Employers Not Well Versed in STD Costs

February 26, 2007 (PLANSPONSOR.com) - A recent survey by the International Society of Certified Employee Benefits Specialists (ISCEBS) showed that employers don't have a firm grasp on what they're paying for short-term disability (STD).

A news release from the Brookfield, Wisconsin-based ISCEBS said its poll also found that employees don’t understand the value of the benefit.

The announcement said the survey found that most employers treat disability as a payroll practice, making it difficult to determine costs. In fact, 41% of respondents don’t know what they spend as a percentage of payroll on short-term disability benefits. Of those who do know:

  • 53% spend between 0%-5% of payroll.
  • 6% spend between 6%-10% of payroll.
  • 2% spend between 11%-15% of payroll.

The majority of respondents, 86%, offer a noncontributory disability benefit. The 14% of employers that require employee contributions indicate that contributions are a detriment to enrollment.

“Given that studies have shown 30% of employees will become disabled for at least 90 days at least once during their working career, we find it surprising that most employers are unaware of how much they spend on their short-term disability benefits,” said Leanne Fosbre, CEBS, vice president of the society, in the news release.

The survey also found that two-thirds of respondents have not made any recent changes to short-term disability, and the majority of them do not anticipate making changes anytime soon. Respondents indicated that union contracts, employee perception of benefit value and management buy-in are the biggest hurdles for changing STD plans.

More information is at http://www.iscebs.org/PDF/std06survey.pdf .