Accuchex Blog

Employer FAQs: Short Term Disability & Hospital Plans

Posted by Leslie Ruhland on Feb 20, 2019 8:16:00 AM
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As many employers already know, including supplemental insurance options in your employee benefits strategy can give you a leg up over the competition to attract and retain the best talent. Short term disability and hospitalization coverage are among the most popular plans.     

Employers looking to add value for their employees with a robust benefits package often add supplemental insurance options as an expansion of their core benefits. Depending on the policy, the employer may fund these plans which makes their cost 100% deductible to the business. They may also be jointly funded by both the employer and employee or offered as voluntary benefits that employees can elect and fund through payroll deductions, often on a pre-tax basis.

short term disability and hospital plans from supplemental insurance

Employees overwhelmingly link their job satisfaction with their benefits package—nearly 80% of those who are extremely or very satisfied with their benefits also report being extremely or very satisfied with their job, and half of employees agree that if their benefits coverage were inadequate, they would look for a different job. Savvy employers have taken note, and view a robust benefits package with supplemental insurance options to be one of the many tools that helps them to attract and retain top talent.

Popular choices are those which cover maternity care, critical illnesses, accidental injury, cancer, and more. Many plans can be used in concert so employees can file claims relating to a single event across several plans which will each provide incremental or lump sum payments for qualifying claims, creating even greater value and a more substantial financial safety net. Two options that frequently overlap in this manner are short-term disability and hospitalization insurance.

What is Supplemental Short-Term Disability?

For employers in California, Hawaii, New York, New Jersey, Rhode Island, and Puerto Rico, short-term disability insurance is a required employee benefit. These state-mandated programs are typically funded by employee payroll tax deductions, though this is not the case in all states. When an employee experiences a qualifying event in one of these states, their approved claim will pay out a percentage of their income for a predetermined period of time.

Supplemental short-term disability plans are not dissimilar from state-mandated or run programs. These plans pay employees a percentage of their wages when a qualifying disability makes them unable to work for a short period. This benefit is crucial for most employees who need time to receive treatment and recover before returning to work, but who might otherwise not be able to afford a lengthy absence.

Some plans, such as the Short-Term Disability insurance offered by Aflac, can be implemented in conjunction with a group or state-run disability plan and will pay employees according to the policy schedule for their qualifying claim regardless of any other disability insurance or payments they may be receiving. This coverage is available to offer as a voluntary benefit to employees through payroll deductions, which means employers don’t incur any additional costs to implement or administer the plan.   

Since employees receiving payments from a group or state plan will be subsisting on payments that typically do not exceed 60 - 70% of their regular gross wages, this additional coverage can help them better make ends meet while they’re on the road to recovery. Employees covered by Aflac’s plan may also receive partial disability payments to help make up for lost income, even if they are able to return to work.  

What is Hospitalization Insurance?

Hospitalization insurance, frequently also called Hospital or Hospital Indemnity insurance, offers coverage for employees when they experience either planned or unplanned hospitalization, and may cover other tests, services, or outpatient procedures depending on the policy.

For many, a hospital stay can leave behind a hefty bill even if the patient has primary health insurance. Hospital insurance can help covered patients pay for out-of-pocket expenses they may incur due to gaps in their core insurance plan or a high deductible. According to the American Hospital Association, more than 36 million people are hospitalized per year. On average, a hospital stay costs more than $10,000 which, for many US households, will result in a bill they are unable to pay even after their health insurance pays for a portion of it.  

Patients with Hospitalization insurance can get help paying the difference, or for other bills they need help with, by filing a claim for qualifying events with their supplemental insurance carrier. Individuals covered by one of Aflac’s customizable hospitalization options can submit a claim as soon as they receive care for a qualified service and receive payment as soon as the following day.

Employees Can Stack Supplemental Insurance Coverage

Most employers looking to round out their existing medical coverage are please to learn that all of Aflac’s supplemental insurance plans stack. For example, if an employee who is covered by both a Hospital and an Accidental Injury policy is hospitalized after an accident, both plans would pay out. Similarly, if an employee covered by both a supplemental cancer and a Hospital policy is hospitalized due to their cancer treatment plan, they could file claims and receive benefits from both of their plans.

Maternity care is also covered under both the Short-term Disability and Hospital policies, and since these plans are supplemental to your core benefits, these maternity benefits are paid on top of and in addition to any state-run or group disability plan and are not coordinated with or limited by the coverage provided by state family leave plans, either.

Learn more about Aflac Maternity coverage.

How do Supplemental Benefits Help Employers?   

1 in 5 surveyed employees reports that they have delayed or avoided medical care because they could not afford it.  Stress over personal finances has been shown to be a significant factor that leads to distraction on the job and decreases in productivity. Employers who offer supplemental insurance not only help to alleviate their employees’ financial concerns so they can seek the care they need, they also gain a more engaged, focused, and productive workforce.

Depending on how supplemental insurance premiums are funded, employers may also see a reduction in their payroll tax liability, or even be able to claim 100% of the employer-paid premium costs as a business deduction.

Read more: The 5 Key Benefits of Providing Supplemental Insurance

Partner with Accuchex to expand your supplemental insurance options today

Short-term disability and hospitalization insurance are among the most popular supplemental insurance options that employers offer. Combined, they can be used to give employees the peace of mind they need if they become ill or injured. Other plans, such as those that cover cancer, critical illness, maternity care, and accidental injury are also frequently sought by employers as a low to no cost option to supplement their core benefits offering.

Accuchex can help you explore your supplemental insurance options and implement the plans that make the most sense for your business. Download the Accuchex Employer’s Guide to Supplemental Insurance  to learn more, or call Accuchex Payroll Management Services at 877-422-2824 to talk to someone about adding supplemental insurance for your employees today.

Topics: supplemental insurance

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