Short-Term Disability: How It Works
Short-Term Disability: How It Works

Short-Term Disability: How It Works

Dealing with unexpected health issues or injuries can be challenging, both physically and financially. Short-term disability (STD) insurance is designed to provide a safety net during these times, ensuring you have some level of income while you’re unable to work. STD insurance covers injuries or illnesses that are not work-related. If you were injured on the job, you should refer to your company’s workers’ compensation policy. Here we will help you understand the importance of STD, eligibility, benefits, and the steps involved in filing a claim.

What is short-term disability insurance?

STD insurance is a type of coverage that provides financial benefits to employees who are temporarily unable to work due to a non-work-related injury, illness, or medical condition. It offers partial income replacement during the initial phase of disability, about six to 12 months. STD is different than long-term disability (LTD). STD comes first. Once STD benefits are exhausted, a LTD policy continues to provide the employee with some income until they can return to work.

Who pays for short-term disability insurance?

STD insurance can be paid for by the employer, the employee, or a combination of both. Some employers offer it as part of their benefits package, while others make it available as a voluntary option that employees can choose to enroll in and pay premiums for. There are​​ five states that have state-mandated disability insurance requirements: CaliforniaHawaiiNew JerseyNew York and Rhode IslandPuerto Rico also has mandatory insurance requirements. If you work for an employer in another state and your employer does not offer the option to purchase STD, you can purchase an individual policy on your own.

How do I qualify for short-term disability benefits?

To qualify for STD benefits, you typically need to provide medical documentation from a healthcare provider that certifies your condition and confirms that you’re unable to work. The severity and expected duration of the medical condition will determine your eligibility.

Is pregnancy covered by short-term disability?

Pregnancy and childbirth are often covered under STD policies. However, there might be specific waiting periods, coverage limits, and documentation requirements for pregnancy-related claims. Check your policy details to understand how pregnancy is handled.

How much will I receive in short-term disability benefits?

The benefit amount varies based on the policy, but is usually a percentage of your regular salary, often around 60-70%. There will most likely be a cap on the maximum benefit amount. Check your policy to find out the exact percentage and limits.

Is there a waiting period before I can receive benefits?

Yes, STD policies typically have a waiting period, also known as an elimination period. This is the initial period of time after your disability begins during which you won’t receive benefits. Waiting periods can range from a few days to a few weeks, depending on the policy terms.

How do I file a short-term disability claim?

Contact your employer’s HR department or the insurance provider to initiate the claim process. You’ll need to complete any required forms and provide medical documentation supporting your disability.

How long does short-term disability benefits last?

The duration of STD benefits varies depending on the policy and the nature of your medical condition. Benefits can last from a few weeks to several months, but they are meant to cover the early phase of a disability. If you get better before the end of the policy term date, the benefits will end when you are able to return to work. If you are not better by the end of the term date, STD will still cease. This is when you seek out LTD benefits.

Can I work part-time while on short-term disability?

Some STD policies allow for limited work or part-time work while receiving benefits, but there are often restrictions and guidelines. Check with your employer or insurance provider to understand the specific rules.

Is short-term disability taxable income?

The tax treatment of STD benefits depends on whether you paid the premiums with pre-tax or post-tax dollars. Benefits from policies with pre-tax premiums are typically subject to income tax, while benefits from policies with post-tax premiums are often tax-free.

What if my condition improves and I can return to work before the benefits end?

STD benefits are meant to provide support during the period when you’re unable to work. If your condition improves and you’re able to return to work, the benefits will cease.

DisclaimerThis article is intended for informational purposes only. It provides general information and is not intended and should not be construed as professional advice. The author is not your attorney, accountant, financial planner or any other professional and no professional-client relationship is created. We do not represent that the information provided is accurate or up-to-date as laws and regulations are always changing. If you have an issue that requires professional help, you should contact the appropriate professional to help you on your specific set of facts. Please read the Terms and Conditions for additional information.

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