According to the Social Security Administration, about 1 in 4 of today’s 20-year-olds will become disabled before retirement age.1 When that happens, it’s not only the injury or illness that causes stress, but the additional bills and financial strain that may come with it.
The Cost of Disability
Disabilities can range from a career-ending health crisis to a broken bone that needs a few weeks to heal. The cost of a disability also varies widely, but there’s no doubt that it can be financially catastrophic. In fact, a national study found that about 4 in 10 adults currently have debt due to medical or dental bills.2
Here are a few ways that the cost of disability can add up for employees:
Loss of Income
Even a minor injury can impact your ability to do your job. You may have limited protections in place, like paid sick days. But most employees only have a week or so of those each year and the time runs out quickly when needed for recovery. El documento Family and Medical Leave Act may protect your job status for 12 weeks when dealing with a medical issue, but it doesn’t protect your income.
Many workers must go without a paycheck while they can’t work. And emergency savings only go so far. A 2023 Bankrate poll found more than two out of three people would be worried that they couldn’t cover their living expenses for one month if they lost a primary source of income tomorrow.3
Unexpected bills become the norm when you’re facing a sudden disability. Between doctor visits, hospital stays, therapy and more, having a disability is expensive. Un 2022 study from the American Cancer Society found that more than 50% of cancer survivors had issues paying medical bills and experienced financial distress or delayed medical care because of the costs.4
Common Questions Employees Ask About Income Protection Benefits
Protect your paycheck – and your future – with employee benefits that can help support your financial wellness.
What Is Disability Insurance?
If you’re unable to work, how long could you and your family keep your lifestyle? Disability insurance provides income protection that can help ease the financial concerns caused by a disabling injury or illness.
- Short-term disability insurance, which we call short-term income protection benefits, replaces part of your income if you’re unable to work due to illness, injury or childbirth. Examples of these disabilities could include broken bones, surgery, lower back conditions or carpal tunnel syndrome.
- Long-term disability insurance, which we call long-term income protection benefits, helps cover your day-to-day living expenses when you’re unable to work for an extended time due to an illness or injury.
These income protection benefits can help you when you need them most.
What Does Disability Insurance Cover?
Employee benefit options can feel overwhelming during enrollment. What should you think about when considering disability insurance? Good questions to ask include:
- What percentage of your income is covered?
- For how long is your income covered?
- Is the income taxable?
You should understand what other types of insurance policies or protections are in place, such as supplemental health plans, and how they work together to cover you.5 For example, accident insurance, which we call accidental injury benefits, may pay you a cash benefit in the case of an injury, which could be very helpful. On the other hand, Social Security’s disability coverage can leave you with a big coverage gap.
Según la Social Security Administration, it can take three to five months to get a decision on a disability application. That’s a long time to go without money coming in. Income protection benefits can help cover the gap and ease financial stress.
How Much Insurance Do I Need?
Disability Insurance is an important resource, but it can be confusing to decide how much coverage you may need. This calculator can help you assess and determine the right amount in three simple steps.
Can I Adjust Coverage as my Life Changes?
Your financial needs will change throughout your life. As your obligations grow and others begin to depend on you, the need for coverage grows as well. Consider a 30-something worker who earns the primary income for a family with kids, a mortgage and car payments. There’s a lot on the line if a disability interferes with that parent’s ability to work.
In comparison, a person in their 20s who lives with their parents might require much less coverage. And the need for income protection might decline again later in life when their mortgage is paid off, children are financially independent and a retirement plan is well-funded.
Financial Stability for Your Employees
Your employees’ income is often the most important part of their financial wellness. It makes sense to help them protect it so they can remain financially stable, no matter what comes their way. Employers who offer income protection solutions should help educate their employees about these benefits in relatable ways. When the unexpected happens, well-informed workers will be better prepared to shoulder the cost of a disability.
Read more about how disability insurance can help support injured workers.
1 Disability and Death Probability Tables for Insured Workers Who Attain Age 20 in 2022, Social Security Administration, December 2022.
2 Health Care Debt In The U.S.: The Broad Consequences Of Medical And Dental Bills, KFF Health Care Debt Survey, Kaiser Family Foundation, June 2022.
3 Bankrate’s 2023 annual emergency savings report, Bankrate.com, February 2023.
4 Survey: Half of Cancer Patients and Survivors Report Incurring Cancer-Related Medical Debt; Over 70% Are Worried About Affording Care, American Cancer Society, March 2022.
5 Supplemental Health products (Accident, Critical Illness and Hospital Indemnity, etc) are independent and do not coordinate with any other health coverage.