Understanding the Basics of Short Term Disability

How Does Short Term Disability Work 






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Whether an incident occurs on the job or after hours, many people experience the risk of becoming incapacitated and being unable to work. Short-term disability benefit is designed to provide financial assistance to individuals who cannot work due to some form of physical incapacitation. It offers financial support for lost income while you recuperate at home.

Although many illnesses and injuries occur at home and in other places, the vast majority of disabling incidents happen in the workplace. This creates a significant need for disability insurance coverage.

Qualifying for Short Term Disability

Your insurance coverage defines what qualifies as a covered disability. However, state laws may also determine what can be covered by disability insurance. Many states consider pregnancy and childbirth as covered disabilities. Some exclusions may not be covered by insurance, depending on the policy. In general, disability is mainly determined by how the illness or injury was acquired. However, an injury or illness is not considered a disability if it is:

  • Self-inflicted
  • Caused by active participation in illegal activity or riot
  • Occurred while committing a crime
  • Happened when driving while intoxicated
  • Happened during an act war

Some insurance companies require employees to work for a certain period before they qualify for disability coverage. Others require employees to work fulltime to be eligible for coverage. The qualifications for disability insurance vary from plan to plan.

Short Term Disability Insurance and Job Protection

It is essential to understand that short-term disability insurance does not guarantee job protection. This means your employer can terminate your contract while you are on disability leave. However, some laws protect employees against termination while on disability leave, especially if it is because of discrimination. Employees on FMLA leave are entitled to their jobs when they can return to work.

When to Begin Short Term Disability Insurance

Consider filing for disability as soon as you or your doctor determine that your disability will affect your job duties or ability to attend work. Some insurance companies may require you to get past the waiting or elimination period before being eligible for payments. In addition, some employers may have policies that require employees to use up their sick days before being eligible for short-term disability. Employees need to familiarize themselves with all benefit policies and terms.

Who Pays Short Term Disability?

The terms of your plan determine the person who pays disability insurance. In many cases, the employer determines what qualifies for short term disability and the cost they will cover. The main difference between short-term disability and workers’ compensation is the person who pays for each.

Short Term Disability Taxes

Short-term disability may be taxable, depending on how the plan was paid for. If the payment was made with after-tax dollars, you might not be required to pay income taxes on the payments received. However, if the plan was paid for with pre-tax dollars, the payment received may be considered part of your income, which is taxable.


How Does Short Term Disability Work
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