State-mandated short-term disability insurance programs often lull families into a sense of false security.
Only five states have laws requiring the coverage, and many people mistakenly assume theirs is one of the few.
They are wrong 45 times out of 50.
Even when they assume correctly (they work in a state with a compulsory program), they find that the program has holes. Each state places limitations on how much they pay, and how long the benefits last.
Many people find that they take a steep pay cut and the payments frequently expire before people recover from their ailment and can return to work.
- Find assistance programs including health insurance and job protections
- Three alternatives to state disability for possible income support
States with Statutory Temporary Disability Programs
The list of states with statutory temporary disability programs is very short. Statutory means that laws require covered employers to enroll employees automatically in a compliant program.
Only five states and one territory have this requirement.
State Disability Assistance
With only 5 states having compulsory short-term term disability programs, workers in the remaining 45 often need financial assistance. Private policies do not cover pre-existing conditions. Laws do not require employers to offer an option.
Here are two private alternatives that could help.
- A credit score-based loan could help with a temporary work absence. If approved, the lender can deposit the money into your bank account. Use the resources to pay your regular bills while unable to work. Do not borrow money unless you are certain that you will recover quickly, and that your employer will hold your job open. You must repay the lender with interest in monthly installments.
- A debt settlement program offers assistance to individuals and households owing more than $10,000 in unsecured debt. This includes credit card balances and unpaid medical bills. People experiencing a temporary disability frequently suffer financial hardship. It is easy to fall behind on monthly payments. The lost income combined with unexpected medical expenses often proves difficult to manage.
State temporary disability health insurance requirements are multifaceted. Continued access to affordable health care is crucial during a separation from work. An injured or sick worker needs medical care in order to recover and return to the job.
- Family leave laws require covered employers to continue group health insurance for a defined period. However, the disabled employee must continue making their share of premium payments using post-tax dollars.
- COBRA mandates health insurance continuation for displaced employees. However, the employer no longer contributes to the premium cost. The disabled person must fund 100% of the premiums using after-tax money.
- Loss of health insurance is a qualifying life event. This means a temporarily disabled person can purchase a new plan outside of the annual open enrollment. Policies bought through the exchange may offer income-based subsidies.
State-mandated short-term disability and the Family Medical Leave Act (FMLA) are separate issues.
FMLA is a federal regulation that provides unpaid job-protected leave to covered workers in all 50 states. The nationwide act offers twelve weeks of job protections during an employee’s own temporary disability. FMLA applies to companies with more than 50 employees, and personnel meeting hours worked and longevity criteria.
Statutory disability programs offer partial income replacement in only 5 states. Most workers automatically participate in the compulsory coverage.
States without Short-Term Disability Requirements
The list of states that do not require short-term disability benefits is much longer. However, this does not mean that every person suffering an injury or sickness is completely out of luck.
Three other options for income assistance are sometimes available to help.
All fifty states have some form of compulsory disability coverage for occupational accidents and illnesses. An occupational disability occurs when a worker suffers an on-the-job accident or contracts a work-related illness.
Each state worker’s compensation program covers medical expenses associated with occupational incidents. It also replaces a portion of income while the affected individual is unable to work. Four types of coverage may apply.
- Partial temporary
- Total temporary
- Partial permanent
- Total permanent
Social Security disability programs are federally required and state managed. Mandated payroll taxes fund two separate entitlements that replace a portion of income.
- Social Security Disability Insurance (SSDI) program pays benefits to you and certain family members if you worked long enough and paid Social Security taxes.
- Supplemental Security Income (SSI) pays benefits to disabled adults and children with limited income and resources.
Social Security does not cover short-term disabilities. It covers permanent medical conditions only. A doctor must expect the condition to last one year or longer or to result in death.
Unemployment compensation is not a substitute for state-mandated short-term disability insurance. The applicant must be physically able to work in order to qualify. In addition, termination of the employee-employer relationship is also required.
- Some states allow disabled workers to collect unemployment after their recovery. A handful classifies a disabling medical condition as a good cause reason to quit.
- A larger number of states classify the care of a seriously sick family member as a compelling reason to quit. The caregiver qualifies once he or she is available to work.
Scan this chart of 45 states without compulsory temporary disability programs to learn their laws about collecting unemployment after recovery.