An employee benefit plan represents a vital promise between employers and employees, ensuring support during times of need. Understanding and implementing effective benefit plans, such as group short-term disability (STD) and group critical illness (CI) insurance, can significantly impact employee well-being and organizational health.
As a benefits advisor, it’s your job to not only understand the ins and outs of STD and CI insurance but also how to present them to your clients in a meaningful way that resonates and adds value to their overall benefits plan.
Let’s delve into the nuances of these benefits and explore their importance, implementation, and strategic advantages.
Understanding Group Short-Term Disability
The Purpose of Group Short-Term Disability
Group short-term disability plans provide financial support to employees who cannot work due to illness, injury, or quarantine.
Offering group short-term disability is attractive for employees; knowing they have that option makes them feel supported by their place of work, and they’ll feel comfortable taking advantage of these benefits in already difficult times of need.
From the employers’ perspective, adding these elements to a robust benefits plan is a way to demonstrate care for valuable employees and support them in instances where employment insurance alone isn’t sufficient.
Employment Insurance (EI) and Its Limitations
Employment Insurance (EI) offers a safety net with benefits covering 55% of an employee’s average insurable weekly earnings, up to $668 for 26 weeks. However, the EI application process is cumbersome. It requires a medical certificate, personal information, and a record of employment.
The approval process can take up to a month, which creates a significant delay for those in need, and the demanding application adds stress to an already challenging situation.
STD plans, also known as weekly indemnity plans or salary continuation programs, offer a more efficient alternative to EI. These plans provide a defined weekly amount to employees unable to work due to illness or injury, offering quicker support and reducing the administrative burden on the employees.
Key Considerations for Implementing Short-Term Disability Plans
Employers need to evaluate their sick leave policies and decide whether to manage these in-house or outsource them for confidentiality and early intervention.
A “standard” short-term disability plan typically covers 66.67% of weekly pay, up to $750 per week (or another dollar amount appropriate to the employees’ typical earnings), starting from the first day of an accident or hospitalization and the fourth day of illness, for a duration of about 4 months.
However, skilled advisors will guide their clients toward individualized solutions using creative plan design.
Creative Plan Designs in Short-Term Disability
Innovative short-term disability plan designs can include EI/STD top-up strategies, extended STD programs lasting 52 or 104 weeks, and integration with EI to reduce Long-Term Disability (LTD) premiums.
These designs cater to various audiences, including unions, small businesses, professional groups, and employers seeking control without direct involvement.
Advantages of Early Intervention
Early intervention in short-term disability plans demonstrates to employees that their well-being is prioritized, potentially reducing the duration of claims and preventing unnecessary LTD claims.
Collaboration with medical professionals and disability management firms enhances the support system in these plans, and effective communication and educating clients about these benefits are crucial for maximizing their impact. Remember, benefits plans are all about a promise that an employer makes to their employees – it’s important that that promise can be followed through in a meaningful way.
Exploring Group Critical Illness Insurance
The Purpose of Group Critical Illness Insurance
Group critical illness insurance provides a lump sum payment to employees upon diagnosis of a critical illness. This tax-free amount allows employees to use the funds at their discretion, addressing immediate financial concerns during a challenging time.
Basic vs. Enhanced Group Critical Illness Policies
Basic critical illness policies cover a few major diseases like cancer, stroke, and heart attack.
In contrast, enhanced policies offer broader coverage for 20-30+ illnesses, including second-event coverage, providing much more comprehensive protection.
Benefits of Group Critical Illness Insurance
Group critical illness insurance is particularly appealing to small employers and high-value executives.
Creative plan designs can offer different coverage amounts, such as $10,000 for general employees and up to $150,000 for executives, making it an easy and attractive sale without requiring evidence of insurability.
Key Questions for Clients Regarding Critical Illness
Employers should consider offering substantial CI coverage without medical evidence requirements, providing significant tax-free benefits to key employees and enhancing workplace morale.
These benefits are relevant across all income levels, making critical illness insurance a powerful tool for employee retention and satisfaction.
Trends and Developments in Group CI
Recent trends in CI insurance include changes to pre-existing condition clauses and waiving the 30-day survival period. This is great news – employees can access crucial funds more quickly in a stressful and scary situation.
Timely claim submissions and proactive client engagement are essential for maximizing the benefits of CI insurance and making employees feel supported and secure.
Integration of Short-Term Disability and Critical Illness Programs
Combining STD and CI Benefits
Integrating short-term disability and critical illness insurance programs offers comprehensive support for employees. For instance, you might guide a client to incorporate a 26-week STD plus a $25,000 CI program or an extended STD program paired with CI coverage.
These combinations are particularly beneficial for lower-wage earners who may not afford LTD, providing essential financial support without replacing the unique benefits of LTD.
Provide Value with Impactful STD and CI Benefits Plans
Understanding EI benefits is crucial, but their limitations highlight the need for tailored short-term disability plans. Group critical illness insurance complements these efforts, offering substantial support during critical health events.
Employers should proactively discuss these benefits with their clients to stay ahead of the competition and enhance employee support, ensuring a resilient and supportive work environment. As an advisor, consider encouraging your clients to participate in “lunch and learn” events with their employees to ensure the benefits plans and their nuances are fully understood, reducing stress should employees ever need to use them. Plus, this makes for some pretty great water cooler chat.
Here at The Benefits Trust, we’ve been supporting employee benefits advisors for over 30 years. For more information about the value of group short-term disability and group critical illness insurance offerings and how to incorporate them together, contact us today!
