Employer Disability Benefits

Group Disability Basics and Policy Structure

Group disability income insurance provides periodic income replacement to eligible employees who cannot work due to a covered illness or injury. In an employer-sponsored group disability plan, the master policy is commonly issued to the employer, although a trust or other eligible group may be the policyholder. Covered employees do not receive individual policies. Instead, each covered employee receives a certificate of coverage that outlines their benefits and rights under the master contract.

Eligibility for group disability coverage typically requires an employee to work a minimum number of full-time hours per week, such as 30 hours. Additionally, new hires commonly must complete a probationary waiting period, such as 30, 60, or 90 days of continuous employment, before becoming eligible to enroll. Employees who enroll when first eligible often receive coverage without presenting individual evidence of insurability, up to the plan's guaranteed-issue limit. However, employees who decline optional group disability coverage when first eligible may have to provide evidence of insurability if they decide to enroll at a later date, depending on the plan terms.

Many group disability policies include an active-at-work provision, but its requirements and exceptions depend on the policy. This rule requires an employee to be actively performing their regular duties, or otherwise meet the policy definition of active work, on the date insurance is scheduled to take effect. If an employee is absent from work due to an injury or illness on that day, coverage is generally deferred until the employee meets the policy active-work requirements.