It’s a new era for benefits.
With health care reform forcing HR to navigate so many changes, many are thinking critically about how to stay in the black while still providing quality employee benefits.
Many employers are considering cost-saving measures. One tactic might be to switch from an employer-paid, long-term disability plan to one offered on a voluntary basis. This might be seen as a win-win situation for employers, as they’re providing a competitive benefits package but at little-to-no expense to them.
However, employers considering a greater emphasis on voluntary plans must find ways to educate employees about why they need coverage. If employees don’t understand voluntary options, that often translates into lower enrollment. In the long run, this can hurt both employees and employers financially.
One smart enrollment strategy includes reaching out to Millennials, who might not understand the need for LTD coverage. Reaching this group requires a fresh and engaging approach. Because Millennials are accustomed to instant technology access and information right at their fingertips, employers should consider a variety of new online educational tactics to boost enrollment.
Many HR managers might not consider one side effect of shifting employer-sponsored LTD coverage to employees: They can choose not to elect coverage and face the prospect of working through a disabling illness or injury. Employees who lack coverage could actually hurt productivity and increase an employer’s health care costs.
Consider the possibilities for an employee who becomes disabled and does not have voluntary LTD coverage:
- He or she can take a leave of absence from work and submit a Social Security Disability Insurance claim. The chances of receiving SSDI benefits are low, however, as 65 percent of initial claims were denied in 2012, according to Social Security Administration data.
- He or she can continue working through the illness or injury as long as possible.
With such low approval for SSDI claims, many employees without disability coverage choose to stay at work and work through their illness or injury because they don’t have an income-replacement safety net. This phenomenon, called presenteeism, is productivity loss associated with employees working through medical conditions. This can cause a major drain on an employer’s bottom line. There are many ways presenteeism can hurt a workplace:
- Employees working slower than normal;
- Employers needing to find replacement employees;
- Employers needing to train new employees on job functions;
- Changes in product or service quality;
- Overtime for other employees.
Young employees need protection
While many employers might view presenteeism as something that affects older employees, young workers also are at risk. One in four of today’s 20-year-olds will become disabled before they retire, according to the Social Security Administration. In December 2012, more than 2.5 million disabled workers were in their 20s, 30s and 40s, based on Pew Research numbers.
Disability benefits help protect the income of employees suffering from disabling conditions. The Millennial generation, one that has been subjected to the pressures of an uncertain economy and a lackluster working environment in recent years, is vulnerable to the risks disability insurance protects against.
The median wealth of households headed by adults younger than 35 had 68 percent less wealth than households of their same-age counterparts had in 1984, according to the Pew Research Center. This decrease in income makes it seem unlikely that they would have the savings to help them withstand interruptions in their household incomes.
They also have a lot at stake: Millennials today tend to have more to protect than those in the same age range did 30 years ago. In fact, in 2009, 38 percent of adults under age 35 owned their own homes, compared with 4 percent of the same age group in 1984. In addition, 17 percent of this same group has an IRA compared with 1 percent in 1984.