Why should I consider short term disability for my small business?

What employee benefit does nobody ask about at hiring, but makes people more likely to sue when it’s not there?

That saves a few bucks but costs tens of thousands each time you don’t use it?

That reminds you of your middle school gym teacher holding a banana every time you see it on your pay stub?

...

Have you guessed STD yet? 

Short term disability insurance (STD) isn’t sexy. It doesn't attract top talent, but it can keep a company from the kind of tough decisions that can end with lawyers. Many employers don’t even know that the situations that are draining their budget are insurable. 

Here are 6 reasons why founders scrimp on disability insurance, and why they’re wrong:

1️⃣ “Not my responsibility.” 

Medical-related absences are emotionally charged. STD prevents the optics (and sometimes legal risk) of putting the company’s interests at odds with an employee’s health needs. When you insure a portion of your employees’ income when they can’t work you also insure the company doesn’t have to make a tough financial decision that might blow up in your face. 

2️⃣ “The state pays for it.” 

State payments are often inadequate for most people to survive on. New York tops out at $170 per week. California only pays benefits for a maximum of 8 weeks and Rhode Island maxes out at 6 weeks. Many states don’t offer disability payments at all. If you’re relying on state benefits to help your team get through a rough patch, you’re putting them at risk for turning a health crisis into a financial crisis.

3️⃣ It’s only for extreme cases

It’s not just for catastrophic illness. STD can subsidize parental leave, smooth out long recoveries, or take pressure off unlimited PTO when someone’s absence stretches into weeks. Even healthy, young teams will eventually face a situation where someone’s out for longer than your PTO budget can comfortably handle.

4️⃣ “We’re too small.”

The smaller your team, the more disruptive and costly an extended absence is. On a team of 10, one person could represent 10% (or more) of your workforce and payroll. Big companies can spread out the risk, but the “rule of small numbers” unfairly penalizes smaller teams when someone’s temporarily unable to work.

5️⃣ “It’s an unnecessary cost.” 

STD is usually dirt-cheap - usually just a couple of bucks per employee per pay period. What’s expensive is when the company has to pay someone for weeks (or months) of PTO when they’re seriously ill, injured, or out on parental leave. 

6️⃣ “We’ll deal with it if it happens.” 

Reality check: Not “if,” but “when.” Sooner or later someone will have a baby, an accident, or a diagnosis. The first time feels like a one-off, but it sets a precedent. The next time, it feels like a generosity tax. The third time, you realize self-insuring isn’t sustainable. Short-term disability is the cheapest way to be as generous as you want without eating up your runway.

Wondering what benefits are good for both the business and the employee?

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