During the past decade, numerous innovations have been introduced to group disability policies , resulting from an increased understanding of the needs and goals of disabled workers and employers. These improvements not only make short-term (STD) and long-term disability (LTD) policies more comprehensive and consumer-friendly, but also have the coincidental effect of reducing premiums.

We have summarized many of these enhancements to enable interested businesses to compare these improvements with your current disability policies. Or if you prefer, we can perform the review for you at no obligation.

Research has demonstrated that early intervention involving on-going therapy (physical, occupational, speech, etc.) with a disabled worker has proven to increase the likelihood of a full recovery following a disabling event. Insurers are now prepared to invest more money and staff expertise during the early stages of a disability in the form of increased benefits, offering rehabilitation programs and other claimant services to speed recovery, and encouraging the claimant to return to work on a part-time basis (when medically and emotionally ready) to include paying for the necessary work environment modifications to make that happen. This is a win/win/win situation for the disabled employee, the employer and the insurance carrier.

Here are some of recent innovative policy enhancements developed by the top-notch carriers:

  1. Liberalized Definition of Disability that takes into consideration either the responsibilities of the position or reduction of income because a disability necessitates part-time work:
    • a) The inability to perform the material and substantial duties of the position, OR
    • b) Experiencing a loss of more than 20% of one’s regular earnings.

  2. Zero Day Residual – If the earnings test (1(b) above) is satisfied and the partially-disabled
    employee continues to work following a disabling event, even on a full-time basis temporarily, then these workdays count toward the elimination period (i.e. the waiting period between the disabling event and the date benefits commence in accordance with the terms of the short-term and/or long-term disability policies).

  3. Return-to-Work Incentives permit the partially-disabled employee to receive up to 100% of his/her pre-disability earnings without penalty during a return-to-work adjustment period (usually 1 to 2 years) from all qualified income sources including part-time employment, disability benefits and other eligible “offset” payments.

  4. Employer Reimbursement of Workplace Modifications installed or constructed in compliance with Americans with Disability Act (ADA), to accommodate a disabled employee under a LTD policy.

  5. Financial Incentives to Participate in an Approved Rehabilitation Program for the qualified disabled employee, in the form of increased disability benefits.

  6. Managed Rehabilitation Benefit which requires qualified candidates (as determined by the patient’s doctor and the insurer’s rehabilitation specialist) to participate in an approved rehabilitation program combining innovative financial incentives with a disciplined approach to claimant motivation. Refusal to participate could result in a reduction of benefits.

  7. Family Day-Care Expense Reimbursement is available to cover the out-of-pocket day-care costs while the claimant attends rehabilitation or retraining programs.

  8. Automatic Indexing of Pre-Disability Earnings enables partially-disabled workers to receive increases in benefits under an LTD claim using an inflation factor tied to a nationally published index such as the CPI.

  9. Commissions Counted toward Qualified Earnings Calculation - Many employers have introduced base-pay-plus-commission compensation arrangements for certain jobs as an added incentive to improve customer service and performance. In making such a change, an employer may overlook the effect this decision has on calculating disability benefits. In such circumstances, the policy definition for “qualified earnings” should be amended to include base pay plus average commission income.