Short term disability benefits are one of three types of injury or illness benefits available to employees at many large companies or organizations. Most of these entities supply their salaried employees and others with sick leave, which may amount to one or two weeks of paid leave which workers can use when they suffer from very short term illnesses, such as the flu. They may also provide employees with long term disability insurance, which pays a portion of their salary when they become gravely ill or injured and are unable to work for a period of time that may amount to several years.
Those two forms of insurance leave a gap for employees who need an intermediate amount of time away from work in order to heal from illnesses or accidents that leave them incapacitated for a longer period of time than their sick days can cover but do not require years of recovery. Short term disability benefits pay employees a portion of their salary when such circumstances occur. The duration of these benefits and their amounts are determined mostly by the companies or the insurance policies which issue them. In a handful of states, these benefits are mandated and regulated by law.
Financial Character of Benefits
Most employers offer plans which will provide an employee with somewhere between 50% and 75% of his or her salary once eligibility and qualification for this plan is determined. The exact amount may be defined either by the employer or the insurance company. This percentage refers to the employee’s gross weekly salary and excludes bonuses and commissions, though exceptions to this may be explained in the actual policy.
Sometimes the length of time that the employee has been with a company will alter the amount of compensation received. Long-serving employees may get 100% of their salary, at least for a certain period of time. With many plans, no matter how much the employee receives at the beginning, the salary percentage may decrease after a fixed period of time passes.
As an example, consider an employee who qualifies for short-term disability and receives 75% of his or her salary for the first five weeks of leave under this policy. That may be followed by eight weeks in which he or she receives only 60% of the base salary. At that point, the policy may be used up and the employee may need to transition to long-term disability benefits if work of any sort is still not feasible.
Typically, employees cannot begin benefiting from such a disability plan immediately, even if the need for it is obvious. Many companies force employees to exhaust a certain number of days of sick leave before beginning to use their short-term benefits. Often, this is calculated to adhere to the waiting period required to process paperwork necessary to initiate the short term plan.
Maximum Duration of Benefits
Most short-term policies for disability cover the employee for anywhere from 13 to 26 weeks. As with the waiting period for short-term benefits, this time period may be designed by the company to cover the waiting period necessary to begin long-term disability payments. Each company has its own policy regarding employees who return to work during this period.
In order to qualify for this type of insurance, you must first be eligible. Eligibility is often determined by the specific job that an employee has with a company. Typically, the minimum requirement is full-time employment with a company or other organization. Wage earners in a large corporation may not be eligible while salaried professionals are. Or eligibility may be determined entirely by length of employment. For example, a company may not grant access to these benefits until an employee has completed six months or one year of full-time employment.
How to File a Claim
If a company handles its own short-term disability plan, then it may only require a doctor’s note to initiate the benefits. When companies contract insurance providers to handle these claims, then the employee will need to fill out whatever paperwork the insurance company requires. The details surrounding this process will always be included in the paperwork provided at the time of employment.
States Which Mandate Coverage
If you live in one of the following states, your employer may be legally required to offer short-term benefits if you become disabled. However, in each state there are a number of particular requirements that vary widely. Some of these states fund this coverage with payroll taxes. Others allow insurance companies to operate these plans.
- California mandates that companies pay a minimum of 55% of an employee’s gross salary under this plan. Furthermore, the plan must endure an entire year after a one-week waiting period is completed. The maximum weekly pay under this plan is limited, however, to $728
- Hawaii manages a plan that pays 58% of salary. This compensation begins after a seven-day waiting period passes. The benefits last 26 weeks.
- New Jersey law mandates that companies pay two-thirds of an employee’s salary for 26 weeks. An additional benefit of the New Jersey plan is that the one week waiting period is paid retroactively after the employee spends three weeks receiving short-term benefits.
- New York requires employers to pay 50% of an employee’s salary for as many as 26 weeks.
- Rhode Island offers short term disability benefits for 30 weeks. The percentage of the salary is determined by quarterly earnings and it increases if the employee has dependent, minor children.