When an employee is injured or becomes ill, it can be very scary, especially if it looks like the injury or illness will last for a long time and it prevents the employee from working. For many, they cannot survive not getting a paycheck while the injury or illness persists. Fortunately for some, they may be eligible for short-term disability insurance or long-term disability insurance. Below we discuss what short-term versus long-term disability insurance, what employees may be eligible for them, and, if they are eligible, what benefits they may be entitled to.
What is short-term disability insurance?
Short-term disability insurance is a benefit that pays an employee’s wages while they are recovering for a disabling injury or illness that is not covered by workers’ compensation.
In most states, employers are not required to provide short-term disability insurance to employees. However, there are some states that require employers to provide short-term disability insurance. Plus, there are a growing number of states that require employers to provide paid family and medical leave that may be used by employees to recover from injuries or illnesses.
Who is eligible for short-term disability insurance?
An employee may be eligible for short-term disability benefits if they meet the requirements for the benefit. For example, the insurance policy may require an employee to work for their employer for a certain period of time before they become eligible for short-term disability insurance. Similarly, some policies may only cover full-time employees or employees in specific job classification.
Also, some employers provide employees with an opportunity to sign up for short-term disability insurance but require the employee to pay for part or all of cost of the monthly premium. Therefore, if an employee does not sign up or pay for short-term benefits, they will not be eligible to take them.
Because employers in most states voluntarily provide short-term disability insurance, they are given significant discretion in determining which employee is eligible for the benefit.
How long does short-term disability last?
How long an employee can take short-term disability depends on the terms of the insurance policy. Sometimes the insurance policies will limit benefits to as little as twelve (12) weeks or less while others may offer up to 52 weeks or more. The employer typically has an ability to make the decision based on how long short-term disability benefits will last, and the decision is frequently based on the cost for offering the benefit.
How does an eligible employee get short-term disability benefits?
If an employee is eligible for short-term disability benefits and is injured or sick, they usually must start by talking to the supervisor or human resources. Human resources or the person responsible for managing the company’s short-term disability insurance will then provide the employee with the information and forms needed to file for short-term disability benefits. The insurance company may request the employee to provide documentation from a medical provider and other information that supports the need for the benefit.
Once it has enough information, the insurance company will then either approve or deny the claim, and if they approve the claim, set the 1) amount the employee will be paid while they covered, 2) how long the benefit will last, and 3) any restrictions the employee complies with to maintain the coverage.
Also, eligible employees may be required to wait for what is called an “elimination period” before they start receiving payments. These elimination periods for short-term disability are determined by the insurance policy but can be as short as one weeks to one month or longer.
What is long-term disability insurance?
Long-term disability insurance is a benefit that pays an employee’s wages due to a disabling injury or illness. It differs from short-term disability insurance for several reasons. First, long-term disability covers illnesses or injuries that may take the employee many years to recover from if at all. In fact, if the employee is permanently disabled, they may be eligible for long-term disability benefits for the rest of their lives.
Examples of the types of injuries or illness that may qualify for long-term disability include:
- Cancer
- Stroke
- Heart disease
- Musculoskeletal injuries
- Mental health disorders
- Parkinson’s disease
- Chronic pain
- Multiple sclerosis
- Migraines
Who is eligible for long-term disability insurance?
Employees may be eligible for government funded long-term disability benefits through the Social Security Administration. To be eligible for government-funded long-term disability benefits, an employee must have worked 5 of the prior 10 years before filing for the benefit. Also, if an employee continues to work after becoming disabled, they will not be eligible for government-funded long-term disability insurance if the make more than an amount called “substantial gainful activity.”
In addition to government funded long-term disability insurance, employers may also offer the benefit to their employees. As with short-term disability insurance, although employers may provide employees with the opportunity to sign up for long-term disability insurance, they may require the employees to pay for part or all of the cost of the monthly premium. Therefore, if an employee does not sign up or pay for short-term benefits, they will not be eligible to take them.
To be eligible for privately funded long-term disability benefits, employees must comply with the requirements set forth by the insurance company. Thus, who may be eligible may vary depending on the policy features an employer has purchased. Because long-term disability insurance may be confusing and getting things wrong may cost an employee thousands of dollars, it may be worthwhile for an employee to talk to a Long-Term Disability Lawyer.
How long does long-term disability last?
An employee may usually rely on the wage replacement payment from long-term disability insurance as long as the disability lasts. In the worst-case scenario, an eligible employee who suffers a permanent disability may receive wage replacement payments for the rest of their lives.
How does an employee get long-term disability benefits?
If an employee becomes disabled and believes they may be entitled to government-funded long-term disability insurance, they may file an application with the Social Security Administration.
If an employee believes they may be eligible for an employer’s long-term disability insurance plan, they must typically begin by talking to their supervisor or the company’s human resources. The company’s department responsible for long-term disability benefit will provide the employee with the information needed to file for long-term disability benefits with the insurance company. Once the insurance company is notified, they may request the employee to provide sufficient evidence showing the need for the benefit.
Once the insurance company has enough information, it will decide whether to approve or deny the claim and set forth the initial terms for the payment.
Also, eligible employees may be required to wait the “elimination period” to expire before they start receiving payments. These elimination periods for long-term disability vary depending on the employer’s insurance policy but can be as long as 90 days.
Conclusion
The hope always is that no person is faced with a disability that limits their ability to work and pay their bills. Unfortunately, that is not the reality we live in. For some employees, there may be a lifeline if they find themselves disabled in the for of short-term and long-term disability insurance. Many employers provide employees with an opportunity to sign up for either paid or unpaid short-term and/or long-term disability protection. Employees that take advantage of the benefit may find they are grateful they did when the unexpected happens in their lives and they find themselves needing the support.
