There may come a time when you are temporarily unable to perform your daily duties at work, due to illness or an injury not job-related. Short-term disability insurance was created for these situations. If your employer provides this coverage, a temporary situation need not become a financial hardship.
Short-term disability is a medical condition which precludes an employee from performing regular work duties for a specified period of time. Most insurers set a maximum of 90 days to 180 days as the time frame for short-term disability coverage. Past this time frame, an employee transitions to long-term disability coverage, if it is offered by the employer or the employee has coverage on his own.
While most short-term disability insurance policies are administered by independent insurers that contract with companies, some companies fund their own disability plans and hire third-party administrators. Eligibility for either type varies but is generally available to any full-time employee who has been with the company for a minimum period of time such as 90 days. Additionally, pre-existing conditions - medical conditions which existed prior to employment - may be subject to an additional 12-month to 24-month wait time for coverage.
In every case of short-term disability, a doctor completes the insurer’s forms to indicate the reason for the disability, expected duration of the disability, prognosis (predicted outcome), and any expected limitations when the employee is released to return to work. This paperwork is then filed with the company’s human resources department and the insurer or third-party administrator responsible for handling the case. A caseworker is assigned, and contact between the disabled employee and the caseworker to track medical progress happens on a regular basis. Failure on the employee's part to maintain this contact may result in revocation of the coverage. Almost all short-term disability claims require the employee to be under the continuous care of a doctor for the duration of the claim.
The amount paid to an injured employee depends on the company's policy. Typically, an employee will be paid between 60 percent to 100 percent of his pre-disability salary. Caps on coverage are common and may apply annually or over a lifetime.
Short-term disability usually does not apply in the case of a work-related illness or injury. This coverage, called worker’s compensation, typically pays an employee 66% of pre-disability salary. Some strictly elective surgical procedures are also excluded from short-term disability coverage.