The Case for Long-Term and Short-Term Disability Coverage in Connecticut

May 13, 2024

Our beautiful state is a wonderful place to live, work, and operate a business. But it’s also expensive compared to other U.S. states. According to LivingCosts.org, Connecticut’s cost of living index is relatively high. With an index of 114, it ranks as the 11th most expensive state. Such conditions make it even more critical for businesses to provide employees with access to disability insurance, a significant element of employee benefits plans

Employee benefits are more than just an expense. They’re an investment in your workforce. By offering the right benefits package, you will be more competitive in the market for talent helping you attract, retain, and motivate a workforce while contributing to your community at a very cost-effective price. You will:

  • Boost employee morale and satisfaction: Employees who feel valued and secure are likelier to be happy and productive at work.
  • Increase employee retention: Competitive benefits packages can help attract and retain top talent in a competitive market.
  • Contribute to your community: Group Life and Disability insurance helps employees keep up with their housing, food, and transportation expenses when they can’t work.
  • Be cost-effective: Group Life and Disability insurance is highly valued by employees but costs significantly less than Medical insurance.

What Is Disability Insurance, and Why Is It Important?

Disability insurance protects employees’ income when they cannot work, allowing them to focus on recovery without the added stress of financial burdens. Disability insurance is critical in Connecticut, where, as previously cited, the cost of living is high and the CT Paid FMLA is a very limited benefit compared to Short Term Disability insurance which typically lasts longer and pays more per week. 

For clarity, it is essential to note that disability coverage is a lifeline rather than a total income replacement product. As such, it typically covers 60% – 80% of an employee’s earnings. 

There are two main types of disability insurance:

  • Short-term disability (STD) insurance typically covers a portion of an employee’s salary for a shorter period, lasting a few weeks to several months.
  • Long-term disability (LTD) insurance takes over when short-term benefits end and can provide income replacement for a longer period, often extending to years or even until retirement.

The specific determination of benefits depends on the plan design and the employee’s disability.

Short-Term Disability Coverage

Short-term disability insurance helps bridge the gap between an employee’s injury, illness, or pregnancy and their return to work. It can cover a variety of situations, including:

  • Accidents: A broken bone, a sprain, or other injuries requiring recovery time may qualify a person for disability benefits, provided the incident is not workplace-related and covered by workers’ compensation insurance.
  • Illness: Short-term illnesses like the flu, pneumonia, or surgery can all trigger short-term disability benefits.
  • Pregnancy: Some short-term disability plans provide coverage for maternity leave.

Choosing Short-Term Disability Insurance

When selecting short-term disability coverage, consider factors like:

  • Benefit duration: How long will the plan pay benefits?
  • Benefit amount: What percentage of an employee’s salary will be replaced?
  • Elimination period: What is the waiting time before benefits begin after a qualifying disability? Injuries and illnesses often have different elimination periods. 

Long-Term Disability Coverage

Long-term disability insurance provides a safety net in case of a serious illness or injury that prevents an employee from working for an extended period and should dovetail with STD so as to minimize a gap in benefits. Employers can choose LTD options to provide a benefit for a certain number of years, until SSDI starts, or until the Normal SS Retirement Age. It can offer:

  • Financial stability: Replacing a significant portion of an employee’s income helps them maintain their standard of living while disabled.
  • Community: Rent, mortgage, utilities, and food can still be paid avoiding eviction, foreclosure, or public assistance.
  • Peace of mind: Knowing they have financial security allows employees to focus on their recovery.
  • Employee retention: Offering long-term disability demonstrates your commitment to employee well-being and can boost morale and retention.

Situations Where Long-Term Disability is Beneficial

Long-term disability insurance can be crucial in various scenarios.

  • Chronic illnesses: Conditions like cancer, multiple sclerosis, or heart disease might require long-term treatment and limit an employee’s ability to work.
  • Accidents with permanent disabilities: Severe injuries that result in permanent limitations can necessitate long-term income replacement.

Choosing Long-Term Disability Insurance

When selecting long-term disability coverage, consider:

  • Benefit amount: Similar to short-term plans, this is the percentage of an employee’s salary that will be replaced.
  • Benefit duration: This guideline determines how long the plan will pay benefits.
  • Definition of disability: The plan’s definition of what constitutes a disability will determine eligibility for benefits.
  • Own occupation or Any occupation: Benefits continue if the employee can’t perform the job they are qualified for versus can’t perform any job at all.

The Short and Long of It

Providing short-term and long-term disability insurance demonstrates your commitment to employee well-being and financial security. It protects your employees from financial hardship during a challenging time and fosters a positive work environment.

By partnering with an experienced insurance agency like Brooks, Todd & McNeil, you can ensure you’re offering employee benefits that employees appreciate and help you attract, retain, and motivate your talent. We have over 75 years of combined experience in navigating the complexities of employee benefits and can help you design a plan that fits your budget and workforce demographics.

Sponsoring the well-being of your employees with employee benefit plans, including disability insurance, is an investment in your business’s success. Contact Brooks, Todd & McNeil today at (800) 448-4567 to discuss your group benefits and business insurance options.

About Brooks, Todd & McNeil

Since 1839, the independent agents at Brooks, Todd & McNeil have been pleased to offer our community the best and most affordable policies from a variety of providers. Our dedicated facilitators are ready to put their 75 years of combined experience to work on your claims. To learn more about our products and services, contact us today at (800) 448-4567.