How Does Group Insurance Work for Disabled Employees?

Summary: Learn what happens within a group plan when an employee makes a disability claim.

Many people worry about what will happen if they are injured while working – whether it is due to a physical illness, accident at work, or a mental health condition. How will they cope with the loss of income? At many workplaces, there are insurance options available when it comes to disability, and these often come in the form of group insurance plans (although people can opt for their own individual insurance plan.) How do these group insurance plans work for disabled employees?

What is Disability Insurance?

Disability insurance comes in a few different types and categories, but overall it is a type of insurance that protects employees when they have been injured in some form and cannot perform the core responsibilities of their job description. Disability insurance can be purchased by an employee on their own (individual) or by the employer (group policy). Disability insurance benefits also comes in the form of short-term disability (STD), and long-term disability (LTD).

Differences Between Group and Individual Disability Insurance

Individual disability insurance is a type that a person purchases on their own, and is often more flexible than a group policy with different features available. As well, their policy moves with them, can have tax free benefits when paid for by their own personal income, and cannot be terminated without their permission.

Group insurance is purchased by an employer for the benefit of all their employees. The premiums are either paid for by the company or through pay cheque deductions of the employees. As well, STD or LTD benefits will generally have caps.

Difference Between Short Term Disability and Long Term Disability

The moment an employee become injured and they file a claim and are approved, they will first be put onto STD within 10 business days. This form of disability benefit can last between 15 and 52 weeks. Depending on the company’s plan, STD will typically cover between 60% and 85% of their pre-disability income. LTD benefits will kick in once their STD benefits have expired, unless the employee can return to work with altered duties (such as doing data entry in the office instead of field work). After the length of the standard LTD benefits, if they employee is still disabled, they will be given an "any occupation" test, which will test whether they can do any job based on their education, training and experience that would earn them 60% to 70% of their pre-disability income. If the employee cannot perform "any occupation," most policies will cover a person up to the age of 65, so long as they continue to qualify.

Understand the Group Insurance Application Process

With a group insurance policy, as soon as an employee is no longer able to perform their position’s core duties and responsibilities due to a disability (physical or mental), they should acquire the disability claims forms from their HR department and fill them out in full. They will need a treating physician to fill out the necessary paperwork and submit clinical records, which can then be verified by the company. An employee will normally have up to 30 days from the start of their leave from work to submit the forms. Once the claims forms are submitted their STD should start within 10 business days if approved. Sometimes employers group policies will include a third-party disability management service to assist employees with claims.

Group Insurance for Disabled Employees Group insurance policies are a great way to give employees a form of safety net when it comes to protecting their livelihood in the case of injury or disability (whether physical or mental.) Providing protection through short-term disability and long-term disability benefits will give employees the resources they need to focus on recovery while easing their financial worries. To learn more about group insurance and to get a free quote, click here.

Hi! I'm Stevie, and I'm interested in everything that surrounds the topic of personal finance. I hope my articles will be of some use to my readers!