Disability Insurance: Part 2
Short-Term Disability Policies
Short-term disability insurance is designed to provide income to employees who become disabled due to sickness or an accident and are unable to work. Government statistics show that these benefits typically replace about 50 percent to 67 percent of an employee’s income.
Waiting Period – “Elimination”
Generally, an employee will be required to satisfy a waiting period (Elimination Period) before disability payments will begin. During this period, employees may use sick leave, vacation, or personal leave. If an employee uses the full duration of short-term disability the following would happen:
· The employee might begin collecting under a long-term disability plan (if one is offered and in place).
· Benefits would terminate.
Benefits Period or “Duration”
The benefit period is usually expressed in terms of a maximum number of weeks of coverage for a single period of disability (Duration). The most common duration of short-term disability insurance is 13 weeks and 26 weeks. In many cases, an employer will offer a Long-Term Disability plan that begins when the duration of the Short-Term Disability runs out.
Long-Term Disability Policies
Long-term disability policies take up where short-term policies leave off, covering employees who become disabled and unable to work for longer periods of time. No one expects anything to happen that would require them to miss work for an extended period of time, but many look at this as their long-term safety net.
What Counts as “Disabled”?
Long-term disability coverage generally defines disability in one of the following two ways:
The inability to perform the tasks of one’s own occupation.
The inability to perform the tasks of any occupation at all.
*An employee does not have to be permanently disabled to receive benefits.