Short-term disability insurance can help you pay the bills when you can't work.
Almost one-third of employees will experience a disabling event before retirement. This event can cause permanent or short-term disability. In the case of short-term disability, a worker may lose wages for a week or several months. To help make up for these losses, a worker can purchase short-term disability insurance.
What is the Definition of Short-Term Disability?
Short-term disability is defined as transitory or minor impairments that last six months or less. Unlike worker's compensation, which covers occupational or on-the-job injuries, short-term disability covers illness, injury sustained outside of work, and pregnancy. The Family Medical Leave Act (FMLA) is an example of short-term disability coverage.
Who is Eligible for Short-term Disability?
Anyone suffering an illness or injury that causes them to miss work can be eligible for short-term disability. However, it will depend on the individual policy to determine if your condition is severe enough to require assistance. For example, a cold lasting a few days will not be covered, but an illness requiring hospitalization and weeks of recuperation will be covered.
What Types of Illnesses Are Covered?
Conditions such as cancer, diabetes, arthritis or heart attack can be covered under short-term disability. Your insurance provider should be able to give you a comprehensive list of illnesses.
Who Pays if I Experience a Short-term Disablility?
While Social Security pays for long-term disabilities, it does not offer benefits for short-term disability. Your employer may offer short-term disability insurance as part of your compensation package. However, only California, Hawaii, New York, New Jersey, Rhode Island and Puerto Rico require employers to provide short-term disability insurance. At this time, the only way to ensure you will receive benefits during a short-term disability is if you carry a policy with an insurance provider.
When Can I Begin Collecting Benefits?
While the exact time frame depends on your policy, benefits can begin immediately or take up to two weeks.
Will I Have to Use My Sick Leave First?
This depends on your policy and/or your employer. Your employer may require you to use sick leave if you are absent for any reason, regardless of compensation from an outside source. Some insurance policies offer retroactive payment if you took time off for a benign condition that eventually worsened and led to a longer absence.
How Much Will I Be Paid?
Short-term disability insurance may pay a percentage of your expected income, or it may pay all of it.
What If I Have to Take Time Off to Care for a Spouse or Family Member with a Short-term Disability?
The FMLA provides for paternity leave after a birth, but does not require employers to pay for sick leave or additional benefits. Short-term disability coverage only pays for the injury or illness of the person covered. It does not provide for time off to care for another individual.
