Overview: Many employers offer disability benefits as a form of income protection in the event an employee cannot work due to illness or injury. These benefits offer income replacement to protect families against the financial loss that occurs if a household wage earner is not able to work for an extended period of time. Disability benefits generally include: (i) sick leave where employees are paid 100 percent of salary for a certain number of days; (ii) short-term disability (STD), which usually commences after benefits under the sick leave policy have been exhausted; and (iii) long-term disability (LTD) coverage, which provides income protection to employees who become ill and cannot work for an extended period of time.
Many LTD policies offer rehabilitation and return-to-work (RTW) programs. These programs are designed to facilitate opportunities for employees to come back to work, and may shorten the length of the disability, reduce claims, save money and improve productivity. The elements of a return-to-work program typically include: (i) a plan to communicate with disabled workers and their treating physicians; (ii) a written document to outline the roles and responsibilities of the employer and disabled employee during the disability leave and the return-to-work process; (iii) designation of an RTW coordinator; (iv) guidelines to address workplace accommodation issues; and (v) a process to review and evaluate the program on a regular basis to ensure effectiveness. In order to be successful, these programs need to be fair, consistent and predictable.
Trends: The retirement age has been shifting upwards, resulting in people working later in life. Older workers generally have longer periods of illness than younger employees, which could result in a substantial increase in the cost of disability programs. Alternatively, the skills and experience of older workers are invaluable in the workplace. Many employers are putting programs in place that build on the strengths of older workers so that they can remain viable and productive members of the workforce for as long as possible.
Author: Tracy Morley, SPHR, Legal Editor
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Updated to reflect the forthcoming Massachusetts paid family and medical leave law.
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HR guidance on disability benefits and the value of return-to-work programs.