This is a guest post written by Scott Streisand of S.K. Streisand Agency.
As executive owners, it’s likely that you and your finance directors are aware that in the state of New York, disability benefits coverage (known as “DBL” insurance) is required by legal mandate. Perhaps you’re familiar with the $0.60 per week deducted from all employees' payroll, and those lengthy and often confusing fill-in-the-blanks premium invoice forms. Yet this required insurance—which provides some minimal financial reimbursement to employees who suffer a non-job related injury or illness—may also provide some truly beneficial human resource perks for both owners and employees.
To provide some context: the $0.60 per week deducted from employee payroll basically pays for the entire annual cost of each male employee. Female employees cost approximately twice as much per annum, as maternity leave is a fully covered recoverable claim. This basic mandated policy coverage for disability includes 26 weeks of continual coverage, paid at "50% of weekly salary, up to the maximum of $170 per week.” Hardly a comforting thought when faced with illness or accident.
To bolster this thin coverage, we recommend and almost always propose that upgrades be added to the basic policy coverage. There are never any questions as to individual health status, age, or any outside-of-work activities.
To illustrate, should the employer wish to increase benefit levels from the mandated basic coverage to three times (3x) the benefits, the cost factors would be as follows: a female employee would cost $108/year, the male employee $49.80. This is in comparison to the basic rate of $49.80 and $23.40 respectively.
The change in benefits: from $170 maximum per week to $510 per week, and $680 per week if hospitalized.
In real numbers, that means that the cost is an additional $5 per month for each female employee (a bit less for males), while increasing the payout by up to four times the standard amount—keeping in mind that all benefit levels are capped at up to 50% of weekly payroll. Remember, no questions can be asked about any employee.
In addition, businesses can add term life insurance at a $15,000 limit at a cost of $3 per month per employee, and $100,000 of accidental death/life insurance is available for $2 per month per employee.
None of these increased levels are required, but may be an effective human resource tool and employee perk for the betterment of all involved. Note: any increased benefit levels or added life insurance coverage must be added for all covered personnel. No ”carve outs” are allowed.
An important note: Corporations with two or fewer owners/executives, or LLC owners and sole proprietors are not covered by NY DBL, unless they are specifically scheduled by name onto the policy. We strongly suggest that executives and/or owners are scheduled by name onto their respective policies. Regardless of your firm’s legal structure, any entity with employees is required to carry NY DBL insurance coverage.
The information contained in this article is for informational purposes only and does not constitute legal or professional advice. For additional information on insurance options available, please contact S.K. Streisand Agency directly.