Sick pay - ANSWERWith the exception of a few jurisdictions that mandate nonoccupational disability
insurance, employers have had no statutory responsibility to pay individuals who
are sick or injured and missing work for reasons other than those that qualify for
workers' compensation benefits. T...
Sick pay - ANSWERWith the exception of a few jurisdictions that mandate nonoccupational disability
insurance, employers have had no statutory responsibility to pay individuals who
are sick or injured and missing work for reasons other than those that qualify for
workers' compensation benefits. This regulatory landscape is slowly shifting as states
and cities enact laws mandating paid sick leave.
Salary continuation program - ANSWERA salary continuation program is an informal program that
allows employers to
manage short-term absences for pregnancies and non-work-related illnesses or
injuries without contracting with an insurance carrier.
Short-term disability (STD) - ANSWERBenefits under a short-term disability plan are typically
provided through a group
contract between an insurance company and an employer. Contracting with an
insurance company to provide STD benefits has its advantages. It ensures that
experienced professionals are managing claims, gives access to return-to-work
support and fraud-prevention services, and locks in a fixed amount of monthly
financial obligation (premiums) regardless of the disability benefits being paid. Some
drawbacks of insurance contracts are less control in designing and administering the
plan and exposure to additional costs from premium charges related to taxes,
commissions and insurance profits. The tax charges are avoided when the plan is a
self-funded plan. Typically, employers with large workforces opt to self-fund their
STD benefits.
FAS 112 requirements - ANSWERAlso, employers subject to Statement 112 of the
Financial Accounting Standards Board (FAS 112) need to annually estimate the
, accrued liability for these benefits, put aside (reserve) funds for it and report it on
their annual financial statements. Employers that purchase short-term disability
policies have no such obligations since their financial obligation is limited to the
monthly premiums.
Benefits and shortcomings of STD group policies - ANSWEROne advantage of a salary continuation
program is that it may encourage employees
to conserve their sick days for extended disability protection. Another advantage of
such a program is that it is not deemed an ERISA plan and, therefore, not subject to
ERISA reporting and disclosure requirements and fiduciary standards. There are,
though, some drawbacks to this policy. Without the involvement of an insurance
carrier, the employer has the burden of making determinations regarding disability
criteria and duration of disability.
Social Security Old-Age, Survivors, and Disability Insurance (OASDI) program - ANSWERThe Social
Security Old-Age, Survivors, and Disability Insurance (OASDI) program
makes monthly income available to insured workers and their families at retirement
or in the event of death or disability. The OASDI program consists of two parts.
Retired workers, their families and survivors of deceased workers receive monthly
benefits under the Old-Age and Survivors Insurance (OASI) program. Disabled
workers and their families receive monthly benefits under the Disability Insurance
(DI) program.
SSDI eligibility requirement - ANSWERThe OASDI program provides for monthly disability insurance
benefits after the
onset of a severe physical or mental impairment. To become entitled to such benefits,
a worker must:
(a) Be insured for disability under the Social Security Act
(b) File a claim for disability insurance benefits
(c) Meet the definition of disability set forth in the act
(d) Complete a five-month waiting period
(e) Not have attained normal retirement age.
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