Take Care of Your Team

Occasionally, a team member encounters an injury or illness situation in which he or she is unable to work for a short period of time. That can cause a loss of wages or salary which, in turn, can create undue hardship and stress for employees and their families.

Employers often seek a way to help, so insurers offer Short Term Disability insurance as part of an employee benefits plan.

Known in the insurance world as STD, the coverage pays a percentage of an employee’s salary for a specified period of time, usually up to 120 days. Typically, the benefit pays 2/3 of the employee’s weekly gross income but is flexible depending on the employer and insurance company requirements.

STD is often included in a benefit plan to provide some relief in the interim, for those few employees that eventually need to transition to Long Term Disability, which, always has a waiting period before it kicks in. Most insurers require that companies provide LTD coverage to employees if they want to offer STD. LTD is insured income supplementation or replacement over a longer period of time. Income losses can be considerable and for that reason, insurance makes sense.

No More "Just in Case"

But does it make economic sense to offer insured STD? Sure, employers can pay expensive monthly group premiums for everyone on the team – just in case, short term disability leave happens to one…but…

Consider a scenario in which a company incorporates insured short term disability benefits into their plan and pays premiums for 2 years for 5 employees that are paid $50,000 annually. Over the period - one person has a 2 week claim.

    5 employees x 24 months x $34 premiums = $4,080

    $50,000 salary / 52 weeks * 66.67% coverage = $641 weekly benefit

    Employer cost is $4,080 for $1,282 of benefits paid for the 2 week absence

Sure it’s true, in odd circumstances, there is a risk that the company might have a higher rate of claims and have to pay out more than the premiums that an insurer would charge over the same period.

BUT, since STD is ‘experience-rated’ by company, rates will increase on renewal and the cost of premiums will be much higher over time.

So what other options are there?

Option: Self-Funded, Self-Administered

Some employers set up a self-funded income replacement program to avoid expensive premiums and huge renewal increases. However, internal adjudication by colleagues is a challenge. What if the claim has to be denied? AWWWKWARD!

Not to mention major privacy issues…

Internal resources are also consumed in creating policies, ensuring claim forms are properly completed and medical evidence is submitted and are updated regularly. Is that the best use of company time?

Option: Blendable Short Term Income Assistance (STIA)

Offer a blended solution.

Our Wage Preserver is NOT insurance. It is a fee-for-service claims program that pays a percentage of wages on behalf of the employer on approved claims.

The cost to the Plan Sponsor is simply 18% of the claim. Note that a minimum of $100 applies to review a submitted claim. In the scenario above, the company cost would be $4,080.

      Claim paid out: $641 x 2 = $1,282 x 18% fee $231

      Total cost $1,513 – a savings of $2,567!!

Blendable Wage Preserver assures valued employees of income continuance in the case of valid short term absences from work AND saves the Plan Sponsor money.

Customize and blend

For efficiency, insurers pigeon hole companies into stock benefit plans. Like all Blendable programs, we offer the ultimate in customization on your Plan to ensure it works for employees, the company and fits within cashflow objectives. What can be customized with our STIA program? 

  • Duration of benefit
  • Employment service or part-time/full-time status
  • Waiting periods for illness and/or injury
  • Maximum amount of time covered
  • Percentage of weekly income covered
  • Requirement to use sick day provisions

The Wage Preserver can be offered as a standalone option or combined with any insured or Health Spending Account Plans. There is no requirement to offer LTD.

You can also incorporate the provision of Wage Preserver benefits into our unique Enhanced Health Benefits plans – providing affordable, assurance of coverage to valued team members.

Talk to one of our knowledgeable experts or have your trusted financial Advisor contact us to learn more about how we can work together to save you money on STD benefits.

Ready to get started?

Let's work together to create the perfect blend of employee benefits for you and your team.