Understanding Short Term Disability Insurance Coverage
Workers who suffer an injury or illness that is temporary in nature and leaves them out of the workforce for a short while can benefit from short-term disability insurance.
As a type of insurance, short-term disability insurance pays a certain percentage of a worker's predisability salary for a designated timeframe if they are unable to perform the duties of their job due to illness or injury.
When Does Short-Term Disability Coverage Become Effective?
Coverage usually begins within the first two weeks after the employee suffers the illness or injury which renders them unable to work. In some cases, employees must use up their allocated sick days before the short-term disability insurance picks up. There is usually a separate policy for short-term disability for injury and for illness.
Who Pays Short-Term Disability Insurance Coverage?
Generally speaking, short-term disability is an employer-sponsored benefit in which financial benefits are employer paid. However, in some cases, coverage can be employee paid or a combination of employer and employee paid.
What are the Coverage Terms?
There are certain coverage terms that an employer can dictate, such as requiring a doctor's documentation to prove an injury or sickness, before short-term disability coverage begins. However, a variety of short-term disability plans dictate different qualifications and coverage terms.
For example, some plans may require an employee to work for an employer for a certain time period before short-term disability coverage begins, while other plans may require that an employee work full-time hours. Additionally, plans vary as to the percentage of weekly salary paid, which typically ranges between 40 and 70 percent of the employee's weekly predisability salary. Often, employees have the option of contributing higher premiums in order to receive a higher percentage of their predisability salary should they file a short-term disability claim.
Short-term disability benefits duration commonly ranges between 10 and 26 weeks, but some extend up to 52 weeks.
Some plans require a waiting period before the policy begins to provide payments. Waiting periods can extend up to 180 days, although that is atypical. Waiting periods often differ depending on the disability. For example, there may be no waiting period for an accident that occurred outside of the work environment, but an illness may have a waiting period of one week.
For an extended illness or injury longer than 26 weeks – or beyond the duration limit on the short-term disability plan – and the employee is still out of work, then a long term disability plan may help provide further financial assistance.
Are There Any Exceptions?
Many short-term disability policies won't cover the inability to work due to drug abuse, suicide attempt, war, or an attempt to commit a criminal act. Further, injuries sustained on-the-job are also not covered by short-term disability insurance. Instead, on-the-job injuries are covered by workers compensation.
When an illness or injury renders you unable to work, you can apply for a short-term disability insurance benefit by speaking with your company's human resources department. If you work for an employee that doesn't provide short-term disability insurance coverage, you might want to think about purchasing an individual short-term disability insurance policy.