Employers and employees have different perceptions of the likelihood and impact of an income-threatening disability, according to findings by the nonprofit Council for Disability Awareness (CDA).
The 2013 Disability Divide: Employer Study, which surveyed 553 U.S.-based HR professionals in August 2012, reports that 84 percent said the ability to earn an income is their employees’ most valuable financial resource—more valuable than retirement savings, homes or medical insurance. But more than half (53 percent) believed that their employees “had never really thought about preparing for disability,” and only a quarter (26 percent) said their employees are “prepared to withstand a disability that causes them to lose their income.”
“Our latest study affirms that distinct differences between employers and employees about disability continue to persist,” CDA President Barry Lundquist told SHRM Online. “Bridging this gap calls for education and advice about the risk of disability, the consequences of income loss and the importance of income-protection planning.”
HR’s Role: Education or Direct Advice?
Earlier CDA research revealed that 48 percent of employees believed that they didn’t have enough information about purchasing disability insurance. But while the new study shows that a majority of HR professionals (72 percent) consider it their responsibility to help workers understand their benefits, fewer (57 percent) think they should provide direction or recommendations on choosing benefits.
“While some HR professionals might view providing advice about purchasing disability insurance as a liability issue, I would say there is liability on the other side of the coin, as well,” Lundquist said. For example, “if during enrollment the employee received no advice or direction, decided to buy pet insurance rather than disability insurance, and then became disabled, I can see them—perhaps on advice from their attorney—coming back to the employer saying, ‘Why didn’t you tell me I should protect my income?’ Pet insurance versus disability might be an extreme example; dental versus disability would not be.”
For some HR professionals, “it may be a confidence issue,” Lundquist continued. “For example, the survey found that among the HR professionals who rated themselves as ‘expert in nonmedical employee benefit matters,’ 73 percent said it was their responsibility ‘to provide direction and recommendations to help my company’s employees chose the most appropriate benefit plan options to meet their individual needs.’ So the experts have more confidence than the novices.”
Lundquist added: “It seems this advice and direction on the best benefits to choose are things that employees particularly hunger for. Most don’t understand insurance very well; they clearly need help.” Moreover, “as more employers offer voluntary, cafeteria and defined contribution benefit approaches—which I am confident will happen more as health care reform is implemented—he more important advice and direction about benefits becomes to the employee.”
Among the steps the report recommends that employers take are:
- Help employees determine their sources of post-disability income and whether it will be sufficient to meet their financial obligations.
- Review what income protection plans are in place, how each one works and the maximum benefit employees are entitled to receive from each source.
Other key findings from the report include:
- Most HR professionals (60 percent) believe that the typical employee in their company could financially survive for three months or less without a paycheck. Employees think they could stay afloat financially for a longer period.
- A large majority (84 percent) of HR professionals think that most disabled workers will return to work within six months. The majority of employees, however, believe that disabilities will most likely be lengthy and career-ending.
- HR professionals grasp the causes of disabilities better than employees, an insight that underscores an opportunity to share better information. Workers mistakenly believe that random accidents cause most disabilities, instead of common, chronic conditions such as back pain and other musculoskeletal disorders.
- Both HR professionals and employees underestimate the odds of a disability occurring. According to Social Security Administration statistics, more than 1 in 4 of today’s 20-year-olds will become disabled before they retire.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related SHRM Video:
The Disability Divide. Speaking with SHRM in 2012 about an earlier survey, Barry Lundquist, president of the Council of Disability Awareness, explained employees’ misperceptions about the most likely causes of disabilities.
Related SHRM Articles:
An Ounce of Disability Prevention, HR Magazine, June 2013
Cancer and Back Disorders Top Long-Term Disability Claims, SHRM Online Benefits, May 2013
Disability Claims Rise, but Fewer Have Coverage, SHRM Online Benefits, September 2012
SHRM Online Benefits page