Short-term disability insurance versus the Family Medical Leave Act (FMLA): what is the difference? Employees frequently ask this question while sick, injured, or pregnant and unable to work. They are not the same.

Short-term disability insurance may replace a portion of income while you are not working. FMLA may protect your job and access to health insurance benefits.

Examine five primary comparison categories to understand how the two vary.

  1. Proactive versus reactive paperwork requirements
  2. Eligible Populations
  3. Paid versus unpaid leave benefits
  4. Private policy versus federal regulation
  5. 24-month versus 12-week length

Short-Term Disability Insurance

The first step in comparing short-term disability insurance versus the Family Medical Leave Act (FMLA) is to examine the first half of the combination. Short-term disability has unique paperwork, eligibility criteria, primary benefits, the length of leave definitions, and origins.

Paperwork Requirements

Short-term disability insurance requires proactive paperwork, whereas FMLA does not. Since this is a private solution in forty-five states, workers must complete a policy application form before becoming sick, hurt, or pregnant in order to qualify for benefits.

Request a short-term disability quote as the first step in the paperwork process. You must complete a new policy application form before you have a preexisting condition or an imminent need. You are too late if you already need the benefit.

Complete a claims form to apply for benefits if you have a policy already in force. The claims paperwork involves signatures from both a doctor and the employer. Your doctor must state the medical reason why you are unable to perform the duties of your full-time occupation.

Eligible Population

A much smaller portion of the population in the United States enjoys short-term disability coverage, compared to FMLA. Those are eligible work in one of five states with a mandatory temporary disability program, their employer bought coverage on their behalf, or they took the proactive step to enroll themselves.

We can estimate the covered percentage by applying census statistics.

State Population
California 38 million
Hawaii 2 million
New Jersey 9 million
New York 20 million
Rhode Island 1 million
Total 69 million

A rough estimate is that a little more than 22% of the population will receive any income-replacement benefit when they leave work temporarily due to a medical condition. The total population in the United States is 316 million (69/316 = 22%). The number of workers purchasing private coverage makes the number larger, but not by very much.

Primary Benefits

Short-term disability insurance replaces a portion of income while FMLA does not. It applies during the time that a policyholder is unable to perform the material duties of his or her primary occupation, due to a covered medical condition.

Short-term disability replaces up to 70% of a worker’s gross monthly income, subject to a hard-dollar weekly limit. With private policies, the applicant determines the level of coverage. Premiums increase with the amount of income the policy will replace. The state-based programs work roughly as follows as of 2016.

State Percentage Weekly Limit
California 55% $1,075
Hawaii 58% $546
New Jersey 66% $595
New York 50% $170
Rhode Island 60% $700

Length of Leave

The length of leave for short-term disability insurance varies by the policy features chosen at time of application, whereas the FMLA length is fixed. Two common features determine how long the policy will make claims payments: the elimination period, and the benefits period.

  1. The elimination period defines how quickly claims payments begin. Policyholders may have a waiting period of 0, 7, 14, 30, or 90 days.
  2. The benefits period defines how long the claims payments may last while the policyholder is unable to work. Claims payments may continue for 3, 6, 12, or 24 months.

Private Policy

Private insurance companies offer short-term disability to groups and individuals, whereas FMLA is government enforced. Forty-five states do not have any regulations requiring employers to offer an option, or purchase the coverage on behalf of employees. It is a voluntary program requiring proactive action.

Five states have mandatory programs Most private employers must follow the mandate. However, most state and federal government employers are exempt.

Family Medical Leave Act (FMLA)

The second step in comparing short-term disability insurance to the Family Medical Leave Act (FMLA) is to explore the second half of the equation. FMLA also has unique paperwork requirements, eligible criteria, primary benefits, the length of leave rules, and origins.

Paperwork Requirements

The Family Medical Leave Act paperwork requirements are reactive, whereas short-term disability requirements are proactive. Workers do not need to complete a policy application months or years in advance of a possible need.

Qualifying employees simply need to complete the paperwork only after they become disabled or need to stop working to care for a sick family member. A doctor must certify the medical reason.

Eligible Population

A much larger portion of the US population enjoys coverage under the Family Medical Leave Act then under short-term disability. Approximately 58% of employees work for covered FMLA establishments. However, many do not meet the hours worked criteria, making the final percentage much lower.

  • Covered employers
    • Employ 50 or more employees for at least 20 workweeks
    • One or more worksites within 75 miles
  • Eligible employees
    • Worked for that employer for at least 12 months
    • Worked for at least 1,250 hours over the 12 months
    • Works at a location with 50 or more employees within 75 miles

Primary Benefits

The primary benefits of the Family Medical Leave Act are job protection, and continued access to health insurance, whereas short-term disability only replaces income. FMLA provides for unpaid leave and wills income replacement up to the individual, or state.

  • FMLA does cover the following
    • Employees own disability
    • Care for sick family member
    • Adoption
    • Maternity leave and baby bonding time
  • FMLA does not replace income!

Under FMLA, you can lose your job while disabled, during maternity leave, or during family leave in one of two ways.

  1. You do not meet eligibility criteria
  2. Job-protections expire before you return to work

Length of Leave

The length of leave for the Family Medical Leave Act caps out at 12-weeks, whereas short-term disability can range up to 24 months. Under FMLA, qualified workers enjoy the following.

  • Up to 12-weeks of leave during any 12-month period
  • Intermittent leave without satisfying an elimination period

Federal Regulation

The Family Medical Leave Act is a federal regulation, which applies to qualifying workers, whereas short-term disability is primarily a private program left up to individuals – except in five states with a mandatory program.

FMLA applies in all fifty states. However, the job-protected leave is not available to all workers. The employer has to meet eligibility criteria: fifty employees working within a 75-mile radius. Workers must meet eligibility requirements based on hours worked: 1,250 hours during the previous 12-months.

Sources

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