employee benefitsJuly 17, 2013  Scottsdale, AZ  The Council for Disability Awareness (CDA), a nonprofit organization dedicated to educating the American public about the risk and consequences of experiencing an income-interrupting illness or injury, recently released two research reports.  The first report, The 2013 CDA Long Term Disability Claims Reviewa proprietary annual review of long-term disability claims among the U.S. working population, summarizes quantitative and qualitative long-term disability insurance claims data from 2008 to 2012.

The CDA report, now in its eighth year, includes disability claims data from 19 CDA member companies, representing more than 75% of the individual and group commercial disability insurance market.  The report revealed that overall claims were down, but the cost of the average claim rose.  By a wide margin, diseases of the musculoskeletal system and connective tissue, such as arthritis, spine disorders, back pain, sciatica and osteoporosis, continue to be the leading cause of disability claims, representing 30.7% of all 2012 claims.

Often times, the value of disability insurance benefits gets overlooked by both employers and employees.  It is important for organizations that offer such programs, whether on a voluntary benefits platform or as a fully or partially employer-paid company benefit, to educate their eligible workforce about the benefits of disability coverage, the company offerings, and what coverage selections may mean for the individual employee.  The reality of becoming disabled at some point in one’s working life is real and statistically more likely than an employee’s death benefits being claimed by one’s beneficiary.

Some key survey findings from the report include:

  • Disability claim payments for 2012 increased slightly (a 0.4 percent increase over 2011).
  • Fewer companies in 2012 reported disability claim incidence increases, with only 27% of companies reporting that long-term disability claim incidence increased in 2012.
  • Many attribute improved 2012 results to a gradually improving economy and declining unemployment rates; however, efforts to help recovering claimants return to work continue to be hampered by limited employment opportunities.
  • The number of companies offering long-term disability coverage remains steady. The number of employers offering group long-term disability insurance programs remained nearly identical in 2012, compared with the prior year.

In a separate report from CDA, The 2013 Disability Divide: Employer Study, distinct differences between employer and employee perceptions about disability were identified.  Despite some common ground, there are clear divisions between employer and employee perceptions around the likelihood and impact of an income-threatening disability.  Of the 553 HR professionals surveyed, 84% said the ability to earn an income was their employees’ most valuable financial resource; more valuable than retirement savings, homes, or medical insurance.  However, 53% thought their employees “had never really thought about preparing for disability,” and only 26% said their employees are “prepared to withstand a disability that causes them to lose their income.”

Key findings from the report include:

  • 48% of employees said they didn’t have enough information about purchasing disability insurance.
  • 60% of HR professionals surveyed thought their typical employee could only financially survive for three months or less without a paycheck.
  • A large majority of HR professionals thought that most disabled workers would return to work within six months, while 68% of employees said disability would keep someone out of work for a year or longer; 31% of employees thought a disabled employee would never return to work.
  • The surveyed HR professionals and employees both significantly underestimate the odds of a disability occurring.

It would appear that employees need education and guidance about the risk of disability, along with knowledge of the consequences of income loss and the importance of income protection planning.  Employers and their service partners are in the best position to assist employees in this effort.  The survey results provide HR professionals with insights to help employees protect their financial security by offering them more effective targeted education around employee coverage selections, and the potential risks of disability.

 

Originally posted by Leonard Sanicola on the WorldatWork Blog.  Leonard Sanicola, CCP, CBP, GRP, CEBS, SPHR, senior benefits practice leader, blogs about trends and issues of importance to the benefits profession and total rewards practitioners.

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