Should I Get Supplemental Short-Term Disability Insurance?

People concerned about the deficiencies of their current coverage should consider getting supplemental short-term disability insurance before it is too late.

You never know when a severe medical event might happen. Inadequate paycheck protection that kicks in too late ends too early, does not pay enough, or proves too hard to claim could put your family in a financial bind.

People living check-to-check with little savings have an acute need for comprehensive disability income benefits. An extra safety net may be the cure.

Yes – you can own multiple policies, provided the combined monthly amount does not exceed 67% of your earnings.

What is Supplemental Insurance?

Supplemental short-term disability insurance is additional coverage that fills gaps in a primary program. Buying an extra policy may be worth it to help you fill one of these possible holes.

  1. Inadequate monthly benefits
  2. Brief duration of claims payments
  3. Lack of coverage for off-the-job incidents
  4. Tough any-occupation underwriting standards

What does it Cost?

Supplemental short-term disability costs depend on three crucial variables the policyholder determines when applying for the insurance.

A short-term disability cost calculator can provide a quick online estimate of the monthly premiums based on multiple configurations of the three pivotal inputs.

  1. Monthly benefit amount: how much the policy pays
  2. Elimination period: how quickly claim payments begin
  3. Benefit period: how long claim payments last

What does it Cover?

Supplemental short-term disability insurance can cover any or all of the four common gaps in other programs you may have through your employer, state, or the federal government.

State Programs

If applicable, supplemental short-term disability can cover the holes in your state program. The monthly amounts could be too small or end quickly, while most states offer nothing.

State-mandated temporary disability programs with varying benefit levels exist in only eight of fifty states.

StatePay %Weekly CapDuration (Weeks)
New Jersey85%$99326
New York50%$17026
Rhode Island60%$97830

Social Security

Supplemental short-term disability can cover the most impactful gap in the Social Security programs that most people fund via FICA payroll contributions: rigorous qualifying rules.

You can apply for temporary disability through Social Security but not win approval unless you meet two critical criteria.

  • Your medical condition will last at least one year
  • You cannot perform any work

Buying an additional policy can cover lost income when you cannot work at your full-time occupation – even if you can perform other work. Plus, it might pay claims if your condition lasts less than one year.

Worker’s Compensation

Supplemental short-term disability can cover the holes in Workers’ Compensation purchased by your employer, which exclusively pays claims for occupational accidents and illness.

You might want to get an additional policy to address off-the-job accidents and illness, which are far more common than work-related maladies.

Multiple Disability Policies

Because supplemental short-term disability insurance is additional coverage, it is natural for people to ask whether they can own multiple policies. The short answer is yes – provided the combined monthly benefit does not exceed 67% of earnings.

The cost of coverage goes up as we age. Therefore, adding supplemental short-term disability to an existing policy makes more sense than canceling the older, cheaper plan.

Stacking Benefits

You can own two disability insurance policies to increase the monthly benefit amount – subject to limitations. Stacking supplemental short-term disability on the existing plan is an excellent way to meet this objective.

You calculate short-term disability pay for one policy by picking the smaller of two critical variables.

  • Maximum monthly benefit ($7,500)
  • Percentage of full-time income (67%)

For instance, a person might want to add a second policy if their income grew and they want 67% of income protection. Or, high-income earners might need more than the monthly maximum connected with the first policy.

Filling Benefits

You can own multiple disability insurance policies if you want the benefits to begin more quickly. Supplemental short-term disability with a tiny elimination period can fill the gaping hole typical in most long-term disability plans.

A disability elimination period is best described as the time that must elapse after the impairment begins until the insured can claim monthly benefits.

For instance, a long-term disability policy with a six-month elimination period could cause an owner living check-to-check to go bankrupt before kicking in. Extra coverage with a seven-day elimination period would remove this risk.

Extending Benefits

You can own two disability insurance policies if you want the benefits to last longer. Adding supplemental long-term disability to an existing plan covering temporary work absences meets this objective.

For instance, your existing policy might have a six-month benefit period. Adding an extra plan with a six-month elimination period would provide better income protection without over-insuring.