Supplemental short-term disability insurance is an important benefit for growing families. Every income security policy has holes to fill. At the same time, it may be the most difficult to understand and purchase. Learn about the value to motivate the extra steps you may need to take.
The limiting factor is purchasing policies that work for maternity leave – those covering normal childbirth. See how supplemental short-term disability works to fill these holes, and discover the solution to a big problem.
- Covering pregnancy complications and maternity leave
- Filling holes in state mandated programs
- When individual policies make the most sense
Supplemental Short-Term Disability Pregnancy
Supplemental short-term disability insurance for pregnancy fills big holes. The lack of paid maternity leave in the United States is the primary hole filled, although there are many other gaps as well. Explore those shortcomings in more detail below.
Many expectant women stop working prior to delivery because of complications, or the need for bed rest. Then they deliver their baby and need to recover from childbirth.
Supplemental short-term disability for maternity leave covers mom’s recovery from normal childbirth. Normal childbirth is often a planned medical event. The benefits paid to the policyholder for this planned medical event can be several multiples of the premiums paid by the policyholder.
As a result, these policies are sold through only one channel –at the work site. If you want a policy covering recovery from normal childbirth, your employer must offer it. There are two basic types of options for employees: employer-paid plans, and voluntary programs.
You can get a short-term disability quote to estimate premium costs and compare them with projected benefits for maternity leave. Determine whether asking your employer to make an option available is worth it.
Employer-paid plans are very scarce. The employer owns the policy and often pays the premium on behalf of employees. The option is scarce because there is a direct cost to employers. There are group plans that are 100% employee paid but frequently have significant participation requirements.
Voluntary programs can be 100% employee paid. There is no direct cost to employers to allow employees to enjoy maternity leave income. The policies are employee-owned so they can keep the coverage wherever they work. Participation requirements are much lower (only three participating employees), so the option is widely accessible.
That is why we state that paid maternity leave exists in the U.S.A. Many women enjoy maternity leave income while recovering from normal childbirth. They bought a policy at work and paid for it themselves. More employers should be making this coverage available, and more employees should be asking for the option.
Complications and Bed Rest
Supplemental short-term disability for pregnancy complications and bed rest provide two alternative purchase channels. Complications of pregnancy are very common but unplanned, and far less common than normal childbirth. You can purchase directly or through your worksite.
Policies purchased directly from an agent in your local area cover pregnancy complications resulting in bed rest, but not normal childbirth. Most women want coverage for normal childbirth as well but may have to settle for lesser benefits in exchange for an easy online purchase.
Policies purchased as an employee benefits cover both: complications as well as normal childbirth. These programs provide better benefits but require extra steps.
Supplemental Short-Term Disability in States
Supplemental short-term disability insurance plugs the holes in state-mandated programs. There are three holes to fill – availability, benefit amounts, and duration.
State programs have very limited availability. Only five states require employers and employees to participate. That means forty-five states have nothing. The states that do require a program have limited benefit amounts, and claims payment duration.
Supplemental short-term disability in California increases availability more than supporting benefits increases, or payment duration. The state-mandated program exempts workers from religious organizations, federal government employees, professional consultants, and direct sales agents. Any of these workers can purchase a supplemental policy.
The need to augment benefits amounts and duration is not as acute in California. The state program has a high monthly payment cap, and claims payments last up to 52 weeks.
Supplemental short-term disability in New Jersey boosts the claims payment duration the most. The state program has a modest monthly benefit cap and replaces up to 66% of monthly income. However, the claims payments last for only six months.
An extra policy can extend the payments duration by two additional years.
Supplemental short-term disability in New York augments the very low monthly claims payment limit. The state mandated program replaces 50% of income up to a paltry $170 per week. That represents a measly 20% of income replacement for someone earning $44,200 per year.
Most experts recommend replacing 66% of income. Clearly, the New York program falls woefully short. People with higher incomes need even more extra coverage.
Supplemental Short-Term Disability for Individuals
Supplemental short-term disability for individuals fills two very large holes in other income security programs: long elimination periods and strict eligibility criteria. Temporary medical conditions are far more common than permanent conditions. Yet many people find it far easier to find individual coverage for permanent conditions. Common accidents and illnesses trigger the need.
Long Elimination Periods
Supplemental short-term disability for individuals has short elimination periods. Longer elimination periods keep the premium costs affordable. However, if a family is living check to check, they may lose everything before payments begin.
Long-term disability insurance can be purchased individually, and makes claims payments often up to age 65. However, many of these policies come with very long elimination periods. The elimination period is the length of time you are unable to work before payments begin.
Strict Eligibility Criteria
Supplemental short-term disability for individuals addresses two big gaps in a common government program. Most medical conditions causing lost income are temporary. In addition, the policies contain an “own occupation” definition that supports a high percentage of claims.
Social Security Disability is available across the U.S. The program provides income security for permanent medical conditions: those expected to last one year or more or result in death. The “any occupation” definition is very strict, making it difficult to qualify.
Many attorneys make a comfortable living helping people dispute denied Social Security claims. Do not rely on this program.