Another Attempt to Provide Short-Term Disability Insurance to Federal Employees

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By on September 26, 2019 in Pay & Benefits with 0 Comments
Congresswoman Eleanor Holmes Norton (D-DC)
Congresswoman Eleanor Holmes Norton (D-DC) | Photo by Keith Mellnick

Congresswoman Eleanor Holmes Norton (D-DC) is trying again to provide a short-term disability insurance benefit for federal employees. She has introduced the Federal Employee Short-Term Disability Insurance Act of 2019 (H.R. 4493) which would make short term disability insurance available as a benefit to federal workers.

Here’s the catch though: the federal government wouldn’t pick up any of the costs if her bill were to become law. Instead, federal employees would pay 100% of the cost to purchase the insurance.

Presumably, there would be some discount on the insurance by purchasing it at group rates as opposed to buying it as an individual on the open insurance market. Norton said in a statement about the bill, “My bill does no more than put federal employees in the same position as many of their private-sector counterparts, who often have access to disability insurance through an employer at group rates, an option unavailable to federal employees.”

She is pushing the legislation as a way to offset the fact that federal employees do not have paid maternity leave, a benefit she clearly wants to see offered to the federal workforce (Norton is a co-sponsor of Carolyn Maloney’s (D-NY) paid family leave bill).

She last introduced the bill in 2018 but it failed to advance.

Norton also says that although federal employees have access to long-term disability insurance, the lack of access to short-term insurance makes it hard to pay their bills if they “have a short-term injury or disability, become pregnant, or develop a pregnancy-related illness.”

But are there other options federal employees have to safeguard their finances and their families without having short-term disability insurance?

Many financial advisors recommend having an emergency fund with savings to cover household expenses for a short period of time (usually at least 3 months but up to as much as 1 or 2 years) when the unexpected happens. An emergency fund is, therefore, a way of self-insuring through short-term financial hardships such as a job loss, injury, illness, major car repair, etc. Having such savings for emergencies would make a short-term insurance policy unnecessary.

One obvious example of a short-term risk that can impact federal employees is a government shutdown. Although federal workers were eventually were paid for missed time in past shutdowns, it creates a temporary financial hardship when their paychecks are put on hold. Some of our readers told us that they were thankful they had worked to set aside emergency savings because it made the last shutdown easier for them to endure.

A copy of Norton’s statement made with the introduction of the legislation is included below.

Statement of Congresswoman Eleanor Holmes Norton on the Introduction of the Federal Employee Short-Term Disability Insurance Act of 2019

Madam Speaker, today, I introduce the Federal Employee Short-Term Disability Insurance Act of 2019, which would help provide financial relief for federal employees who have a short-term injury or disability, become pregnant, or develop a pregnancy-related illness. This bill would offer federal employees short-term disability insurance at no cost to the federal government. Employees would be responsible for 100 percent of the premiums and be able to receive disability insurance benefits for up to one year, which would replace a portion of their lost income due to a non-work-related injury or illness or pregnancy. These benefits would be particularly advantageous to ensure that our federal employees, who do not yet enjoy paid maternity leave, are able to utilize the 12 weeks of unpaid maternity leave permitted by federal law while continuing to pay their bills, buy groceries and make their mortgage, car and other loan payments without depleting their retirement or other savings accounts. Too many federal employees do not take advantage of the full amount of federal unpaid maternity leave they and their newborn need because they have no way to replace the lost income.

I decided to investigate how we could provide short-term disability insurance for federal employees after learning that many of them already buy short-term disability insurance as individuals in the private market at high individual rates. Although federal employees have good health insurance, federal health benefits do not replace lost income if employees are unable to work. Moreover, while federal employees may have available sick or annual leave days, they may not have enough such days to pay the bills if they have to be out of work for an extended period, such as following surgery. Although there are long-term disability options for federal employees who become permanently disabled, federal employees do not qualify for such benefits until they have worked for the federal government for at least 18 months. My bill does no more than put federal employees in the same position as many of their private-sector counterparts, who often have access to disability insurance through an employer at group rates, an option unavailable to federal employees. This bill would not allow participating insurance companies to exclude persons based on preexisting conditions. Because of the federal government’s purchasing power, this bill would provide these benefits at a more competitive rate than is available for employees purchasing as individuals, as many do. Under the bill, the Director of the Office of Personnel Management would contract with private carriers to provide this coverage, essentially providing the equivalent of group coverage available to workers in the private sector.

According to the Social Security Administration, a 20-year-old worker has a one-in-four chance of becoming disabled by retirement age. The majority of disabilities are not caused by major accidents, but by injuries or illnesses, such as back injuries or cancer, according to the Council for Disability Awareness. There is every reason to allow our federal employees to take advantage of the federal government’s group rates to obtain the most reasonable price if they choose to purchase short-term disability coverage on their own at no cost to the federal government.

I strongly urge my colleagues to support this bill.

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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