Group Disability

• Group Long Term Disability
• Group Short Term Disability
• Supplemental Disability

Individual Disability Income

• Individual Policy
• Business Overhead Expense
• Diability Buy-Out

State (Statutory) Disability Insurance

• Statutory Disability
• Workers Compensation

Group Long Term Disability

This benefit is usually paid for by the employer, although some insurance companies offer it on a voluntary basis, where an employer doesn’t offer employer paid coverage. Waiting periods usually are either 90 or 180 days and benefit percentages range from 50% to 70% of wages. Wages can be defined in many ways. They may use the amount on a W-2, K-1, or a schedule C. Wages may or may not include commissions, overtime, pension contributions, and/or amounts over a certain level of income. Additional benefit riders may include, social security offsets, cost of living, residual disability, catastrophic (needing assistance to perform essential daily living activities) etc.

The definition of disability can vary widely by company and class of business. Definition of disability and earnings levels may separate classes of employees. As an example, Officers may be offered a definition of to age 65 “your occupation” as opposed to 2 years for all other employees. Definitions can be specific, as insuring the specialty within an occupation (physician or surgeon). Each company is different and very few companies specialize in the physician, healthcare, and professional service marketplace.

Group Short Term Disability

Short-term disability is offered on an employer paid or voluntary basis. When employer paid it may be a flat amount or a percentage of wages, the latter being the most popular. It is usually non-occupational and is written in coordination with statutory New York State Disability Benefits Law Insurance. Waiting periods are usually 7 or 14 days and benefit periods are rarely longer than 6 months. Benefit percentages (percent of wages) range from 50% to 70%. The maximum weekly benefit level is usually $1,000 and may be higher for some professionals and very large employers. Some benefit riders are available, but far fewer than group long-term disability.

Supplemental Disability

The word supplemental has generally been defined as “adding to something”. The insurance company AFLAC, has made the phrase supplemental insurance or supplemental benefits certainly one of the most recognized. There are several insurance companies offering supplemental insurance. AFLAC, Colonial Supplemental Insurance, Allstate Worksite Division, Transamerica Worksite, Mutual of Omaha and several others. Most of them offer similar products on an employer sponsored basis. The disability benefit offers many options for the employees. Benefit periods can either be 3, 6, 12, or 24 months. Waiting periods can be 0/7((zero days for accident and seven days for sickness), 0/14, 14/14, 30/30, or 90/90. The best feature is that each employee can choose a different waiting period, benefit period, and benefit amount. Most policies cover accident and sickness, although some companies will provide an Accident Disability Only contract. Underwriting is less stringent than if an employee was to buy an individual disability product through normal channels. The waiting periods are also an advantage, as the individual marketplace no longer offers such short waiting periods.

Individual Disability Income

Individual disability income insurance is designed to replace a major portion of income when sickness or injury prevents a person from earning a living. It can help pay regular monthly bills while a person is recovering, but is still unable to do his or her job. The shortest waiting period is usually 60 days and the benefit period can extend 2, 5,10 years or to age 65. The benefit amount can range from $500 to$30,000 per month. Maximum underwriting limits are usually 50% of earned monthly income. The primary difference between individual and group long-term disability is the underwriting, definition of disability, and the individuality of design.

Individual disability income insurance requires, medical, occupational and personal underwriting. An insurance medical requires an individual to complete an application and may require lab testing and/or a complete physical. Occupation is based on the severity, and may not only affect the premium, but the possibility of being rejected. Personal underwriting refers to your personal habits, sports essentially the way you lead your life. If you drink a lot, take recreational drugs, are involved in professional or amateur automobile racing, sky dive or the like, it may limit the ability to get disability income insurance.

Each company plays by similar rules, but some are more conservative than others. Some insurance companies choose to allow a more liberal underwriting of physicians and other healthcare professionals. For instance; residents and interns may be allowed to purchase higher limits than they would normally be able to purchase based on their future income.

Several riders are available like residual, cost of living, future increase option, partial disability, social insurance substitute rider, etc.(all defined in the definitions section of this site).

Business Overhead Expense

This is a disability income insurance policy that pays a business’ overhead expenses an owner or a key person (must be an employee of the business) becomes disabled. A business overhead expense (BOE) policy pays a monthly benefit based on actual expenses, not anticipated profits. It is designed for businesses that rely on a small number of people or one person to produce revenue. Expenses such as rent, utilities, employee’s salaries, payroll taxes, professional fees, postage office supplies, insurance and interest on bank loans can be used with the proceeds from BOE.

Waiting periods are generally shorter 14 or 30 days and indemnity period are not more than 12 or 24 months. The benefits are taxable and the premiums are tax deductible. The funds are used to pay tax deductible items then and are then deducted appropriately.

Disability Buy-Out

Disability buy-out insurance is designed to provide the revenue needed to purchase a disabled owner or partner’s interest in the business if they become disabled. It is important to first establish a properly value for your business and then set a predetermined selling price with the help of your accountant and attorney. This will protect your business from the threat that a disability that may impose an insurmountable burden upon the remaining partner(s) or owner(s). The waiting period may be 12, 18, or 24 months. The benefits are paid out over a 3-5 year period on a monthly basis. The premiums are not deducted, but the benefits are income tax free.

New York Statutory Disability Benefit Law Insurance

New York is one of a handful of states that require employers to provide disability benefits coverage to employees for an off-the-job injury or illness. Coverage for disability benefits can be obtained through a disability benefits insurance carrier who is authorized by the New York State Workers' Compensation Board to write such policies.

Disability benefits are temporary cash benefits paid to an eligible wage earner, when he/she is disabled by an off the job injury or illness.

Medical care is the responsibility of the claimant. It is not paid for by the employer or insurance carrier. Cash benefits are 50 percent of a claimant's average weekly wage, but no more than the maximum benefit allowed, currently $170 per week (WCL §204).

Benefits are paid for a maximum of 26 weeks of disability during 52 consecutive weeks. For employed workers, there is a 7-day waiting period for which no benefits are paid. Benefit rights begin on the eighth consecutive day of disability. An employer must supply a worker who has been disabled more than seven days with a Statement of Rights under the Disability Benefits Law (form DB-271S), within five days of learning that the worker is disabled.

An employer is allowed, but not required, to collect contributions from its employees to offset the cost of providing benefits. An employee's contribution is computed at the rate of one-half of one percent of his/her wages, but no more than sixty cents a week.

If an employee has more than one job at the same time, with combined wages of more than $120 per week, the employee may request each employer to adjust the contributions in proportion to the earnings of each employment. The combined contributions may not exceed 60 cents per week. The request should be made as soon as the employee enters a second job.

Workers Compensation Insurance

New York is one of a handful of states that require employers to provide disability benefits coverage to employees for an off-the-job injury or illness. Coverage for disability benefits can be obtained through a disability benefits insurance carrier who is authorized by the New York State Workers' Compensation Board to write such policies.

Disability benefits are temporary cash benefits paid to an eligible wage earner, when he/she is disabled by an off the job injury or illness.

Medical care is the responsibility of the claimant. It is not paid for by the employer or insurance carrier. Cash benefits are 50 percent of a claimant's average weekly wage, but no more than the maximum benefit allowed, currently $170 per week (WCL §204).

Benefits are paid for a maximum of 26 weeks of disability during 52 consecutive weeks. For employed workers, there is a 7-day waiting period for which no benefits are paid. Benefit rights begin on the eighth consecutive day of disability. An employer must supply a worker who has been disabled more than seven days with a Statement of Rights under the Disability Benefits Law (form DB-271S), within five days of learning that the worker is disabled.

An employer is allowed, but not required, to collect contributions from its employees to offset the cost of providing benefits. An employee's contribution is computed at the rate of one-half of one percent of his/her wages, but no more than sixty cents a week.

If an employee has more than one job at the same time, with combined wages of more than $120 per week, the employee may request each employer to adjust the contributions in proportion to the earnings of each employment. The combined contributions may not exceed 60 cents per week. The request should be made as soon as the employee enters a second job.