Short-Term Disability – How to protect yourself and your employees
As an employer it’s important to be prepared for your employees to need time off work due to an illness.
Stats show that 1/3 of employees will have a sickness in their lifetime that will cause them to need 90 days off work and 1/4 will have a mental health condition causing them to need time off work. In fact, in 2020 mental health was a leading cause in requiring time off work.
Chances are, as an employer, you will encounter an employee in need of short-term disability. Now the question is – what is the best way to handle short-term disability in the workplace?
Outsourcing, handling it in-house or a combination of both? Let’s look at the options and the pros and cons of how to handle Short-Term Disability as an employer:
OPTION: Purchasing Short-Term Disability insurance from an insurance company
Outsourcing all employee medical evaluations, approval of claims and payments.
Pros:
Completely outsourced
Least amount of work for the employer
Cons:
Expensive
Lack of control
Slower turnaround
Recommendation: No, unless an employer is looking to minimize their hours spent per claim.
OPTION: Have Short-Term Disability handled by an insurer or third-party on a self-insured basis.
Outsourcing employee medical evaluations, approvals of claim and payments. You also keep the difference between the claim and the premium – not charged premium unilaterally.
Pros:
More cost effective
Outsource all of the work
Cons:
Relying on a third party to issue payment, may need quicker turnaround sometimes
Recommendation: Yes, depending upon the employer’s need for control.
OPTION: Handle Short-Term Disability in-house and hire a third party for advice to pay.
Outsourcing employee medical evaluations but control the approval of claims and payments. You continue to pay sickness benefits and payroll during time of employee’s illness, but hire a third party for advice to pay. You can be cost mindful as you have control of payment.
Pros:
Outsource medical review
Keep control over payroll and approval of claim
Cons:
More work for the employer to administer payroll
Recommendation: Yes, most recommended in most cases.
OPTION: Handling Short-Term Disability in-house completely.
Handling employee’s medical evaluations, approval of claims and payments all on your own as an employer.
Pros:
Cheapest option
Complete control
Cons:
Access to employee’s medical
Recommendation: Never. Too many Human Rights issues at risk.
Check out our simplified chart below to evaluate your options as an employer. Best practice is to discuss your options with your group benefits provider to ensure you choose the best option for your business and your employees.
