Life can be unpredictable, and while we hope to stay healthy and active throughout our careers, unexpected injuries or illnesses can happen at any time. When the unexpected strikes,
disability insurance
provides a safety net for employees. Whether you’re just starting your career or you’ve been in the workforce for years, it’s important to understand disability insurance options and why they are a crucial part of your financial plan.
Short-Term Disability
As the name suggests, short-term disability insurance provides temporary income to employees experiencing brief stints of work leave. Below is an overview of short-term disability.
Duration of Coverage: Short-term disability plans typically cover an employee for 3-6 months; however, each policy is nuanced. The length of coverage depends on the policy and state provider.
Qualifying Period: The typical qualifying period for short-term disability is 14 days. A qualifying period is also known as a waiting or elimination period. It defines the amount of time that an employee must wait for coverage approval. The period begins the day the employee becomes disabled, not the day the claim is filed.
Benefit Amount: Short-term disability policies typically pay 40-70% of an employee’s pre-disability income.
Common Uses: Childbirth, surgery recovery, and temporary illnesses
Long-Term Disability
Long-term disability insurance, on the other hand, is designed to provide financial support for a much longer period of time to account for severe or prolonged injury.
Duration of Coverage: Long-term disability plans are built to cover employees for years. Two years is typically the minimum, but employees can be covered until retirement age at 65.
Qualifying Period: Employees using a long-term disability policy must endure a longer waiting period. The qualifying period for long-term disability ranges from 30 to 180 days.
Benefit Amount: Long-term disability policies pay anywhere from 50-80% of an employee’s pre-disability income.
Common Uses: Chronic illness and severe accidents
Is Offering Short-Term and Long-Term Disability Required?
Employers are not required to offer short-term or long-term disability insurance benefits. Similar to paid time off policies, disability insurance is an opportunity for employers to attract and retain top talent.
It is important to remember that employers are required to protect medical leave mandated by the Family and Medical Leave Act (FMLA). The FMLA requires that certain employees receive up to 12 weeks of unpaid, job protected leave. Additionally, health benefits cannot be revoked from employees during this period. FMLA and disability insurance serve different but complementary roles when it comes to taking medical leave. If you are dealing with a medical issue and need time off, understanding both FMLA rights and disability insurance will ensure that you receive both income support and job protection while you recover.
What If an Employer Lacks Disability Coverage?
HR departments should be transparent and open with employees about the absence of disability insurance policies, as this information is critical for employees’ financial planning and well-being. Clearly communicating that disability coverage is not offered allows employees to make informed decisions about their personal insurance needs and seek alternative coverage options if necessary. Additionally, HR professionals should remain informed about supplemental policies. For example, accrual PTO policies can alleviate some of the stress that coincides with disability leave.
Similarly, HR professionals, with their deep understanding of the diverse roles within their company, can be proactive in exploring potential solutions for employees who lack disability coverage, such as offering the option to transition to reduced roles or flexible work arrangements to accommodate employee needs during times of illness or injury.
Additional Resources
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