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Short Term Disability Benefits
Short Term Disability: Benefits, Definitions, Eligibility
Short term disability benefits vary based upon how your policy is configured, the contract definitions, eligibility requirements, and amount of income replaced. Pay careful attention to policy definitions and eligibility criteria as they vary widely between insurance companies.
Make your choices wisely. One of our agents can help you decide the configuration that best fits your budget and needs and arrange to place your coverage. What you will find in more detail on this page:
- Policy Definitions: elimination period, payment duration, and riders
- Eligibility Requirements: occupation class, medical criteria, qualifying conditions, income limits
Short Term Disability Benefits: Policy Definitions
Short term disability benefits are derived in part by the policy definitions: elimination or waiting period, payment duration, the definition of disability, and riders that may be attached to your contract.
Many policy variations become important based upon who is buying the policy and why. Explore the topics pertaining to your situation.
Many policy variations become important based upon who is buying the policy and why. Explore the topics pertaining to your situation.
Individual Contracts Individual policies are the holy grail for many growing families. Many employers do not offer coverage for their employees, so women seek individual coverage they can buy direct. Nothing exists. But you can buy an individual policy at work and pay for it yourself. You own the policy and keep it wherever you go.
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Long Term Benefits to Age 65 Long term benefits are available up to age 65 after satisfying a long waiting period. Three to six month waiting periods are most common. Long term disability is not for temporary disabilities such as pregnancy and maternity leave. It fills a different need: high income earners with high overhead costs.
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Self Employed Workers Self employed workers find it difficult to find health insurance of any kind. Many women with growing families find self employment a great way to gain job flexibility, but then finding a way to replace income during maternity leave becomes very hard. Women who work as contractors or 1099 employees have an option.
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Supplemental Policy Types Supplemental plans fills gaps left in other policies. Your existing coverage may have long waiting periods, short benefit periods, or may not replace enough of your income. Many group plans are not portable. If you leave work you lose your coverage. If you have an existing medical condition when this happens, finding an alternative policy may be very hard.
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Are Payments Taxed? Disability is income taxable depending upon how you pay the premiums. Learn how to determine what may be taken from your check and sent to the government. Find strategies to determine the best way to pay for the premium to maximize your payments.
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Elimination and Waiting Periods
The short term disability elimination period determines how quickly your payments begin once you are unable to work. The shorter the elimination period, the more quickly payments begin, and the higher your monthly premium.
You can elect different elimination periods for accident, and for sickness coverage. Options range from zero days for an accident up to 180 days. The shortest elimination period available for sickness is 7 days. Most women planning to use short term disability for pregnancy often elect the shortest elimination period because they are planning to use the program, and the payment period length is fixed for a normal delivery.
All policies will have a waiting period before the contract will make payments for an existing medical condition. An existing condition might be defined as any injury or sickness that you sought medical treatment or advice for during the twelve months preceding the start date of your contract. There may be a six or twelve month waiting period before an existing condition would be covered.
Payment Duration
The short term disability payment duration determines how long the policy will continue to make payments during the time you are unable to work due to a covered medical condition. You can elect benefit durations of 3 months, 6 months, 12 months, and 24 months.
The longer the payment duration, the longer your policy will continue replacing your income, and the higher the premium cost. Your premium will not double if you are choosing between a 12 month, and a 24 month duration period.
Most women planning a pregnancy elect at least a 12 month payment duration. The reason is simple: they may encounter difficulties very early in a pregnancy. They want the payments to span the entire pregnancy, delivery, and recovery from childbirth.
Policy Definitions
Policy definitions may have a profound impact on the amounts paid by your insurance contract. It pays to understand these concepts when applying for coverage, that way there are no unpleasant surprises when you need to make a claim. We use some hypothetical examples for women during pregnancy to illustrate the possible impact.
The definitions for total and partial disability will vary by insurance carrier. In general being totally disabled means you are unable to perform the duties of your regular job. Partial disability can be defined as you inability to work more than 20 hours per week at your full time occupation. During pregnancy, many women may need to cut back on the hours worked.
Partial payments are most commonly paid only after being declared totally disabled first. If your doctor ordered bed rest to stabilize your health, than allows you to return to work on a part time basis, then the partial amount may be payable.
Recurrent disabilities occur when you stop working, then return to work full time, and then need to stop working again. This is common for women suffering from chronic illnesses. Autoimmune disorders fit this description, and women are far more likely than men to suffer from this condition. Also during pregnancy, it is not uncommon to stop, start, and then stop working again, etc.
Recurrent disabilities may be treated as a new or continuation of an existing condition depending upon the circumstances. A new disability resets both your elimination period, and payment duration.
The definitions for total and partial disability will vary by insurance carrier. In general being totally disabled means you are unable to perform the duties of your regular job. Partial disability can be defined as you inability to work more than 20 hours per week at your full time occupation. During pregnancy, many women may need to cut back on the hours worked.
Partial payments are most commonly paid only after being declared totally disabled first. If your doctor ordered bed rest to stabilize your health, than allows you to return to work on a part time basis, then the partial amount may be payable.
Recurrent disabilities occur when you stop working, then return to work full time, and then need to stop working again. This is common for women suffering from chronic illnesses. Autoimmune disorders fit this description, and women are far more likely than men to suffer from this condition. Also during pregnancy, it is not uncommon to stop, start, and then stop working again, etc.
Recurrent disabilities may be treated as a new or continuation of an existing condition depending upon the circumstances. A new disability resets both your elimination period, and payment duration.
- New - If you have returned to work for more than six months
- Continuation - If you returned to work for less than six months
Riders
Short term disability riders are addendums to programs that alter the way the contract works. It allows the individual to tailor the policy to their unique needs. Wellness riders provide a monetary incentive for policyholders to get regular medical checkups, and catch any health issues in a more treatable stage.
Most commonly a rider is issued to exclude an existing health condition from being a covered for a specified period of time. A cancer survivor might get a policy that excludes unemployment due to a return of the cancer until five years after the last treatment date. A person who recently underwent knee surgery might accept a rider excluding a recurrence of the knee injury. Riders allow modified policies to be issued that might otherwise be declined.
Most commonly a rider is issued to exclude an existing health condition from being a covered for a specified period of time. A cancer survivor might get a policy that excludes unemployment due to a return of the cancer until five years after the last treatment date. A person who recently underwent knee surgery might accept a rider excluding a recurrence of the knee injury. Riders allow modified policies to be issued that might otherwise be declined.
Eligibility Criteria
Benefits are available only if you meet the eligibility criteria. Do you qualify for coverage, and if covered does your medical event qualify for claims payments, and if so how much? These questions are answered in part by: occupation class, medical criteria, qualifying conditions, and income limits and offsets.
Occupation Class
Occupation class is an important eligibility requirement. Sometimes insurance companies will consider both occupation and the industry of employer.
White collar occupation classes are considered to be lower in risk than other occupations. A person sitting behind a desk is far less likely to miss work due to an injury or illness. People working as computer analysts, executives, and in administrative roles pay the lowest rates, and qualify for coverage most easily. Those in more dangerous occupation classes pay higher rates, and find it more difficult to qualify: chiropractors, mine workers, airline pilots, etc.
The industry of your employer is a key eligibility requirement for contracts sold at the worksite. Some high risk industries are excluded altogether, while others have rate assignments based upon risk and turnover ratios.
White collar occupation classes are considered to be lower in risk than other occupations. A person sitting behind a desk is far less likely to miss work due to an injury or illness. People working as computer analysts, executives, and in administrative roles pay the lowest rates, and qualify for coverage most easily. Those in more dangerous occupation classes pay higher rates, and find it more difficult to qualify: chiropractors, mine workers, airline pilots, etc.
The industry of your employer is a key eligibility requirement for contracts sold at the worksite. Some high risk industries are excluded altogether, while others have rate assignments based upon risk and turnover ratios.
Medical Criteria
Insurance companies all have unique health and underwriting criteria: another important short term disability eligibility criteria. Every company will ask medical questions to determine if you are healthy enough to be an insurable risk. Medical criteria vary based upon monthly benefit amount, where and how you buy your policy.
The greater the monthly level of income replacement requested, the more stringent the medical criteria. Underwriters want more health information when asked to take bigger risk. You might experience simplified underwriting when requesting a policy paying $3,000 per month, and full underwriting when applying for $5,000 per month or more.
When purchasing a contract in a worksite environment health underwriting criteria is often more streamlined as risks can be pooled with co-workers, and employers want workers to keep productive, rather than answering detailed medical questions with an agent. Guarantee issue is often available to groups when multiple employees participate.
The greater the monthly level of income replacement requested, the more stringent the medical criteria. Underwriters want more health information when asked to take bigger risk. You might experience simplified underwriting when requesting a policy paying $3,000 per month, and full underwriting when applying for $5,000 per month or more.
When purchasing a contract in a worksite environment health underwriting criteria is often more streamlined as risks can be pooled with co-workers, and employers want workers to keep productive, rather than answering detailed medical questions with an agent. Guarantee issue is often available to groups when multiple employees participate.
Qualifying Conditions
Qualifying conditions are another important eligibility criteria. What medical conditions qualify you to file a claim and receive a benefit payment?
Qualifying conditions typically consist of covered accidents and illnesses that prevent the insured from performing the full time duties of their primary occupation. A policy will provide a list of excluded conditions such as: pre-existing conditions, addictions, aviation, committing a crime, mental disorders, etc.
Consider knee surgery as an example. If you require surgery on a knee due to a covered accident after your policy start date, the surgery would probably be a covered benefit provided you were unable to work while in recovery.
Many knee replacement surgeries are anticipated. You experience pain for years before going under the knife. A policy with a twelve month pre-existing condition clause would rule out the surgery as a qualifying condition during the first twelve months of the policy. On day 366 your knee replacement surgery might qualify.
Qualifying conditions typically consist of covered accidents and illnesses that prevent the insured from performing the full time duties of their primary occupation. A policy will provide a list of excluded conditions such as: pre-existing conditions, addictions, aviation, committing a crime, mental disorders, etc.
Consider knee surgery as an example. If you require surgery on a knee due to a covered accident after your policy start date, the surgery would probably be a covered benefit provided you were unable to work while in recovery.
Many knee replacement surgeries are anticipated. You experience pain for years before going under the knife. A policy with a twelve month pre-existing condition clause would rule out the surgery as a qualifying condition during the first twelve months of the policy. On day 366 your knee replacement surgery might qualify.
Income Limits and Offsets
Income limits and offsets are the final eligibility requirement to be explored. In most cases a policy will replace up to two thirds of income, up to a set limit of $5,000 per month. Offsets will reduce the amount of coverage you may be able to purchase.
Most policies will consider income from your primary occupation exclusively. Policyholders with a second job sometimes do not get the same level of income replacement. Income from overtime, commissions, bonuses, and other forms of variable pay are often excluded.
Your level of income replacement may be offset by other contracts you might already have in force. The purpose is to make certain that you are not over-insured. Both your employer and the insurance company want to avoid having you take home more money while you are unemployed, then while you are working. Your income limit may be reduced or offset by any state plans, group plans, or individual coverage already in force.
Most policies will consider income from your primary occupation exclusively. Policyholders with a second job sometimes do not get the same level of income replacement. Income from overtime, commissions, bonuses, and other forms of variable pay are often excluded.
Your level of income replacement may be offset by other contracts you might already have in force. The purpose is to make certain that you are not over-insured. Both your employer and the insurance company want to avoid having you take home more money while you are unemployed, then while you are working. Your income limit may be reduced or offset by any state plans, group plans, or individual coverage already in force.
