Educating your Employees on their Disability Insurance Plan

Employees don’t always understand the value of their benefits, until they have to use them. Such was the case for a Pennsylvania school business official who found out he had cancer and had to rely on disability income to get him through. Once back at work, he made plans to strengthen the disability plan and educate workers on their benefits.

How strong is your disability insurance plan? Are you and your employees adequately protected? Here are 4 scary realities about losing your income should illness or injury strike:

Assumptions

Many people assume that if they become disabled and are unable to work, that Social Security, unemployment compensation, health insurance or worker’s compensation insurance would take care of them and pay their expenses. However, that is rarely the case.

• Only 30-35% of Social Security applicants who file for Social Security Disability Insurance are approved the first time.[1] In 2013, the average monthly check was $1,146.42.[2] Is that enough for you and your family to make ends meet?
• Unemployment Compensation is for those who are physically and mentally able to work. If you are disabled, you are unable to work.
• Health Insurance will only cover your medical services and prescriptions, not income.
• Worker’s Comp Insurance provides a benefit ONLY if a disability is a result of an on-the-job accident, injury or occupational disease. Most disabling accidents and illness are not job related.[3]

Savings

The average time off work due to a disability is 2 ½ years.[4] Most people cannot stretch their savings that far. In fact estimates show that roughly ¾ of Americans are living paycheck to paycheck with little to no emergency savings.[5]

Health Insurance Coverage

If you cannot work, your job-provided insurance is gone. Perhaps the single most important benefit of disability insurance income is to help pay for health insurance coverage. Some policies even provide a specific benefit toward health insurance. In 2017, over 15 million Americans will use up all their savings to pay medical bills.[6] Some may be forced to tap into their investments, sell possessions, put expenses on a credit card or take out a loan to make ends meet.[7]

Financial Hardship

It may be hard to believe, but disability can be more financially disastrous than a death in the family. If you are disabled, you lose your earning power, but you still have living expenses and medical care costs not covered by health insurance. Bankruptcy, home foreclosure and going on public assistance are sadly not uncommon paths one may need to take.

Educating Employees on Disability Benefits

Since many employees underestimate their disability odds, providing education on this issue is a valuable retention tool. It will help employees to appreciate and understand the value of this benefit.

Download this disability infographic and share with your employees about the importance of disability planning.

[1] Social Security Disability SSI Resource Center www.ssdrc.com/8-13.html

[2] Annual Statistical Report on the Social Security Disability Insurance Program, 2013 https://www.ssa.gov/policy/docs/statcomps/di_asr/2013/di_asr13.pdf

[3] Council for Disability Awareness website, www.disabilitycanhappen.org; “Chances of Disability. Me, Disabled?” under “What are the most common causes of disability?”

[4] U.S. Group Disability Rate & Risk Management Survey 2012, based on claims closed in 2011.

[5] http://money.cnn.com/2013/06/24/pf/emergency-savings/ Accessed 19 January 2017.

[6] https://www.nerdwallet.com/blog/health/medical-bankruptcy/

[7] 2014 CDA Consumer Disability Awareness Study