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Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
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Short-term disability plans provide a basic income for a short period of time for employees who need to take time off work because of a non-work related injury or illness.These benefits are usually payable for up to six months to coordinate with the waiting period in most Long Term Disability Insurance Policies and the waiting period for Social Security Disability Insurance (SSDI). Some policies extend for twelve months.

Many employers insure this benefit with a Short Term Disability insurance policy. Most larger employers self-fund and self-administer this plan, meaning that they pay the benefits directly and handle the claims and payments internally without use of an insurance company.

Employers in most states provide short term income benefits voluntarily. Employers are required to provide this benefit in California, Hawaii, New Jersey, New York, Rhode Island and Puerto. (To learn more about state-required Short Term Disability Insurance, see: Short Term Disability Income: State Programs).

Generally, there is not a lot of choice about whether to obtain Short Term Disability Insurance, or the terms of the benefits. The benefits are whatever the plan provides. Employees are automatically enrolled in the program.

For features of short term plans to note, click here.

For information about the tax status of Short Term Disability payments, see Tax.

The employer generally pays the entire cost. (The insurance industry refers to this as "non-contributory.")

If you are permitted to purchase additional coverage, it is usually wise to do so since there are no health questions required to enroll in group Short Term Disability Plans. The more income you can receive when you are out of work for health reasons, the better.

Short term disability plans are different from Sick Leave. Sick leave is time off for illness, generally with full pay. Most employers provide sick leave even though they are not legally required to do so except under Family And Medical Leave Act (FMLA) or similar laws. Short term disability plans generally require that Sick Leave be used up entirely before short term disability income starts. Some plans will let the employee use Sick Leave benefits to cover the difference between the reduced benefit of the Short Term Disability Plan and the employee's full salary until the Sick Leave runs out.

Short term plans are usually structured to coordinate with employer provided Long Term Disability Insurance and/or Social Security Disability Insurance (SSDI).  SSDI has a 5 month waiting period during which no income payments are paid to people who are "disabled." It is common practice for employer provided Long Term Disability plans to also have a waiting period, generally of six months. Short term disability plans generally fill in the gap between the time a disability starts and the long term coverages start.

If you have a claim under a Short Term Disability program, see: Short Term Disability Insurance: Claims.

If there is a work related injury, see Workers Compensation.

Short Term Disability Features To Note

Each Short Term Disability plan will have slightly different benefits and provisions. If you don't have one, ask your employer for a Summary Plan Description of the Short Term Disability plan.

While these plans vary, following is a list of basic features to note:


Check to see whether the type of employee you are is covered. For instance, is the plan limited to full time employees, but not to part time employees? How are the different types of employee defined?

Do you have to work for the employer for a certain period of time before you become eligible for Short Term Disability?

Benefit Payment

Most plans pay a percentage of your gross pay, such as 60% of your salary. There is, often a maximum payment dollar amount. For example, the benefit may be something like 60% of gross weekly earnings to a maximum payment of $400 per week.

Or the benefit may be a certain percentage for one period of time, and then another percentage for another period of time. For example, 45% of gross weekly earnings for the first month, then 60% for the remaining period of time.

Some employers divide the total group of employees into classes and pay a fixed amount for each class. For example: Employees earning between $400 and 499 per week will receive a benefit of $300 per week, while employees who earn between $500 and $750 per week will receive a benefit of $350. per week.

The reason employers pay less than full salary is to encourage people to go back to work.

Waiting Period

A waiting period is the period between the time when you leave work and when benefits start.

The waiting period for short term disability benefits is usually one week. If you become hospitalized or are injured in an accident, there is usually no waiting period.

Many employers will "dove-tail" short term disability with a program that pays full salary and benefits when a person is sick (Sick Leave). For example, a plan may provide that "the waiting period is one week or the expiration of sick leave, whichever is greater." This type of provision forces you to use up sick leave before being eligible for short term disability.

Maximum Benefit Period

Short-term disability plans will only pay for a limited period of time, usually no more than 13, 26 or 52 weeks per each disability period.

The maximum benefit period is often set to match the waiting period for the employer's Long Term Disability Plan or Social Security Disability Insurance (SSDI).

To learn more, see: Long Term Disability Insurance.

Pre-Existing Conditions Provision

Many short-term disability plans will not pay if the need for time off work is due to a medical condition that was treated before the employee becomes insured under the plan. .

Work Related Injury or Illness

Generally short-term disability plans only cover disabilities that are not work related since those disabilities are covered by Workers Compensation Insurance. However, some employers will also cover work related disabilities as a supplement to Workers Compensation benefits.

To learn more, see: Workers Compensation Insurance.

Disability Period

Short-term disability plans usually cover more than one period of disability. If you become disabled and then go back to work, and become disabled again, the short-term plan will generally picks up again the second time.

If this becomes relevant to you, check to see how long you are required to work after a disabling experience before you are eligible to receive short-term disability income again.