Insurance Information Institute Answers the Question – Will my Employer Provide Disability Coverage?

Posted on Jul 21, 2009

The Insurance Information Institute, which provides the public with information regarding insurance, addressed the following question on its website - “Will my employer provide disability coverage?”

According to the Insurance Information Institute, most employers offer some form of disability coverage, but it is important to understand what is covered, especially before you file a disability claim.  Some of the disability insurance policies allow short-term sick leave, which can last anywhere from a few days to six months.  Many states, including Hawaii, New Jersey, New York and Rhode Island, require that employers offer disability benefits for up to 26 weeks.

A company’s benefits department usually has the information regarding what is covered under the employer’s group disability policy.  There is generally a waiting period before benefits begin being paid and it is helpful to know this timeframe before having to file a claim.  It is also crucial to know how long benefits can be paid.  Some disability insurance policies take into account other disability programs, such as Social Security, when determining the disability payments.  This information is also beneficial.

There are no laws in place that require employers to offer long-term disability insurance coverage, but many employers do offer this type of policy.  It is estimated that approximately 50 percent of large and mid-sized employers offer long-term disability insurance to their employees.  The average long-term disability pay equals approximately 60 percent of the worker’s normal salary.  Long-term disability benefits typically begin after short-term disability insurance runs out.  It can last anywhere from five years to life.

Employer-paid disability income is generally subject to federal and state income tax.

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