The importance of disability insurance and which states are mandating their own version
More than ever, companies and organizations—including state governments—are understanding the benefits of disability insurance. Designed as a financial security benefit, disability insurance pays employees a portion of their income if they become injured, ill or give birth and need to take time off from work to recover.
At this time, 10 states have enacted laws requiring employers to offer some form of disability or paid family and medical leave (PFML) insurance to their employees. Those states include California, Colorado, Connecticut, Hawaii, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Washington, plus the District of Columbia and the Commonwealth of Puerto Rico. Although each state’s mandate is different, the PFML plans are similar in that they generally cover time off for employees for the following reasons:
- Bond or care for a new child who has joined their family through birth, adoption or foster care.
- Care for a family member with a serious illness.
- Care for themselves, if they have a serious health condition, are pregnant or just had a baby.
- Some states include emergencies for a family member who is in the military or has been a victim of domestic abuse or violence.
Why it’s important to offer disability insurance
Even if your business is located in a state that mandates disability only or PFML coverage, offering short- and long-term disability insurance to your employees can help provide additional security.
Let’s look at an example:
Mike is an employee with a wife and two small children. He lives in a state that mandates PFML, but his employer also offers short- and long-term disability insurance. Mike signed up for both. His PFML policy covers sixteen weeks of combined leave. Last year, Mike took 12 weeks to bond with his second child following her birth. Later in the year, he contracted COVID-19 and was out of work for 8 weeks. His PFML plan only covered a portion of his pay for the first 4 weeks, but his employer-sponsored disability plan kicked in and provided payments for the remaining four weeks. Having both policies helped give Mike and his family peace of mind so they could focus on getting well.
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