Disability Insurance for Employees: Group Short-Term and Long-Term Coverage for Small Businesses
An injury or illness that keeps someone out of work for weeks or months is far more common than most people think. When it happens, the paycheck stops, but the mortgage, car payment and grocery bill don't. Disability insurance for employees replaces part of that lost income, so your people can focus on getting better instead of worrying about money. For employees and their families, that peace of mind is one of the most valuable parts of an employee benefits package.
Benefits On Us helps small and mid-sized employers set up group disability insurance that fits their budget. We compare plans from A-rated carriers, explain the options in plain language and handle enrollment, so you can offer real protection without adding work to your plate. We've helped employers since 2001, and our team serves clients in English and Spanish.
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What is disability insurance and how does it work?
Disability insurance is coverage that pays a portion of a person's income when an illness, injury or pregnancy leaves them unable to work. Unlike health insurance, which pays doctors and hospitals, disability insurance pays the employee directly, usually as a weekly or monthly benefit, to cover everyday living expenses while they recover. Disability insurance pays this disability income until the employee can return to work or the benefit period ends.
When an employer offers it as a workplace benefit, it's called group disability insurance. One group policy covers all eligible employees, which makes coverage more affordable and easier to qualify for than buying an individual policy. Group disability is one of the most affordable insurance options you can add alongside your health plan and life insurance.
Short-term vs. long-term disability insurance
Most employers offer one or both types of coverage. They work together: short-term disability covers the first weeks or months, and long-term disability takes over if the condition lasts longer.
| Short-term disability (STD) | Long-term disability (LTD) | |
|---|---|---|
| What it covers | Temporary conditions: surgery, injuries, illness, recovery from childbirth | Serious or lasting conditions: cancer, heart disease, back disorders, major injuries |
| Benefit amount | Usually 50% to 70% of weekly pay, up to a weekly maximum | Typically 60% of monthly pay, up to a monthly maximum |
| Waiting period | Often 0 to 14 days | Usually 90 to 180 days |
| How long it pays | Commonly 3 to 6 months | Several years, or up to retirement age, depending on the policy |
Short-term disability insurance
Short-term disability insurance pays a weekly benefit for conditions that keep an employee out of work temporarily. Common claims include recovering from surgery, a broken bone, a serious illness and maternity leave after childbirth. Because STD benefits start after a short waiting period, it's often the coverage employees use most and appreciate most.
Long-term disability insurance
Long-term disability insurance protects against the bigger financial risk: a condition that keeps someone from working for months or years. LTD benefits start after the short-term period ends and can continue for years. LTD benefits typically continue as long as the employee is unable to perform their job, up to the policy's limit or retirement age. For many employees who become disabled, it's the only thing standing between a serious diagnosis and a financial crisis.
Social Security disability insurance isn't enough on its own
Some people assume Social Security disability insurance (SSDI) will cover them. In reality, the Social Security Administration only approves a condition expected to last at least 12 months or result in death, the application can take months, and the monthly check is often far less than a paycheck. Group long-term disability coverage fills that gap, and many policies help employees apply for Social Security disability when they qualify.
The importance of disability insurance: why offering disability coverage matters
According to the U.S. Bureau of Labor Statistics, only 44% of private industry workers have access to short-term disability plans, and just 37% have access to long-term disability plans (March 2026). That gap is an opportunity for small businesses that want to stand out.
Protect your team's income.
Most families couldn't go months without a paycheck. Disability coverage keeps bills paid while someone recovers.
Attract and keep good people.
Employees value income protection, especially in hands-on roles where an injury can sideline them. It's a benefit that helps you compete with larger companies.
Support a smoother return to work.
Many group policies include return-to-work and rehabilitation services that help employees come back sooner.
Avoid tough conversations.
Without coverage, an employee facing a long recovery may ask you for help you can't give. A plan gives them a clear path.
Low cost for real protection.
Group disability insurance usually costs far less than health insurance, and you can choose employer-paid, employee-paid or shared premiums.
Coordinate with your other coverage.
Disability plans work alongside workers' comp and Social Security so employees are protected however an injury or illness happens.
Is disability insurance required? State-mandated disability programs
In most states, including Texas, employers are not required to offer disability insurance. A handful of states and territories require short-term disability coverage or run state disability insurance programs, including California, Hawaii, New Jersey, New York, Rhode Island and Puerto Rico. A growing number of states also run paid leave programs for family and medical reasons, and those laws spell out which covered employers must participate. These state disability insurance programs only replace part of a paycheck, so many employers add private coverage on top.
If you have employees in more than one state, we'll help you sort out what's required where, so you stay compliant and avoid paying for coverage twice.
How much does group disability insurance cost?
Costs depend on your team's size, ages, industry and job duties, the benefit percentage you choose, the waiting period and how long benefits last. A longer waiting period and a lower benefit percentage lower the premium; richer benefits raise it.
Employers can structure the cost in three ways:
Employer-paid
You pay the full premium. Employees get the benefit at no cost, but benefits they receive are generally taxable income.
Employee-paid (voluntary)
Employees pay through payroll deduction. If they pay with after-tax dollars, the benefits they receive are generally tax-free.
Shared
You split the premium with your employees, balancing your budget with a richer benefit.
Some carriers require a minimum number of employees or a minimum participation rate to qualify for group rates. We'll tell you up front which carriers fit your group and what each option will cost.
Disability insurance vs. workers' compensation
Workers' compensation covers injuries and illnesses that happen on the job. Disability insurance covers the much larger group of conditions that happen off the job, such as illness, surgery, pregnancy, or an injury on the weekend. Most claims are not work-related, which is why workers' comp alone leaves a big gap. Group disability plans are designed to coordinate with workers' comp and Social Security disability benefits, so employees aren't paid twice for the same lost income.
Not sure what fits your business?
Book a free 15-minute call. We'll review what you have today and show you where you could save time and money.
Book a 15-minute callTrusted by employers since 2001 · Free, no-obligation call · Se habla español
How we help: disability insurance solutions for your benefits strategy
- 1
Review your team.
On a free 15-minute call, we look at your workforce, your current benefits and your budget.
- 2
Compare plans.
We shop short-term and long-term disability options from A-rated carriers and show you the trade-offs side by side.
- 3
Enroll your employees.
We handle enrollment and explain the coverage to your team, in English or Spanish.
- 4
Support you year-round.
We help with claims questions and review your plan at renewal so it keeps fitting your business.
Disability coverage works best as part of a complete benefits package. Pair it with group health and dental insurance, workers' compensation insurance and wellness programs that help prevent claims in the first place.
Disability insurance questions, answered
Protect your team's paycheck
Book a free 15-minute call and we'll show you what short-term and long-term disability coverage would cost for your team. No pressure, no sales pitch, just clear answers.
Trusted by employers since 2001 · Free, no-obligation call · Se habla español
Prefer to talk now? Call 281.502.4600