For California employers, managing benefits can feel like navigating a maze of regulations, cost pressures, and employee expectations. One area often overlooked—but with significant implications—is Long Term Disability (LTD) insurance.
What Is Long Term Disability Insurance in California?
Long Term Disability (LTD) insurance provides income replacement for employees who are unable to work for an extended period due to illness or injury. While California offers State Disability Insurance (SDI), it typically covers short-term needs—up to 52 weeks. LTD, which is usually employer-sponsored or employee-paid through a group plan, kicks in after that period (often after 90 or 180 days) and can continue to pay a portion of income for several years or until retirement age, depending on the plan.
Why It Matters More Than You Think
Many employers assume that if SDI is in place, they’re covered. But here’s the catch: SDI is not designed for long-term conditions like cancer recovery, multiple sclerosis, or severe mental health issues. Without sufficient LTD coverage, employees facing these challenges may be left without income—and employers could be left with larger problems than they anticipated.
Here are three often-overlooked costs of inadequate LTD coverage:
1. Productivity Loss and Absenteeism
When an employee experiences a serious health issue without sufficient LTD protection, it can create anxiety and distraction—for them and their team. HR departments may see increased time off requests, modified duties, and operational disruptions. This hidden cost often goes untracked but can quietly erode team efficiency and morale.
2. Higher Turnover and Recruiting Costs
Employees increasingly view comprehensive benefits—including robust disability coverage—as a signal of employer quality. Inadequate LTD offerings can drive talent to competitors with more supportive benefits packages. Replacing experienced employees is expensive, especially in industries with tight labor markets or specialized skills.
3. Legal and Compliance Risks
Disability-related claims can sometimes evolve into ADA or FMLA disputes if not managed with care. Offering a well-structured LTD plan doesn’t eliminate these risks, but it does help demonstrate a good-faith effort to support employees and provide reasonable accommodations. It also helps employers stay aligned with evolving best practices in workforce management.
Looking Ahead
For employers in California, where the workforce is diverse and aging, LTD should be viewed not just as a benefit—but as a strategic safeguard. A well-designed plan helps manage financial risk, supports employee retention, and demonstrates a culture of care.
As LTD claims trends shift toward chronic conditions and mental health, forward-thinking employers are taking a closer look at their policies. Those who invest now may avoid the far greater costs of being unprepared later.
If you have any questions or would like more information on how to enhance your benefits package, feel free to reach out to SSA Insurance Services at 760-203-4293 or service@ssainsuranceservices.com.
Since 2013 SSA Insurance Services has been helping organizations of all sizes to promote and protect the health and wellness of their most important asset: their employees. Stephanie San Antonio and her team do this by working with employers to design, implement, and maintain a company culture that is in line with their mission and values, and building a comprehensive benefit package that attracts and retains their top talent. Call SSA at (760) 203-4299 for a complimentary benefits package review, to make sure your group health plan is in compliance, and for help with establishing a wellness program for your employees to keep them healthy, happy and engaged.
