A short term disability policy is insurance which pays a percentage of an individual’s salary for a specific period of time if the individual is injured or ill and can’t perform the responsibilities of his or her job. Short term disability coverage typically begins between 1 and 14 days after the individual is unable to work, although many employers require that their employees use their sick days, and sometimes paid vacation days, before they can collect short term disability.
Why You Need Short Term Disability Insurance
Think about what would happen if you couldn’t work for two or three months. Do you have enough money in the bank to pay your living expenses for that period of time? Do you have another source of income large enough to pay the living expenses while you’re unable to work? If there is a good chance you can’t afford to live without your salary for a few months, you should look at getting short term disability policies if you do not already have the insurance coverage. The Council for Disability Awareness says that 3 in every 10 people starting work today will become disabled before they retire. Disability is not something you can predict – having a short term disability insurance policy will ensure you are covered should it happen to you.
Most of the time, short term disability policies are employer-paid benefits. Some companies opt to have employees pay for the short term disability coverage.
Short Term Disability Policy Eligibility
Employers can create rules for claiming short term disability, such as requiring employees to first use sick and/or vacation time before putting in a claim. Some employers require a note from a doctor to validate the injury or illness that prevents them from being able to work.
Each short term disability policy can specific it’s own terms for eligibility, but the basics are as follows:
- Individual must be considered a full-time employer (typically 30+ hours weekly)
- Individual must work a certain number of months or years before they can make a claim on their short term disability policy.
- Usual payout is between 50 and 70% of the individual’s weekly salary
- Short term disability benefits average 10 to 26 weeks of coverage; although some policies extend up to two years.
In some states, short term disability policies are required for employees. States that require short term disability benefits up to 26 weeks include Hawaii, New York, New Jersey and Rhode Island. Other states do not have a short term disability requirement, but employers may still make the policies available to their employees as a benefit.
Short Term Disability Coverage
Short term disability coverage is sometimes retroactive, as well. If you take three days of sick pay because you were home with a cold and later find out it’s pneumonia and required hospitalization for several weeks – you can often go back and get short term disability coverage from the first day you called out of work sick.
Some companies also provide a long term disability program. This is a benefit which covers individuals who’s injury or illness prevents them from returning back to work after their short term disability policy coverage ends.