Short Term Disability Law Definition Defense Lawyer
Disability benefits are a major part of any employee benefits strategy. Employers can offer many different types of disability benefits, all of which will be discussed in this article. Some of these include:
- Short-term disability benefits
- Long-term disability benefits
- Income replacement
- Leave benefits
- Disability accommodation
This article will also discuss HR’s role in administering disability benefits and their impact on employers and employees.
How to Define Disability
Some disability benefits may have a different definition of what constitutes disability to others.
The ADA defines disability as a mental or physical impairment which significantly limits any major life activities. It also includes anyone who has a record of an impairment or is regarded as having an impairment. A lot of benefits will follow the ADA’s definition; however, others will have a less restrictive definition. Some disability benefits cover all medical conditions, which lead an employee to be incapacitated for a length of time. This includes outpatient surgery and pregnancy. While these are not considered as a disability under ADA, these will receive some benefits.
What Are Disability Benefits?
A disability benefit provides job protection or income replacement to employees who cannot work due to an accident or illness. Disability benefits can cover short-term or long-term effects of the accident or illness. They may also cover a permanent disability.
Why Should a Company Provide Disability Benefits?
Disability benefits can give an employer a competitive advantage when hiring top talent. As base salaries have not grown much in the last decade, employees often compare employers based on the benefits they offer.
A short or long-term disability can financially devastate an employee if they are unable to work. Disability benefits alleviate this potential financial devastation and therefore can be attractive to potential employees. The U.S Bureau of Labor Statistics shows that disability insurance is only 1% of compensation costs. Therefore, it is a very low-cost way to be competitive.
What Is HR’s Role in Disability Benefits?
A disability benefits program needs to meet the needs of both the employee and the employer. HR, as the middle ground between the employee and employer, is thus an important part of administering benefits.
HR will usually be responsible for the following steps of administering disability benefits:
- Identifying which disability benefits the law requires
- Understanding the objective of the employer in providing benefits
- Reviewing benefits programs and deciding which ones to offer
- Negotiating with insurance brokers
- Establishing eligibility for each type of disability benefit
- Providing guidelines on the length of available benefits
- Providing guidelines on length of disability leave available to employees
- Creating processes for requesting and scheduling disability leave
- Creating a policy or FAQs that address any issues that may arise
- Communicating the disability benefits policies to all staff
- Updating the staff on any changes to the disability policy
- Educating employees about the new policies and why disability benefits are important
Types of Disability Benefits
There are a number of different disability benefits an employer could offer depending on their industry, and their objectives. Here are some of the most common types of disability benefits employers may offer employees.
Short-Term Disability Insurance
Short-term disability insurance plans will cover part or all of an employee’s income if they are unable to work due to a temporary disability. There is no job protection included with a short-term disability insurance plan. Job protection is regulated by state and deferral laws such as ADA and FMLA and any internal policies the employer has. Paid time off programs usually covers the waiting period for short-term disability insurance to start. The waiting period is there to ensure the insurance is not abused and that insurance is not collected when paid-time-off can cover the absence.
In most cases, the short-term disability insurance will only cover part of an employee’s pay, usually 60-75% of the base pay. It is at the employer’s discretion whether they allow employees to co-ordinate the insurance with other benefits so employees can ensure maximum compensation.
The median length of short-term disability insurance payments is 26 weeks. In California, employers are legally required to have short-term disability insurance for their employees.
Long-Term Disability Insurance
Alongside short-term disability insurance, many employers also offer long-term disability insurance. This covers employees for longer or permanent disabilities once their short-term disability insurance ends. The length of long-term disability insurance depends on the plan; some plans will pay the employee until their date of retirement, or when they are eligible for social security disability benefits. Other plans have a maximum length of benefits, such as 24 months.
Approximately 72% of U.S employers offer long-term disability insurance. On most plans, employees are eligible for long-term disability insurance after the waiting period. The waiting period could be three to six months, depending on the plan.
Long-term disability insurance does not provide job protection for employees, this is determined by state and federal laws, such as FMLA, and ADA, and the employer’s policies.
Long-Term Care Insurance
Long-term care insurance assists employees with disabilities and chronic illnesses who need care when they return from the hospital. These may include adult daycare, hospice care, home health care, respite care, or an assisted living facility. This insurance protects the financial future of an employee and their family.
Employers often offer this type of insurance to be competitive when hiring talent. With the rising cost of home health care and nursing homes, ageing employees request this type of benefits.
Long-term care insurance is organized into two categories: qualified and non-qualified. A Qualified plan is not counted as income as they are treated as health insurance and accident contracts. A non-qualified plan is considered a personal expense and is therefore not deductible.
Critical Illness/ Supplemental Insurance
These policies give employees a fixed, lump-sum payment after they have been diagnosed with a critical illness. The policy will specify which illnesses are covered. Many will cover cancer, strokes, and heart attacks as standard. Other plans will provide cover for additional critical illnesses.
Depending on the plan the employer selects, employees may receive additional benefits for certain treatments or hospitalization.
The critical illness benefit will be paid as a lump-sum directly to the employee for use as they see fit. Employees often incur astronomical expenses when diagnosed with a critical illness such as cancer, and many believe they would not be able to cover these costs on their own.
Critical illness insurance policies are often paid by the employee via payroll deductions. Benefits are tax-free, but premiums are not tax-deductible.
Employers can provide additional support to employees by providing programs that help them navigate disability benefits, health insurance, and treatments. These programs will answer any questions employees may have and guide them through correct processes.
Disability Leave Benefits
Employees with a disability or illness are entitled to leaves of absences, some of which are required by law, others are voluntary.
Federal Laws
The ADA requires employers to give reasonable accommodations to employees with a disability. The accommodations should be reasonable and not cause unnecessary hardship for the employer. This may include leaves of absences.
The FMLA entitles employees to up to 12 weeks of unpaid leave within a 12 month period. This is for medical reasons, the care of a child, parent, or spouse with serious health conditions, or the birth or adoption of a child.
State Laws
States may impose further requirements for people with disabilities or family medical leave. These might be in the form of leaves of absences or paid time off.
Employer Policies
Employers have the discretion to create their own policies if they wish as long as they at least have the federal and state requirements covered.
What laws are the source for Short Term Disability?
ADA of 1990
The Americans with Disabilities Act was designed to give protection to those with disabilities and allow society to benefit from their skills. The act covers equal opportunity for those with disabilities in many areas such as transportation, government services, public spaces, and in the workplace.
In Title I, the ADA prohibits employers with more than 15 employees from discriminating against those with disabilities in all employment decisions, including hiring, firing, and promotion.
The EEOC is the government entity which enforces the ADA and provides additional information about policies and compliance.
FMLA
The FMLA ensures employees with families have sufficient leave to care for their family as required. Employees can take up to 12 weeks of unpaid leave within a 12 month period. This is for medical reasons, the care of a child, parent, or spouse with serious health conditions, or the birth or adoption of a child.
State Workers’ Compensation Statutes
All states have workers’ compensation to look after workers who have work-related injuries and illnesses. Under these statutes, employees who are injured at work have benefits for wage loss, medical leave and more. If an employee’s work-related injury results in disability, they may receive benefits for medical expenses and lost wages.
State Temporary Disability Benefits Laws
California has enacted state laws for temporary disability benefits.
Social Security Disability Benefits
Social security pays disability benefits for medical conditions that will result in death, or prevent them from working for at least a year. Social security also incentivizes people with disabilities to continue working. These incentives are:
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- A trial period of at least nine months which allows people with disabilities to see if they can work.
- A period of 36 months which allows people to receive benefits if their earnings are not substantial.
- A five year period during which disabled people can ask to start benefits immediately if they cannot continue to work.
- Free Medicare Part A coverage after the trial work period for at least 93 months. After that, disabled individuals can pay a monthly premium to access Medicare Part A coverage.
- Deductions for any disability-related expenses
Other Disability Laws
There are provisions for people with disabilities in a number of other federal and state laws. The purpose of state and federal laws regarding disabilities is to ensure these workers are not discriminated against and are able to earn a fair income.
Communication
Employers should communicate their benefits provisions with employees to ensure they are able to take advantage of applicable benefits. Here are some tips to assist with communication:
- Develop a communication strategy with a timeline for all communication, the audience, message, and frequency.
- Ensure the communication message relates the benefits policies to the company’s values.
- Develop an overall message or theme that all benefits offerings can be tied into. This could be in the form of a slogan or logo.
- Select employees or managers who can champion the new benefits and provide feedback.