We are often asked by clients:
“What are my obligations to continuing benefits when an employee goes on disability?”
This is a very good question!
The following options explore some general best practices; however, every company is unique therefore, it’s best to speak with us to discuss specifics.
- Ideally, every organization should have a documented Continuation of Benefits During Disability policy (which is communicated to employees). This policy would specify what happens to employee benefits (e.g. Life Insurance, AD&D, Extended Health, Dental) in the event of a disability (short term and long term).
- Having a policy in place is a proactive approach that clearly outlines details before an employee is off work vs. scrambling to figure things out after the fact.
- A policy demonstrates consistent practices by the employer for all employees and provides unbiased treatment and prevents confusion for everyone.
- However, it’s really up to each organization to decide if or how long they wish to continue employee benfits.
- For Short Term Disability, we typically recommend continuing all existing health benefits for the employee with the same cost sharing prior to the employee’s leave. For example: if the employee and employer were each paying 50% of the premiums before the leave, then they would continue during short-term disability.
- For Long Term Disability, the employer is not legally obligated to continue employee benefits; however, many do to support their employees. Continuing benefits could be for 12 months or longer – once again, it’s really dependant on your company culture and organizational factors. Contact us to discuss what may be an appropriate timeframe for your organization. Employer/employee cost share would continue.
- Employment termination and benefits termination are according to your company policy – not determinant on whether LTD benefits are actually payable or not (e.g. if insurance carrier determines employee is no longer disabled and is able to return to work.)
- Whatever timeframe you wish to continue benefits, best practice is typically to provide 30-60 days written notice in advance of terminating an employees benefits. This allows a reasonable amount of time for the disabled employee to find an alternate individual health policy.
- An important thing to remember is that employers should make every effort to support and help the employee return to work. Disability management is an essential part of the process. It’s in everyone’s best interest to get the employee healthy and back to work.
Please speak with an ENCOMPASS Consultant about the options that are available when an employee’s group benefits terminate. Conversion of benefits for the disabled employee to an individual plan is possible without providing medical evidence.
For more information about this article or other HR or Benefits-related questions, please contact ENCOMPASS.
