Short-term disability insurance provides compensation to employees unable to work because of an illness or injury expected to last at least seven days. Unlike Social Security Disability Insurance, this isn't a federal benefit. In the majority of states, employers aren't required to offer it, but employers often purchase it privately and offer it as an employee benefit to attract workers. Employees also can purchase their own individual policies through insurance companies. Rules regarding your ability to work while receiving short-term disability benefits vary based on the policy guidelines and state regulations.
Defining a Disability
Your insurance policy defines what the term disability means under plan guidelines. Some policies define a disability as "the inability to work at your own job." Others define it as "the inability to work any job." If you feel you can work a different type of job with your disability, it's best to consult your employer or the insurance company -- depending on what your plan requires -- to determine if it's allowed. If the insurance company does allow you to work a different type of job while still collecting short term disability, the benefit amount may be reduced as a result.
How it Works
Short-term disability insurance benefits typically are available anywhere for 9 to 52 weeks, depending on the policy. In many cases, the policies require you to use up your sick days before benefits will kick in. If you're approved for benefits, the insurance company pays a percentage of your pre-disability earnings, usually 50 to 70 percent.
Filing a Claim
The exact claim process will vary based on the insurance company. Generally, the insurance company will need the employer to provide information about your employment, such as your length of employment, job duties and salary. The company also will need you to grant permission to get your medical information. Your doctor then must provide written documentation explaining your condition and how long you're expected to be out of work. In most cases, this is a standard form the doctor fills out and returns. If you aren't ready to return to work at the anticipated date, you may need to file an extension -- along with verification from your doctor that you're still unable to perform your work-related duties -- to continue receiving benefits.
Partial Disability Policies
Although most policies won't consider you disabled if you are able to work, some include partial disability benefits. For example, if you can't work as many hours because of your temporary disability, your policy may provide you benefits for the lost hours.
State Disability Insurance
Several states have a mandatory temporary disability insurance requirement for illness and injuries that aren't work-related. In the following states, employers are required to obtain disability insurance coverage for employees:
Each state has its own eligibility criteria and rules for benefits. For example, in California you can work part-time and still receive partial benefits as long as you're suffering a loss of income and meet the other eligibility guidelines. In New Jersey, it's considered fraud if you work and collect Temporary Disability Insurance. In Hawaii, employers purchase private insurance policies; therefore the guidelines can vary.