Many employees in the United States probably don’t think they’ll ever need short-term disability insurance. However, 7.4 to 11.1 million worker injuries occur annually, and each year about 5% of Americans will experience a short-term disability due to illness, injury, or pregnancy. Perhaps even more surprising is the fact that just over 1 in 4 of today’s 20-year-olds will become disabled before they retire.
So making sure your employees understand their short-term disability benefits might be more important than you think. It’s one of those benefits that ends up towards the bottom of your list during open enrollment presentations, but it’s worth spending a little extra time on—because chances are, some of your employees will use it in the coming year.
Here’s how to answer some of the most frequently asked questions employees have about short-term disability insurance, in easily understandable terms:
How does short-term disability work?
Short-term disability covers a portion of your salary if you’re unable to work for a short period of time. That might be a physical or mental illness, injury or childbirth.
While only a handful of states require employers to offer short-term disability benefits, SHRM reports that 80% of companies pay all of the premiums for short-term and long-term disability. Great job, employers!
Some employees are eligible for short-term disability insurance as soon as they’re hired. Others have a “service wait” period, where an employee is only eligible for short-term disability once they’ve worked for their employer for a specific period of time. Make sure your employees understand your company’s policies.
How much does short-term disability pay?
How much you’ll receive varies, but a good rule of thumb is that your employer will cover 40-80% of your salary while you’re on leave. Each state sets mandated limits on how much coverage you can receive. SHRM notes that benefits may be coordinated with other income such as paid sick leave to ensure that income benefits do not exceed 100 percent of base pay.
How long is short-term disability?
Short-term disability insurance typically lasts three to six months. The maximum amount of coverage is 52 weeks (one calendar year). If you still aren’t able to return to work after coverage ends, you’ll have the option to move to long-term disability insurance or apply for social security disability insurance.
Short-term disability elimination period
Short-term disability insurance includes an elimination period, meaning you have to be injured or disabled for a certain amount of time before your benefits kick in. The most common elimination period is seven days, but in rare cases it could be up to 180 days.
Many employers offer paid time off for any absences that last less than seven days, so you wouldn’t need to file for short-term disability.
Make sure you clearly explain how long your company’s elimination period is, so employees understand where there may be gaps in coverage.
What’s not covered by short-term disability insurance
- Disabilities that happen in the workplace.
About 10% of disabilities happen within the workplace and are covered separately by workers’ compensation.
- Long-term disability.
Long-term disability insurance generally covers any disabilities that last for 6+ months.
- Severe health conditions.
Social Security Disability Insurance is available to US residents with severe health conditions who either haven’t worked or accrued enough credits to be eligible for employer-sponsored disability insurance.
How to apply for short-term disability
For employees, the first step in applying for short-term disability is to contact you—their human resources department. They can also review your benefits documentation, or contact your short-term disability vendor.
Some employers require workers to use any available sick days before their short-term disability period begins. Others ask for a note from the employee’s physician before approving requests for short-term disability.
Once an employee has completed their claim form for short-term disability and provided the necessary documents, they should submit it to you or your insurance provider. Be clear with your employees about what documentation they need, and when they need to submit it to get full access to their benefits.
Can you contact your employees while they’re on short-term disability?
You have the right to contact employees while they’re on short-term disability as long as you don’t ask them to perform any sort of work. For example, if you have a quick question or two about their benefits, or about a work-related procedure, you can reach out.
Unlike some other programs like the Family Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA) that provide time off for employees, short-term disability doesn’t offer any sort of job protection. Employees on short-term disability also aren’t entitled to the same job position when they return from it. It’s up to your company how you’d like to set return-to-work policies.
How ALEX can help
Understanding the complexities of short- and long-term disability isn’t always easy. ALEX is here to help you explain the differences to your employees. Backed by behavioral science, ALEX helps employees understand all their options and make an educated decision on their benefits. In fact, 85% of users say ALEX helped them better understand tax savings related to their benefits choices.