Welcome to HR 101. Class is now in session. In honor of October being National Disability Employment Awareness Month, today’s lesson is on disability benefits.
The history. In 1956, President Eisenhower signed into law Amendments to the Social Security Act, which established the Social Security Disability Insurance program, according to the Social Security Administration (SSA). At the time, the program only provided benefits for disabled workers between the ages of 50 and 65 who had met certain requirements for insured status—the program would later expand its coverage to include benefits for spouses and dependents, the elimination of age requirements, and extended medicare protections, among other things.
In 1967, the SSA more clearly defined the definition of disability to “a person must not only be unable to do his or her previous work but also be unable, considering age, education, and experience, to do any work that exists in the national economy, whether or not a vacancy existed or the person would be hired to do the job.”
As the decades passed, disability benefits—such as Social Security disability insurance, supplemental insurance, paid leave policies, and workers compensation programs—would continue to expand and evolve, eventually becoming a key part of some employer’s benefits packages.
Fast-forward. Up to one in four people in the US have a disability of some kind, according to data from the Centers for Disease Control and Prevention. This includes people who have hearing, vision, cognitive, walking, or self-care issues, or other difficulties that impact their ability to live independently.
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Around 4% of employed Americans have a disability, according to 2022 data from the Bureau of Labor Statistics, and some 78% of employers offer a short-term disability benefit, reported CNBC, while 63% of employers offer long-term benefits. Yet just 38% of employees take advantage of the former and only 33% do so for the latter, according to CNBC.
Most employees don’t think about disability benefits, assuming it is something they’ll never need to use, Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans, told SHRM. But the reality is that one in four 20-year-olds will become disabled before they reach retirement age, she added, citing SSA data.
Despite being an uncomfortable topic, it’s vital for employers to explain the value of these benefits so their employees understand what options are available to them should something unforeseen happen.
“While employees understand the importance of planning for retirement and signing up for insurance to protect their families, most employees have not planned for a circumstance where they would need to replace their income should they become disabled and are unable to work,” Jackie Breslin, director of human capital services for TriNet, told SHRM. “Many times, employees have not thought about how important long-term benefits are until they have a family member, friend, or coworker that is going through a medical challenge and is therefore faced with a financial challenge.”