Group health insurance and group disability insurance are excellent ways to protect your employees. This is perfect for those who want coverage but don’t have the necessary budget for more expensive premiums.
The question is: should you offer group health insurance and group disability insurance to your employees?
What is group health insurance?
This insurance is offered to businesses or organizations so they can ensure their employees or members. Often, the premiums for LA Group Health Insurance are lower than individual plans.
Advantages of Group Health Insurance
- Tax credit for small businesses
- Cheaper for employees with budget constraints
- Attractive to skilled and qualified employees
- Ensure that your employees are getting the necessary protection.
The biggest disadvantage includes the difficulty of administration. Remember, you will act as the intermediary between the insurer and the insured.
The second disadvantage is the limited flexibility. Group health insurance is generic or is not tailored to individual needs of your employees.
Group Disability Insurance
Aside from group health insurance, GDI or group disability insurance is another important employee benefits package. Why should you consider this as part of the benefits package?
Pros of GDI
There’s one thing you should understand before offering it to your employees. As the business owner, you might subsidize a portion of the premium. That being said, GDI has a lot of advantages.
Easiness of Application
You don’t need to provide proof of income. Moreover, your employees can skip the medical exam. The coverage is the same regardless of health issues.
Pre-existing conditions are covered whether these conditions can cause disability or not. As long as you enrolled for a policy of 12-months or longer, your employees get the protection they need.
Since this insurance requires a minimum number of enrollees, the premiums are lower compared to individual plans.
Cons of GDI
Group disability insurance is not without disadvantages.
Lower and More Generic Coverage
The low premium is equivalent to limited benefit and more generic coverage. Often, the benefit replaces 60% of your pre-disability income.
Plus, the workers’ compensation or social security disability allowance can affect the amount your employee receives.
Non-transferable and Non-convertible
Once your employees resign, they can’t transfer or convert the group plan into an individual plan. Coverage runs while you pay and stops once you’re not updated.
Long-term Vs. Short-term
Group disability insurance has two types: long-term and short-term. You can enroll your employee in either one or both policies.
Short-term disability insurance has the following features:
- Shorter to no waiting period
- Benefits kick in once disabled
- Coverage is less than a year
Long-term disability insurance has the following benefits:
- This insurance starts once the short-term GDI stops giving benefits.
- This entitles employees to a longer period of receiving the benefits.
- Some coverage may reach up to retiring age, usually 65 years old.
Who Can Offer Group Disability Insurance
Business owners can offer GDI to their employees. Other businesses include unions, medical and legal associations.
Most often, employers choose short-term disability insurance. Since group disability insurance is cheaper than a private or individual policy, this results in lower coverage and lesser rider selection for your employees.
Tax Advantages of GDI
Generally, disability insurance is non-taxable. However, a part of the premium paid for employers is taxable income.
Roles of Other Insurance in Disability Allowance
Aside from group disability coverage, workers’ compensation and Social Security insurance (SSDI) provide disability benefits. These two insurance reduces the wage replacement allowance of group disability insurance and individual plans.
This reduction could pose some risks for some employees with budget constraints. Your employees could be pushed back to the poverty line if they rely on SSDI.
You can reverser this effect by offering to help in enrolling them with a private disability or other life insurance through payroll deduction. It’s just a matter of creating a comprehensive but flexible and voluntary payment arrangement that employees can enjoy.
The answer to the question is yes, but still, the final decision is yours. Remember, financial protection would be a great benefit for your employees. You can offer group health and group disability insurance to ensure full coverage.
If these insurances don’t suffice, you or your employees can fill the gap by getting an individual plan with flexible payments. You can consult an insurance provider to maximize these opportunities.
About Arroyo Insurance Services
Arroyo Insurance Services was officially established in 1986, but we have roots dating back to before 1950. One of California’s leading client-oriented and independently owned agencies, we have over 140 employees with a combined experience of over 450 years, spread across 11 locations. We are committed to providing the best insurance and risk management services at the most competitive premiums, and backing it with hands-on service tailored to our customers’ needs. For more information on how we can mitigate your risks, contact us today at (877) 220-4769.