Monday, March 27, 2006

What Do You Do When Your Employee Becomes Disabled?

What Do You Do When Your Employee Becomes Disabled???
Who is going to pay the bills for your long time employee,  the one who just found out they have a major illness, and can't come back to work for several months.  You talk with them in the hospital, and you tell them that everything will be all right, but you look at your own situation, and you realize that without an income, things wouldn't be all right at your house, either.  You have some decisions to make... will you just go ahead and pay the employee their salary for the remaining time they are out?  Can you actually afford to pay that expense?  What if another employee goes out on disability, can you afford to set a precedence?  What if they are out indefinitely?  How long can you afford to cover them?  Can everyone else in your organization keep doing the work of the disabled person?  At some point you will need to hire a person to replace them.  This problem can happen to anybody and at any time.   But this is not the time to be doing this sole searching.  Many employers think that having a good health plan is all they need to make sure their employees are happy, and well taken care of, but what about the other needs that may come up? 
Now you realize you can't afford a lot more expense for your business, so how can you offer more benefits?  Obviously, if you are contemplating paying for this salary, the cost of insurance would have been cheaper.  Realistically speaking, you offer health insurance, life insurance, and maybe even dental and vision, you can't possibly do it all!!  No one expects you to pay for everything!
Most people recommend that you do not pay for all of your employees disability benefits. The perfect balance is to pay just enough to make them able to pay for the rest of it.  The portion that you pay is usually the portion that becomes taxed when they receive the benefit, so it defeats the purpose if you pay too much of it, anyway.  The surprising thing about it, is that disability is not much more expensive than dental insurance, in most cases.  Small business owners tend to think the cost will be out of range for them.  Employees perceive dental insurance to be more important, but the worst case scenario with forgoing dental insurance, is not nearly as devastating as forgoing disability insurance.  In other words, the highest payout of most dental insurance companies, is $1000.00 per person in any given year.  The largest payout with a disability insurance company, is going to be 50% or more of the employees income for the duration you purchased.  This is a much better use of the benefit money that you are paying out.
So what happens when you offer disability and some of your employees decline to get the coverage?  Then what do you do if they become disabled?  Well, you do the same thing that you would do if they had a cavity and chose not to take dental insurance.  You get a good night sleep knowing that you have made it available, and if they chose not to take it, then they made that decision.  Most employees look to their boss to make available the insurances that they need.  As the boss, you have a great influence over the benefit choices your employees make.  If you strongly encourage disability, then you will have a greater number of people participate in the plan.  You have to ask them how they will cover their house and car payments, and maybe even college expenses if they are not able to come to work everyday.  Make sure they realize that as a business, you can not afford to pay their salary for longer than their sick days.  When they realize that the responsibility is theirs, they can make a good decision.  If you don't get actively involved in the process, your employees will not think it is important.

Friday, March 17, 2006

Health Insurance What to do before you quit your job!!!

I get so many calls from people who have decided to make the BIG BREAK!  They are tired of working for someone else, and they have decided to go into business for themselves.  This is a very exciting time; there is a lot to do and there are a lot of decisions to make.  One of the first decisions, BEFORE you leave the old job, is to decide on your health insurance plan.  If you can get COBRA from your previous employer, ask how much it will cost you to continue with it.  You need to budget this into your expenses.  If you can't get COBRA, then you need to see what you can do about getting your own health insurance.  What many people do not realize, is that insurance companies can decline you coverage based on your health.  What you consider healthy is not necessarily what the insurance companies will consider healthy, either. 
There are a lot of misconceptions about health insurance.  Most people think that group health insurance is less expensive than individual.  It may appear that it is cheaper, because your company is paying a percentage of the total cost.  In many cases an individual plan is the least expensive way to go.  It may even be cheaper than COBRA.  The worst thing to do in looking for an accurate quote, is to go online and see what rates they post.  Many times they use quotes that are accurate for a very healthy person, and you may not be considered that healthy.  Sometimes they show rates that are for an 18 year old male, and don't exactly specify that it is not for your age bracket.  If you do decide to go online, expect to receive many phone calls back from various agents.  One gentleman I spoke with recently, told me he had received more than one hundred phone responses.  Some insurance agents run quotes on their websites.  These are tied into a single agency, and you are not likely to get so many calls as you will from a search engine.  These rates are also more likely to be accurate, but not as accurate as actually speaking to someone who can give you advise.  Your health insurance depends on getting the right rates and availability. 
It is best to actually visit or at least call an insurance agent, so you can get straight answers.  How do you find a good insurance agent?  I always recommend you look for someone that you would enjoy working with.  This should be the start of a long term business relationship, so get to know them.  It is a good idea to look for an agent who is an active member of an insurance association.  These agents meet once each month to learn the new trends, laws and products that are pertinent to the insurance industry.  One such organization is South Atlanta Association of Health Underwriters.  It is a part of the National Association and the Georgia Association.  You can access the website at  ( and  Ask your agent if he is a member.  It is also advisable to make sure your agent is able to help with the increased life insurance you may need, as well as "buy-sell" and "business overhead" insurance.  These will become important as your new business grows.
It is certainly better to have all of the expenses understood, including your health insurance, before you make this big move. You don't want to quit your job and then find out that you can't get coverage or that it is not what you expected.  This is a big change and an exciting time.  Make sure you are fully ready for it.