For years, employers lamented the fact that employees didn’t recognize the value of their benefits. That’s changed. Today, employees are more informed and more selective. They acknowledge the value of benefit packages, they know what’s available in the market, and they weigh employment options accordingly. As a result, employers are seeking unique ways to differentiate themselves in an increasingly competitive market and questioning how (or if) new leave laws, such as paid family and medical leave (PFML), should affect traditional products like short-term disability (STD).
In order to maintain a strategic advantage, employers must reevaluate and retool their plan and policy designs. This requires an understanding of how each component of benefit plans complement the whole. Without that understanding it’s easy to make assumptions that can leave your employees at a disadvantage during some of the most vulnerable times of their lives.
We know that an employee’s experience with accommodations including leave can make or break retention. Recent Reddit conversation threads illustrate why — with six to 60 comments about the value of STD and other products. One person wrote, “Having the STD means I can rest and not overexert myself while trying to heal/manage my health. If I didn’t have it I’d be screwed…” Another contributor describes it as a lifesaver.
The ability to heal from an injury or illness with employer support makes a meaningful different to employees, who don’t just remember that they got time off; they remember how they were treated during that time. It’s personal.
And the investment that employers make in an employee’s holistic health with benefits that help them stay at work, take the time they need to care for family members and themselves, and return to work as soon as possible pays off. Employees who feel seen, heard, and supported are more engaged and loyal. It’s a two-way street.
Understanding the options — and how they fit together to protect employees during times of need — can position your organization for success. On the flipside, lack of knowledge can leave you (and your employees) vulnerable.
Trusted Guides
And according to the 2024 DMEC Plan & Policy Design Benchmarking Report, employers are being generous with the plans offered. Data shows significant investments in benefits including leave and disability insurance. This data, which represents hundreds of employers, highlights the importance of customizing plan and policy options that support a diverse workforce and bridge gaps between state-mandated disability programs, employer-sponsored STD, and PFML. While the intricacies can be confusing, it is crucial for employers to explore seemingly subtle nuances that may impact employees adversely.
I’m not suggesting we all become insurance experts. However, understanding options — and how they fit together to protect employees during times of need — can position your organization for success. On the flipside, lack of knowledge can be a liability. What you don’t know can hurt you.
Join us for the 2025 DMEC Annual Conference from Aug. 4-7 in Washington, D.C., where we start with a preconference workshop focused on effective policy development and continue with several sessions focused on helping employers navigate the intricacies of PFML programs, employer-sponsored benefits, paid time off, parental leaves, STD, and long-term disability. Earmark these sessions on the agenda and register before June 26 for discounted rates.
Disrupting the Status Quo
As more states pass (and implement) PFML, there are an increasing number of questions about the need for STD insurance. Those who do their research learn the value of STD to support holistic employee health and wellness, which includes physical, mental, and financial health. It helps ensure equity especially for multi-state employers especially when you consider the cost of PFML contributions.
Even with the rise of state-mandated paid leaves with broader eligibility, STD is essential for employers that want to provide comprehensive coverage. Comparing STD with paid medical leave reveals significant differences. Understanding these distinctions is crucial for ensuring employees receive the complementary protection STD provides.
The devil is truly in the details. And there are a lot of details when it comes to comparing STD and PFML including wage replacement options as well as caps, duration of benefits, benefit eligibility, and more.
Traditionally STD has helped level the playing field for multi-state employers, and that role is evolving. I hear more about customizable STD options, which can — when designed strategically — help employees stay at work with appropriate supports. And that should always be our goal. However, all too frequently we focus on leave as a first accommodation when it should be the last.
As our industry evolves, there are more opportunities to provide employee support during all stages (and phases) of their lives. Those who take a one-size-fits-all approach to disability and absence management are setting themselves up for failure. Yet some employers have not pivoted from legacy approaches. It can be difficult to embrace a different approach, yet the rewards here far outweigh the risks.
Data-Driven Decisions
To lay the groundwork for change, use data to support the need for different types of policy and plan designs that appeal to a diverse workforce. The 2024 DMEC Plan & Policy Design Benchmarking Report reveals interesting trends about STD — which most employers continue to offer (and pay for in full) — as well as changes to benefit portfolios.
Get details in the “Key Insights from DMEC’s 2024 Plan and Policy Design Survey” webinar on June 11 and join the DMEC community to gain access to the full report, DMEC AbsenceExemplar® benchmarking data, customized reports, and myriad resources.
Using data to compare your plans and policies with your comparators may reveal oversized investments in programs with limited appeal to your workforce that outpace your peers. If so, you have money to reinvest. Forward-thinking employers assess programs for usability as well as equity regarding eligibility, benefit amounts, and duration of benefits. Use these four points to evaluate STD as part of your plan and policy framework:
- Bridging the coverage gap: While statutory leave programs provide income replacement, some have waiting periods or limitations that STD fills. Research your state programs and talk with your carrier about redesigning your STD plan to align and provide a valuable supplement.
- Customization: As statutory benefits expand, employers are redesigning their STD policies to complement them with adjustments to waiting periods, coverage durations, and their integration with paid leave laws.
- Enhancing employee experience and retention: Employees expect seamless, easy-to-navigate benefits. A well-designed STD plan can offer financial security and predictability to reduce stress during leaves. Customizable STD options can also help employees stay at work.
- Cost and compliance: Employers must navigate how STD interacts with statutory plans to avoid unnecessary costs or inefficiencies and ensure compliance with regulations that can overlap.
Ongoing discussions about plans and policies help ensure a holistic approach to employee health and wellness. While there are no simple answers here, it is increasingly important to arm your teams with knowledge about different options and elements to effective benefit plans.
It’s not a new discussion, but the stakes are higher when you consider that employees are more willing to switch employers to gain a more generous benefit plan even when salaries are equal. Join us June 11 for a discussion about how hundreds of employers are wielding the power of their benefit plans and policies to deliver more customized employee support and retain a competitive edge.
