What Does Long-Term Disability Cover?

Keeping and attracting talented employees for your NJ business means understanding the importance of providing comprehensive employee benefits, including disability insurance. NJ is one of a hand full of states that requires short term disability covering up to six months of income replacement for disabled employees. Adding long-term disability insurance can extend at very reasonable rates the length of benefits. This article aims to assist NJ business owners like you in making informed decisions about disability insurance.

What is Long-Term Disability Insurance?

Long-term disability insurance provides financial assistance to employees who cannot work for an extended period due to illness, injury, or accident. It becomes a lifeline for employees who cannot perform their duties and allows them to maintain financial stability during difficult times.

The Scope of Long-Term Disability Coverage

•     Income Replacement: A primary long-term disability insurance function replaces a portion of the employee’s income, typically 50-70% of their pre-disability earnings. This financial support allows the employee to continue meeting their financial obligations, such as mortgage payments, utility bills, and medical expenses, while they recover from their disability.
•     Duration of Benefits: Long-term disability benefits usually begin after a pre-determined waiting period (also known as the elimination period), which can range from 90 to 180 days, depending on the policy. Once the waiting period is over, benefits may continue for a specified number of years or until the employee reaches a specific age, such as 65.
•     Rehabilitation and Return-to-Work Programs: Some long-term disability policies include provisions for rehabilitation and return-to-work programs, which help employees recover and transition back into the workforce. These programs often include vocational training, job placement assistance, and workplace accommodations to ensure employees can safely and effectively perform their duties.
•     Cost of Living Adjustments (COLA): To help employees manage inflation and increased living expenses, some long-term disability policies offer cost-of-living adjustments. These adjustments ensure that the employee’s benefits keep pace with rising costs, helping to maintain their financial security.

How Short-Term Disability Insurance Fills the Gap

While long-term disability insurance is essential for extended absences from work, it delays payouts for months–up to a year–after a disability claim. Short-term disability insurance plays a critical role in bridging the gap between the onset of a disability and the start of long-term benefits. Here’s how short-term disability insurance complements long-term coverage:

•     Immediate Financial Assistance:Short-term disability insurance provides financial support from the first day of the employee’s absence until the long-term disability benefits begin. This direct assistance ensures that employees can meet their financial obligations during the critical early stages of their disability.
•     Coverage for Shorter Disabilities: Not all disabilities require long-term support. Some employees may recover and return to work within a few weeks or months. In these cases, short-term disability insurance provides the necessary financial assistance without long-term coverage.
•     Flexible Coverage

Take Action Today: Protect Your Employees with Short-Long-Term Disability Insurance

Be sure to give your employees the financial security they deserve. Dickstein Associates Agency, a Division of Risk Strategies, Co., specializes in helping New Jersey business owners like you navigate the complexities of insurance coverage.

Our expert team is here to assist you in finding the best short-term disability insurance plan to suit your business needs. Visit our Long-Term Disability page to learn more and request a quote. Secure your employees’ futures and the success of your business with help from the Long-Term Disability experts at Dickstein Associates Agency today.