Employers consider medically boarding when an employee is unable to perform the requirements of their job due to an injury or ill-health.
Labour law sets out that there must be fair reason and procedure followed by the employer before an employee can be medical boarded or dismissed due to incapacitation.
When all avenues are exhausted, and an alternative position is not feasible the employer is required to give the employee reasonable notice of their intention to have the employee medically boarded and to pursue a disability claim if available, from the company’s group risk scheme or retirement fund.
For companies without group cover, the employee can apply for illness benefits through the Unemployment Insurance Fund.
To qualify for illness benefits, the employee must be receiving less than their normal wages while on sick leave. Click on the link to find out more about claiming UIF illness benefits or contact the UIF directly.
For employers who do offer group benefits, it is important to establish the type of risk cover in place and the extent of coverage available to your employees.
Careful consideration is to be taken to understand the terms and conditions of meeting the definitions of disablement applicable to your group risk policy.
Disability benefits can be offered as a lump sum benefit or a monthly income benefit.
Lump Sum Disability Benefit (LSDB)
LSDB may be included as part of your Retirement Fund or in terms of a separate group scheme policy issued to the employer.
This benefit is payable if a member is totally and permanently disabled on a continuous basis thereby implying that the employee is unable to perform their own occupation or any other occupation in the open labour market as defined by your particular insurer.
A lump sum benefit may be payable, usually a multiple of the member’s annual fund salary after a minimum 6-month waiting period. LSDB benefits payable amount to 1/3rd of the sum assured paid as a lump sum, and 2/3rd’s to be transferred to a compulsory annuity to pay the disability claimant an income up to fund’s normal retirement age, whereby annuity rules and payments will apply.
The employer will accordingly end the employee’s employment contract and their membership to the company retirement fund will also come to an end.
It is during the waiting period that employers would apply the company’s sick leave policy. Thereafter, the employee can apply for compensation from the UIF for illness benefits if he/she received a reduced or zero remuneration whilst the LSDB claim is being assessed.
Income Disability Benefit (Also Known As Permanent Health Insurance/PHI)
PHI may be included as part of your Retirement Fund or in terms of a separate group scheme policy issued to the employer.
PHI pays a tax-free monthly benefit via the employer to compensate the member whilst unable to work due to either injury or illness. The benefit is based on a percentage of the member’s monthly pensionable salary and is payable once the initial waiting period expires.
It is during the initial waiting period that the employer would apply the company’s sick leave policy whilst the underwriter assesses the medical and occupation information supplied by the employer, the member and the doctor/s.
Once approved and the initial waiting period has expired, benefit payments commence and will be payable for as long as the member meets the definitions of disability as defined by the insurer. Benefits may cease at the earlier of the employee being rehabilitated into the work force or reaching the fund or scheme’s normal retirement age when he/she would exercise his retirement options.
An income disability benefit usually includes an annual increase factor to allow for inflation as well as an Employer Waiver. It is the waiver that ensures that the members retirement savings and death benefits continue whilst in receipt of a disability claim.
Important to note that disability claimant’s is not entitled to claim illness benefits from the UIF, if they are receiving a disability income from an occupational fund.
Potential Gaps to fill…
- Are You Applying Your Sick Leave policy Correctly?
When dealing with a disability case, employers would usually apply their sick leave policy i.e. sick leave, annual leave, then unpaid leave, potentially resulting in the member being out of pocket whilst a claim is assessed. - Does Your Fund/Scheme Include A Salary Pay Back Benefit?
Most insurers offer a Salary Pay Back benefit to compensate the employer for payments made to successful disability claimants during the initial waiting period. This is cover is optional and you will need to request the Salary PayBack benefit to be added to your current group Income Disability benefit. - Time To Review Your Personal Risk Policies?
Enjoy up to a minimum of 7-days waiting period on income disability benefits in your personal capacity. Certain terms and conditions will apply dependant on your risk provider. Make sure to include your group benefits with your personal plan to ensure your plan complies with the rules of aggregation for Disability Cover.
