Self-employed short-term disability insurance is a reality. Do not fall for the myth that only people working for large employers can get adequate income security.

Policies are available for the freelancers but with key limitations. Look for coverage based upon your objectives. Finding the right policy may not be easy, but could be worth the effort.

Learn how short-term disability insurance works for the self-employed.

  • Determining premium rates after taxes
  • Covering pregnancy and maternity leave

Self-Employed Short-Term Disability Costs

The first question many self-employed people ask is what short-term disability insurance will cost. The answer will depend on many factors including your income level, the policy features you select, whether the premiums are deductible, along with your primary occupation.

Before exploring costs, make sure you qualify to purchase a policy first. Many people omit this step. You must be actively working, and relatively healthy. A new policy will not cover any preexisting condition for at least twelve months. Coverage must begin prior to a pregnancy.

Apply for a short-term loan to replace your lost income if you are temporarily unable to work, and did not purchase coverage in advance of your need.

Online Quotes

Self-employed workers can purchase individual short-term disability to protect their income in case they are unable to work because of an accident or when sick. Women looking to address pregnancy and maternity leave needs should scroll further down the page for further details.

Request an online disability quote to determine premium costs. An agent may contact you to review your needs and present options.

Deducting Premiums

Self-employed business owners may be able to lower their short-term disability premium costs by deducting the expenses on their annual tax return. Keep in mind that when you deduct the premiums, the benefits become taxable income when claimed.

Women planning a pregnancy should not take the deduction, as it may increase the amount of taxes owed. The taxes paid on the claim may greatly exceed the savings on the premiums. Many women purchase a policy expecting to file a claim when pregnant.

Eligibility for the deduction varies by how you organize your business.

  • Sole Proprietors – not deductible
  • Partnerships – deductible
  • S Corporation – deductible
  • C Corporation – deductible

Rates by Occupation

Short-term disability rates will vary by the policy features you select (elimination period, benefits length, and monthly amount), in addition to your occupation and/or industry. Certain industries and occupations are inherently more or less risky. Carriers often classify rates by industry or occupation. Occupations rated A have the best rates and D the lowest.

Find your probable rating from this list of largest independent occupations. Each carrier employs different ratings.

Occupation Rating
Childcare workers C
Carpenters C
Maids and Housekeeping D
Farmers and Ranchers D
Construction Laborers C
Hairdressers, Stylists, Cosmetologists C
Real Estate Agents A
Truck Drivers B
Painters and Maintenance C
Lawyers A
Management Analysts, Consultants A
Retail Salespeople C
Automotive Service B
Accountants and Auditors A
Electricians C
Plumbers C

Self-Employed Short-Term Disability Pregnancy

Many self-employed women seek out short-term disability insurance covering pregnancy during their childbearing years. It makes perfect sense for her work activities may be curtailed both before her delivery and after as she recovers from labor and delivery.

Apply for a maternity leave loan if you are already pregnant and need to fund your time away from the business. You must purchase a policy prior to conception to qualify. Every carrier will exclude any preexisting pregnancy.

Pregnancy Bed Rest

Self-employed women can readily purchase short-term disability to cover pregnancy bed rest only. You can purchase an individual policy that covers accidents and illnesses. A covered illness will include complications of pregnancy, but not recovery from normal childbirth.

Request a quote for an individual policy provided you want coverage for pregnancy complications only. You must begin the coverage prior to conception. The benefits cease immediately after childbirth.

Maternity Leave

It is more difficult, but not impossible for self-employed women to purchase short-term disability covering maternity leave. Only policies covering your recovery from labor and delivery after normal childbirth create maternity leave pay. Only policies sold through employer groups do this.

Hope is not lost. Three options to obtain these policies do exist that require extra effort. The policies pay six weeks for a normal vaginal delivery, and eight weeks for a normal C-section birth. The extra effort to obtain a policy through an employer channel has a great incentive.

  1. If you are an independent contractor, you can obtain a policy if your agency provides voluntary benefits. You can pay the premium through payroll deduction.
  2. If you have two or more employees working for our through you, you can establish a group. A group with three benefit eligible employees qualifies to offer voluntary benefits. 1099 workers count towards the total.
  3. Self-employed women working in California can enroll directly in both the state disability and paid leave program.