How Does Short-Term Disability Work?

Short-term disability benefits protect your income if you're unable to work for a specific amount of time, but expect to be able to resume your job in the future. Once you've proven that your condition qualifies under the plan requirements, you'll get a specified percentage of your salary until you're able to work again, or until you exhaust your coverage. After a year, you'll lose short-term disability benefits and have to apply for long-term disability instead.

Short-term Policy Basics

Disability benefits may be offered by your employer, your own private insurer or both. In many cases, the insurer will provide a set percentage of your salary, often between 60 and 75 percent of your base pay up to a capped amount. As part of a benefits package, an employer also may offer the opportunity to purchase supplemental short-term disability coverage that gets you closer to the income you have while working. Before benefits kick in, the condition has to last longer than the elimination period -- otherwise known as a deductible period or waiting period. The elimination period represents the time between when the condition occurs and the short-term disability coverage starts, often somewhere around a month. In many cases you'll have to use up your allotment of paid sick days before accepting short-term disability.

Qualifying for Benefits

To qualify for short-term disability payments, you'll need to meet your plan requirements. This may include demonstrating that your condition:

  • Will keep you out of work for an extended period.
  • Leaves you unable to perform the material duties of your job.
  • Requires regular and continuing medical care.
  • Did not occur on the job or as a direct result of job-related duties. If it did, workers' compensation likely would provide benefits for your lost income rather than short-term disability.

You'll also need to document the date the condition started, and the date when it became so serious that you were unable to work.

In addition, you'll have to give your employer permission to obtain relevant information from your physician, often called an Attending Physician's Statement. For example, if you need to take time off as the result of pregnancy, you'd need a doctor to certify that you're actually pregnant. Your employer will have to fill out a form of its own as well.

Once your claim has been approved -- which should take about a week in most cases, unless more information is needed -- you'll start receiving payments when eligible according to the policy guidelines. A common approach is to make payments weekly in arrears, meaning you'll be paid each week for benefits earned the week before. You may be approved for coverage for a specific period of time based on your physician's information -- in that case, you'd need to file a request for an extension of benefits if you're not ready to go back to work on that date.

Tip

Social Security does not pay benefits for short-term disabilities. However, it may cover long-term disability for qualified applicants.

Moving to Long-term Coverage

If your medical condition lasts six months or more, or is expected to last that long, you'll transition to long-term disability. This may create a coverage gap, since short-term coverage may expire before long-term coverage begins. Check your policies to ensure you're covered regardless of the specific amount of time you're sidelined from work

Fraud Penalties

Be truthful when filling out the short-term disability claim form. If you're found to have committed fraud to obtain benefits you know you're not entitled to, you'll face penalties based on the applicable federal and state law. Insurance companies investigate claims that raise internal red flags, and can handle everything internally or report you to the authorities for prosecutions. Penalties can include restitution, fines, jail time or a combination of these.