By now you get it - health and dental shouldn’t be insured benefits, and health and wellbeing is very important. So what happens when something more serious happens to a plan member? How do you help them if they can’t work due to illness or injury? Let’s dive into our Wage Preserver program to explore how we can provide additional support for your team.
What is Wage Preserver, and Why do I need it?
Unforeseen injuries and illnesses can happen at any time, resulting in lost work and wages. This time off can extend to weeks at a time, adding additional stress and hardship for the employee and their loved ones.
To mitigate the stress and lost wages that occur from time off for injuries and illnesses, organizations can offer their employees Short Term Disability (STD) Insurance. STD coverage provides income for the plan member to support them while they’re unable to work.
However, STD can often times end up costing the plan sponsor more than the plan member would receive in terms of payment. In addition, if frequently used, the costs for STD will likely increase during the plan sponsor's annual premium renewal. This doesn’t seem to benefit the plan sponsor, right?
We have heard this story time and time again; that's why we offer Wage Preserver - a better option to protect your employees while managing your costs.
Short-Term Disability Explained
How does Short-Term Disability work? A Plan sponsor pays STD premiums so that if a plan member is unable to work, the insurer will pay them a percentage of their salary for a specified time to help them cover expenses. STD usually pays about 2/3 of the plan member’s weekly income and will extend for a few months.
Does it make sense to use insurance to provide this coverage? Well, that depends on how often you think plan members will need it. Plan sponsors pay monthly group premiums for each of their team members in case STD leave occurs. If the expected cost of paying the benefit is significantly lower than the premiums, then it doesn’t make sense to have STD insurance.
The Value of Wage Preserver
Paying for Short Term Disability claims as they happen instead of using insurance is one more way to take control over your costs. It’s just like how covering health and dental expenses through an HSA or EHB saves you from sending premiums into a black hole.
We can customize Wage Preserver to ensure it works for your employees, as well as the organization as a whole. All while fitting within cash flow objectives.
It can be blended into any Health Spending Account or Enhanced Health Blend to give your plan members the protection they need.
What can be customized?
- Duration of benefit
- Employment service or part-time/full-time status
- Waiting periods for illness/injury
- The maximum amount of time covered.
- Percentage of weekly income covered.
- The requirement to use sick day provisions
How STD Insurance Works
For example, an organization has implemented an insured STD plan and pays monthly premiums of $30 for each of their 5 employees. Each employee is paid a salary of $50,000 per year.
5 Employees x 12 Months x $50 premiums = $3,000
$50,000 Salary / 52 Weeks * 66.67% Coverage = $641 Weekly Benefit
Let’s say an employee takes 2 weeks of disability leave. Their benefit would be $1,282. However, the organization had to pay $3,000 in premiums. It doesn’t add up.
Not a fan of this system? We have options to help reduce STD benefit costs and create a plan that works for your organization.
Flexible and Customizable Options with Wage Preserver
Our Wage Preserver Short-Term Income Assistance (STIA) is a fee-for-service claims program that pays a percentage of wages on behalf of the plan sponsor for approved claims. One thing we want to make clear is that Wage Preserver is NOT insurance. The plan sponsor pays the cost of the claim, plus an 18% fee.
In the scenario mentioned above, the STD benefit cost the organization $1,800, but only paid the employee $1,282. With the STIA option:
Claim Paid Out: $641 x 2 = $1,282
$1,282 x 18% Fee = $231
Total Cost = $1,513
Instead of paying $3,000 in premiums, the organization only paid $1,513. Wage Preserver saved them $1,487!
We Can Help You Save!
If you are looking to support your employees in their time of injury or illness, but also want to save costs with a plan that makes sense, get in touch. Our Growth Team is ready to chat about how we can work together to save you money on customizable Short Term Disability benefits!