What determines my group short-term disability rates?
- Claire Baker
- 4 days ago
- 2 min read
Your incompetent HR department directly affects your short-term disability insurance rates.
But not in the way that you think.
Short-term disability is a great benefit. Don’t get me wrong.
It can save the company money and help employees through a tough time.
But you may be surprised about how your company's culture affect your rates.
1️⃣ Your industry
You’re less likely to slip and fall or have something fall on your head at a white collar job, so your rates should be lower, right?
Nope. White collar workers make more money on average, making their claims more expensive and driving up rates.
White collar work is also more likely to lead to burn-out and mental health disability, which leads to longer and more expensive claims than many physical injuries.
Long claims, not broken bones, cost the most money.
2️⃣ Your PTO policy
Generous PTO means people take more time off. So they’re more likely to file disability claims too, right?
Many short-term disabilities resolve after a few weeks of R&R. The more generous your PTO policy is, the longer people wait before filing a claim.
Insurance companies like that and lower your rates. You still wind up paying for it, but through PTO, not premiums.
3️⃣ Your location
Everyone hates high-regulation states like California, New York, Massachusetts, and Washington, right?
Not disability insurance. They love states with state-paid disability insurance where private disability can “wrap” around state benefits and only pay the difference between the state payment and policy limits.
In distributed teams, the employer pays the same rate for everyone. In generous states, insurance pockets the difference.
4️⃣ Executives
Executives make more money so their policies are more expensive. Right?
Wrong again. Executives are more likely to go back to work sooner, making them cheaper to insure.
5️⃣ HR Competence
Insurance wants your HR department to be good at their job so claims flow more smoothly, right?
Haven’t you been paying attention?
Insurance WANTS you to misunderstand your benefits. Then you’re less likely to use them.
HR messed up your application? Great! All the better to deny you with. If they’re lucky, you’ll give up entirely. Ideally, HR loses the application altogether and you never apply.
An incompetent HR department will actually improve your “experience rating” (i.e. premium-to-claim ratio) and drive down your rates.
And you thought that Linda in HR was useless. She’s probably saving your company 8¢ per employee per month in premiums. You should thank her.
If your team is having trouble with their disability claims, we can help. We'll probably crater your experience rating and increase your short-term disability rate. But hey, I can help make sure your team’s claims are successful so they don't come out of PTO. Maybe you’ll save money in the end.
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