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How does short-term disability work?

Short-term disability benefits protect your income if you are unable to work for a specific period of time, but expect to be able to continue your work in the future. Once you have proven that your status qualifies under the requirements of the plan, you will receive a specific percentage of your salary until you can work again or until you exhaust your coverage. After a year, you will lose your short-term disability benefits and instead, you must apply for long-term disability benefits.

How Does Short-Term Disability Work?
How Does Short-Term Disability Work?

Short-term policy basics

Disability benefits can be provided by your employer, your own private insurance company, or both. In many cases, the insurance company will provide a percentage of your salary, usually between 60 and 75 percent of your base salary up to the cap amount. As part of the benefits package, employers can also offer the opportunity to purchase additional short-term disability insurance to help you get closer to the income you have while working. Before the benefit takes effect, the condition must last longer than the exclusion period – otherwise known as the deduction period or waiting period. The exclusion period represents the period from when the condition occurs to the beginning of short-term disability coverage, usually about a month. In many cases, you will have to use up all the sick days paid before accepting a short-term injury.

Eligible for benefits

To be eligible for short-term disability payments, you need to meet the program requirements. This may include proving that your condition:
Will keep you from working for a long time.
Makes it impossible for you to perform the important tasks of your work.
Requires regular and ongoing medical care.
Does not occur at work or as a direct result of work-related tasks. If that happens, workers’ compensation will likely benefit your lost income rather than short-term disability.
You will also need to record the date the condition began and the day it became so severe that you could not work.
In addition, you will have to allow the employer to obtain relevant information from your doctor, commonly known as the Attending Physician Statement. For example, if you need to take time off during pregnancy, you need your doctor to confirm that you are indeed pregnant. Your employer will also have to fill out a form of his own.

Once your request has been approved – which will take about a week in most cases, unless more information is needed – you’ll start receiving payments when you qualify under the policy guidelines. The common approach is weekly debt payments, which means you will be paid each week for benefits earned the week before. You may be approved for coverage for a specific period of time based on your doctor’s information – in which case, you need to file a claim for an extension of benefits if you are not ready to go back to work on that date.

Tip

Social Security does not pay benefits for short-term disability cases. However, it can cover long-term disability for qualified applicants.

Switching to Long-Term Insurance

If your health condition lasts six months or more, or is expected to last so long, you will move on to a long-term disability phase. This can create a gap in coverage, as short-term coverage may expire before long-term coverage begins. Check your policies to make sure you’re protected regardless of the specific length of time you have to take time off work

Penalties for fraud

Be honest when filling out the short-term disability claim form. If you are found to be committing fraud to gain benefits that you know you are not entitled to, you will face penalties based on applicable federal and state laws. Insurance companies that investigate complaints that raise red flags internally and can handle everything internally or report you to the authorities for prosecution. Penalties may include compensation, fines, jail time, or a combination of these forms.

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