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Putting Risk in Its Place with Long-Term Disability Coverage

October 24, 2023

If you had to rank in order of importance the top three group welfare benefits an employer could offer an employee, what would they be? Perhaps number one would be medical, number two would be dental and number three would be vision. Would long-term disability rank in your top five? In my opinion, it should be ranked number two, right after major medical. After all, if you do not have an income, you cannot pay for medical, dental or vision insurance.

Employers offer long-term disability insurance to their employees for two reasons:

  1. They want to attract and retain the best in the industry.
  2. They care about their employees and want to provide for them in their time of need.

However, 70% of private sector workers do not have this long-term disability insurance. This is happening despite the following eye-opening statistics from the U.S. Centers for Disease Control and Prevention:

  • 61 million Americans, or 27% of the population, are classified as being disabled.
  • Mobility and cognitive disabilities are the most common, which can keep people from working.
  • Disabled adults are more likely to be obese, smoke, have heart disease or have diabetes, further complicating a disability.

Some employers may argue there is not a need to provide long-term disability insurance because Social Security disability will step in, or if employees are injured on the job, they will be covered by Worker’s Compensation. However, 90% of all disability accidents and illnesses are unrelated to the claimant’s employment, according to Also, most do not realize that more than two-thirds of Social Security disability claims are denied, according to the Social Security Administration. If approved, the process often takes two years.

In addition, the average person on Social Security disability receives about $1,300 per month. When an employer provides long-term disability, the carrier will assist in expediting the Social Security disability approval process. Furthermore, the insurance company will only offset their monthly payout by what Social Security pays. For example, if the insurance plan were to pay a claimant $2,000 per month and Social Security is going to pay $700, the carrier will pay the difference of $1,300 per month, in most cases to the Social Security retirement age of 67. It’s easy to see the importance of long-term disability insurance.

Long-term disability can be complicated with the way the contract is structured. For instance, the definition of occupation, what earnings are included, and of what a disability entails are all extremely important details that should align with the needs of your workforce. Make sure commissions are included in the definition of earnings if you have a large sales team.

If you would like a review of your current long-term disability plan or if you want to explore your options, contact me below:

Employee Benefits | Cincinnati
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