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  • Andrew Casperson

The Value of offering Short-term Disability Insurance

Short-term disability (STD) insurance is an employee benefit that provides financial protection for employees who are unable to work due to a non-work-related illness, injury, or pregnancy. It offers a percentage of an employee’s regular pay for a limited period, typically between 3 to 6 months. While some employers offer STD insurance as a company-provided benefit, it's important for companies to consider making it a voluntary benefit as well.

First and foremost, offering STD insurance as a voluntary benefit can help attract and retain employees. In today's competitive job market, employers need to offer a comprehensive benefits package to attract and retain top talent. According to a survey conducted by the Society for Human Resource Management (SHRM), 60% of job seekers say that benefits are a major factor in their decision to accept or reject a job offer. By offering STD insurance as a voluntary benefit, employers can differentiate themselves from their competitors and increase the appeal of their overall benefits package.

Secondly, STD insurance can help employees manage unexpected health issues without depleting their savings. With the high cost of healthcare and potential for missed wages, even something like maternity can put a significant financial strain on an individual or family. Without STD insurance, an employee may be forced to rely on their savings, cut back on expenses, or take on debt to cover their expenses while they are unable to work. The other important piece to protect with this coverage is an employee’s 401(k), where hardship withdraws can put both their current and future financial security at risk. Offering this essential coverage can alleviate this burden and provide peace of mind to employees during a difficult time.

Thirdly, STD insurance can help employers reduce the cost of absenteeism and increase productivity. When employees are absent from work due to illness or injury, it can have a significant impact on an organization's productivity and bottom line. According to a report by the Integrated Benefits Institute (IBI), the cost of lost productivity due to absenteeism is estimated to be $530 billion per year in the United States. By offering STD insurance, employers can help employees return to work faster and reduce the impact of absenteeism on their business. Another aspect of reducing cost with STD is how it can help control workers comp E-mods by providing a direct disincentive to utilize workers comp for off-the-job injuries.

In conclusion, offering STD insurance as a voluntary benefit is a smart investment for employers. It can help attract and retain employees, provide financial protection during unexpected health issues, and reduce the cost of absenteeism. With the many benefits of STD insurance, it's important for employers to consider offering it as part of their benefits package.


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