Why Are Disability Benefits So Important?

While no one expects to face a disability, many people will encounter a time when health challenges limit their ability to work.

Disability coverage can represent one of the largest portions of a company’s total benefits program, so employers must ensure the costs are reasonable. Disability benefits that effectively support employees during their most challenging times are a vital part of a robust Disability Management program. They aid in employees’ recovery and timely return to work, while positively impacting a company’s bottom line.

Types of Disability Coverage

There are two common types of Disability Benefit coverage for non-occupational absences: Short-Term Disability (STD) and Long-Term Disability (LTD). The primary difference in these benefits is when they begin and how long they last:

  1. Short-Term Disability (STD): Begins within the first few days or weeks of an absence and covers the initial months when an employee is unable to work.
  2. Long-Term Disability (LTD): Designed to cover extended absences, typically starting after STD benefits are exhausted and continuing for a longer period.

Both types of coverage provide a crucial safety net for employees, helping them meet their daily needs while focusing on recovery.

Short-Term Disability

STD benefits provide a percentage of an employee’s wages as a benefit payment when they are off work due to a disability that is longer than 3-7 days, depending on the policy. The benefit is typically a set percentage of the employee’s pre-disability earnings and is typically paid out on a weekly basis. STD plans generally provide benefits for a limited period of time, such as 90 days or 17 weeks. During the STD period, a disability case manager works with both the employer and employee with the dual aim of early return to work and preventing progression to a long-term work absence whenever possible.

Long-Term Disability

In some cases, due to the severity of a health condition, an employee is medically unable to perform their work for an extended period or even permanently. In these situations, LTD benefits are the solution. When both STD and LTD benefits are managed by the same insurer, the transition from STD to LTD is seamless, avoiding interruption of benefit payments for the employee. However, it is important to note that STD and LTD policies may have different provisions that impact entitlement to benefits. For example, some LTD plans have a clause that excludes coverage for pre-existing conditions, while this is generally not the case for STD.
Like STD claims, LTD claims involve a disability case manager who monitors ongoing eligibility for benefits and implements strategies to positively impact claim duration and support a return to work, whenever possible.
Many LTD plans have two distinct assessment periods for determining eligibility:

  • Own Occupation period (typically during the first 1-2 years): The employee is evaluated based on their ability to perform the duties of their pre-disability job.
  • Any Occupation period (following the Own Occupation period): The employee is evaluated based on their ability to perform duties of any occupation for which they have the necessary education, training, and experience.

Optimizing Disability Benefit Coverage

At DMI, we believe it is possible to provide employees with excellent benefits while also controlling costs for the employer. We help shorten claim durations by applying effective case management strategies and leveraging our in-house Disability Management expertise. This includes facilitating and expediting rehabilitation interventions through our dedicated Rehabilitation Services team.

DMI manages all claims with a proactive focus on function and close collaboration with stakeholders, backed by exceptional customer service and clear communication with employers. Our goal is to ensure a safe and timely return to work for employees with disabilities while mitigating costs. This is why it’s critical for organizations to carefully evaluate the best benefits options for their needs before they are needed.

Talk to an expert today!

DMI is dedicated to delivering timely, effective solutions to help you navigate disability benefits. We provide support for both Short-Term and Long-Term Disability claims, ensuring a smooth process and helping manage claim durations. Whether you’re an employer optimizing your benefits or an employee needing assistance, DMI is here to help.

Interested in learning more about our services and how disability management can support your company? Request a free review of your claims experience from a DMI expert to determine if you will benefit from DMI’s claims management services.