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What is short term disability insurance?

What is Short Term Disability InsuranceShort term disability insurance offers financial assistance as partial income replacement should you become disabled and unable to work for a short amount of time. If you are unable to return to work after a year, you would need long term disability insurance to continue to receive benefits.

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Not all short term disability insurance plans cover up to one year, so your benefits are limited to the term stated in your policy. This could be as little as 10 weeks or as much as 52 weeks. The longer the term covered by your policy, the better the benefit you have.

Most employers pay for short term disability insurance for their employees. Some people who do not have employer sponsored disability insurance pay for private disability insurance. It is also possible to have group disability insurance and private disability insurance simultaneously to maximize your benefit potential.

Short Term Disability Eligibility

In order to be eligible for short term disability, you must sustain a disabling injury or illness that is diagnosed as such by a certified physician. Not all short term disability qualifications require disease, as maternity leave can also count as short term disability. If you need to take off of work for any medical, physical, or mental reason it is always best to check with your insurance plan advisor to see if you qualify for benefits.

Your short term disability becomes effective based on your insurance policy. Some plans automatically begin on the first day of the injury while others do not start paying benefits unless you are absent from work for a minimum of two weeks. Depending on your plan and your employer, you may need to first exhaust all of your sick and personal days before short term disability insurance benefits begin.

If your employer offers short term disability at the workplace, it does not automatically guarantee you coverage as an employee. Insurance is usually only provided to employees based on the number of hours they work, which typically needs to be full time or 32 hours or more per week.

Most states do not require disability insurance, although there are a few states that do mandate employers to offer short term disability for a period of at least up to 26 weeks. There are no state laws on long term disability.

Short Term Disability Benefits

The main purpose of short term disability is to provide you with some income replacement so that you can pay your bills and survive while you are away from work and unable to earn a paycheck.

Plan benefits vary, but typically short term disability insurance pays out somewhere between 50 percent and 70 percent of the disabled employee’s weekly salary.

It is common for plans to range between 10 and 26 weeks, but they can go as long as one year. It is also possible, albeit rare, to find a short term disability plan that pays up to two years. In general, any disability that lasts longer than one year defaults to long term disability status.

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Short Term Disability through Social Security

In order to benefit from short term disability you need to have insurance from either your employer or through a private insurance company. You will not be able to get short term disability assistance through the government.

Social Security offers disability insurance but only for people who are diagnosed with a long term disability. If a person is expected to have their illness for more than one year then they may be able to qualify for Social Security Disability Insurance (SSDI).

To qualify for long term disability insurance through Social Security, you must have been employed for a certain length of time and contributed to Social Security through earnings in recent years prior to your disability. For example, a young person who just begins their first job and becomes disabled will probably not qualify for Social Security disability because he has not paid enough taxes into the system yet.

You earn credits based on how much money you make and how much taxes you pay as a result. You also need to work somewhat currently, so if you work and pay taxes for 20 years and then stop working for another 20 years, chances are you will not qualify for Social Security disability. However, if you work on and off for 10 of those last 20 years you may still be eligible for Social Security benefits.

Becoming disabled is difficult, and not having supplemental income in the interim is scary. Having short term disability insurance can help you continue to survive with basic necessities as you progress towards recovery. Social Security disability can only help you with long term disabilities, so for short term disability insurance you need an employer sponsored plan, a private plan, or a combination of both for the maximum leverage. No one plans on a disability, but you can plan on short term disability insurance.

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