, there were over 2.5 million disabled workers in
their 20s, 30s, and 40s receiving SSDI benefits.
SSDI benefits are not the right solution for everybody, because the benefits
tend to be relatively meager -- the average benefit payment last year was
$1,130. Also, the application process takes months or even years, and the
probability of receiving SSDI benefits tends to be slim, given pressure to limit
federal spending during a time of gaping budget deficits.

7. Helpful Resources
Information about the prevalence of disability and disability risk
mitigation is readily available. This includes steps you can take to promote
employee health, as well as exploring insurance solutions. The CDA
website, for example, features a page directed towards employees and
individuals on "reducing your chances" of becoming disabled. It provides
basic healthy living tips and links to additional resources on those topics.
You'll also find a page listing additional resources, and research which
highlights relevant studies. One study listed shows the gaps between
what employers understand about disability and what employees actually
believe about disability.
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Finally, it's important to know you can customize disability insurance
benefits to some degree. For example, you can limit your program to
cover premiums for key people on your staff. However, they must be
selected as a group on an objective basis, if you design the program
correctly in order to avoid discrimination accusations.
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There are also tax considerations. If the company pays the premiums
directly, the covered employee is taxed on the value of the premium, and
on the value of any benefits received. However, employers can choose to
add to employees' salaries to offset the tax bite. If the employee
purchases the policy on his/her own, any benefits received are not
taxable.
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Whether offering short-term disability and long-term disability coverage
is worth it in the end for your company will depend on many factors, not
the least of which is cost. This is especially true if you are considering
paying for the benefit. And the only way to assess the variable is to find a
competent insurance adviser to review your unique situation and get
some insurance quotes. Internet-based price quoting systems exist, but
might not be as reliable or accurate as dealing directly with insurance
professionals.
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9. 14550 Torrey Chase Blvd., Ste. 360 Houston, TX 77014 USA
www.hrp.net
E-mail : info@hrp.net
Toll Free
Phone
Fax
:
:
:
877.880.4477
281.880.6525
281.866.9426

10. 14550 Torrey Chase Blvd., Ste. 360 Houston, TX 77014 USA
www.hrp.net
E-mail : info@hrp.net
Toll Free
Phone
Fax
:
:
:
877.880.4477
281.880.6525
281.866.9426