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Facts About Short Term Disability

Short-term disability refers to a type of insurance that is designed to cover workers who are unable to fulfill the duties of their jobs due to an illness, an injury, or some other non-permanent condition that creates a disability. Short-term disability should not be confused with workers' compensation, which specifically provides financial benefits to those who are injured or develop health problems directly related to a job. Instead, short-term disability simply covers workers who develop non-work-related conditions and need to take a few weeks off to recover.

  1. The Facts

    • Short-term disability is a type of "safety net" for employees who develop health conditions that interfere with their ability to work. Specifically, short-term disability insurance covers a portion of an employee's salary when that employee is unable to work. Employees can purchase their own short-term disability packages from private insurance companies, or they can purchase the insurance through their employer. Employers often offer group packages into which employees can buy. In some states, employers of certain sizes are required to carry or offer short-term disability insurance for their employees.

    Time Frame

    • The time covered under short-term disability varies from policy to policy. On average, short-term disability covers employees from around three months to upward of six months. In some places, the benefits last even longer: in California, for instance, employees may claim short-term disability benefits for a year. Additionally short-term disability policies often require a waiting period of as long as two weeks before benefits are paid out; the waiting period will ensure that the employee's condition is, in fact, valid and prevents claims that might be deemed frivolous or invalid. What is more, if an employee purchases short-term disability through an employer, there might be a stipulated period of time the employee must work before filing a claim.

    The Cost

    • Short-term disability insurance costs vary by policy. Employers who carry short-term disability for their employees generally pay an average of $200 per year for each employee. Employees who purchase short-term disability through their employer can expect to pay around $700 or $800 per year. Individual policies purchased independently of the workplace tend to be more expensive and can cost upward of $1,500 to $2,000 per year. The annual cost of the policy is based on the monthly outlay should the employee file a claim. On average, short-term disability pays around $2,000 per month to cover employees who cannot work.

    Considerations

    • Short-term disability is designed to cover exactly what its name suggests: short-term health problems. This type of insurance will not cover long-term problems, however, so employees who realize that their health conditions will not be resolved within the time established under short-term disability will have to work with their employers to create a long-term plan of action.

    Expert Insight

    • All insurance can be a gamble, and short-term disability is no different. At the same time, short-term disability can be a lifesaver for employees who find themselves with health problems -- such as diabetes, arthritis or even a heart attack -- that interfere with work and require that they take some time off. Insurance experts recommend that those looking into short-term disability consider the policy and the cost carefully to make a decision. In some cases, the benefits will more than pay for the cost of the insurance.

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