About Short-Term Disability Insurance for Maternity Leave

Smooth the transition to parenthood with short-term disability insurance.

When you find out you are pregnant, many questions come to mind. Among the questions is often how your family will survive without your income. Many families address this question prior to the decision to expand. They plan ahead with a short-term disability insurance policy either through their employer or some outside insurance company. With proper planning, short-term disability insurance can lessen financial worries for new parents.

What is Maternity Leave?

Maternity leave is the time taken by a parent when expanding her family either through the birth or adoption of a child. Maternity leave is also known as family medical leave. In the United States, this leave often includes up to 6 weeks of leave, although it is usually unpaid unless you have an abundance of paid leave available or you are covered by short-term disability. For many mothers, short-term disability insurance provides the only source of income during maternity leave.

What is Short-Term Disability Insurance?

This insurance covers your salary or a portion should you be unable to work due to illness, injury or childbirth. Some states mandate the availability of this insurance funded through payroll deductions. The states are New Jersey, New York, California, Hawaii and Rhode Island. Other states do not mandate this coverage, and it therefore can be purchased with a monthly premium. You should contact your human resources department to find out if your job offers short-term disability insurance.

The short-term disability insurance will usually cover between 50 and 100 percent of your salary for a certain amount of time, which is usually determined by the illness and your time employed. Usually, short-term disability covers about half of your salary for 4 to 6 weeks. This coverage can be extended based on medical need with doctor's documentation. Medical need would include complications or C-section.

Is Short-Term Disability Insurance for Pregnancy Worth It?

Short-term disability insurance can cost anywhere between 1 and 3 percent of your annual salary. The benefits it provides during pregnancy are immeasurable. Having this insurance can alleviate the worry about income during what should be a special time at home with your child. It creates a steady income that might not otherwise exist. This provides more time with your child and adequate time for your healing. You can be secure that your household expenses will be paid as usual.

In addition, this insurance provides for complications during pregnancy that might require you to stop working prior to delivery. If your child is born prematurely and requires additional time for care by a parent, your expenses will still be covered while you are off of work. Should you experience postpartum complications or illnesses, at least a portion of your salary will be paid, allowing you to focus on improving your medical conditions.

When Should You Get Coverage?

You should get short-term disability insurance before you become pregnant. You can obtain this type of insurance during your pregnancy, but it will likely have a pregnancy rider, which will not provide income during maternity leave. While pregnancy is not a disability itself, possible complications and healing time necessary would qualify you to file a claim for your short-term disability payments through your insurer.

How Do You Submit a Claim for Benefits?

You usually contact a benefits counselor. You will likely have to use all accumulated leave first. Your doctor must complete a claim form for your insurance company. This form is usually submitted to your company's benefits department. Your doctor may be contacted directly by your employer for any necessary clarification. Many carriers have a waiting period of 8 to 14 days. After this waiting period and with submission of proper documentation, you can expect to begin receiving your partial salary payments at regular intervals for the agreed upon time. Should there be any changes requiring your leave to be extended for medical reasons, your partial salary payments may also be extended by contacting your insurance company.

Whether short-term disability insurance is mandated by your state or you purchase it yourself, it has many benefits as your family expands. The financial security makes the transition to parenthood a smooth one.

References

• Baby Center: Maternity Leave--The Basics
• "How Can I Ever Afford Children: Money Skills for New and Experienced Parents"; Barbara Hetzer; 1998
• "What to Expect When You're Expecting"; Heidi Murkoff and Sharon Mazel; 2008