Disability benefits provide protection against loss of income due to a nonoccupational illness or injury.
Commercially insured. The employer pays monthly premiums to an insurance carrier in exchange for the carrier assuming all risks of underwriting a short-term disability policy. The actuarially determined premium is often specified as a rate per $10 of weekly benefit per month. In some cases, the employer contributes a specific amount (often, a number of cents per hour worked for each employee) to a designated union fund that provides welfare benefits.
Long-term disability. Long-term disability (LTD) plans provide a monthly benefit to eligible employees who, because of a non-work-related illness or injury, are unable to work for an extended length of time. Benefits usually are paid as a fixed percentage of predisability earnings, up to a set limit. Most participants have a waiting period of 3 to 6 months, or until sick leave or STD benefits end, before LTD benefits begin. LTD benefits generally continue until retirement or a specified age, or for a period that varies with the employee's age at the time of the disability.
Noncommercially insured. The employer is required to have liquid assets corresponding to the projected liability of the plan. These plans must be registered with the Department of Labor and are guaranteed by ERISA. The employer assumes all risks and expenses of providing the benefit.
Short-term disability. Short-term disability (STD) plans provide benefits for non-work-related illnesses or accidents on a per-disability basis, typically for a 6-month to 12-month period. Benefits are paid as a percentage of employee earnings or as a flat dollar amount. STD benefits vary with the amount of predisability earnings, length of service with the establishment, or length of disability.
State temporary disability plans. The States of California, Rhode Island, Hawaii, New Jersey, and New York require temporary disability insurance (TDI) coverage. These plans provide temporary income for a limited period to workers who are unable to work because of non-work-related accidents or illnesses. California and Rhode Island mandated plans do not require employer contributions; Hawaii, New Jersey, and New York require employer contributions to disability plans.
Unfunded salary continuation. The employer pays the benefit from operating revenue, assuming all associated risks and expenses.
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