Short-Term Disability Basics
According to multiple specialists the financial illiteracy around the world is quite bad. Workers are often ignorant about their rights for disability benefits before they do suffer through an accident or illness.
Read this article in detail in order to learn what short-term disability is, as well as how to prepare yourself for some legal and paperwork requirements you might face as you are applying for short-term disability payments.
WHAT IS SHORT-TERM DISABILITY?
A disability occurs when you are temporarily disabled to engage in an activity because of an injury or illness. If your temporary disability prevents you to perform on the duties of your employment, you may be eligible for temporary disability benefits. You should be provided an amount sufficient to cover your basic needs and some of your recovery expenses. It should at least partially compensate your lost income.
The injury or illness does not necessarily need to be work-related in order to consider it short-term disability, however, these often occur at the workplace or due to work-related factors. In fact, the workplace becomes the scene of an injury or a lethal accident far too often.
According to research, in the United States for example, over the course of the year 2015, more than 3.5 million injuries and illnesses were reported in the workplace. Supposedly even this number is not correct. Because of the legal consequences for the employers, accidents are thought to be covered up in most cases. The real number is supposedly more than 7 million injuries and illnesses.
SHORT-TERM DISABILITY BENEFITS & INSURANCE
The common idea is that If you experience a short-term disability, your employer is supposed to still pay out a certain percentage of your salary as a compensation for your loss of income. And that will only last for a limited amount of time and the amount will depend on the type of injury and the time it will take to recover.
Depending on the legislation of the country or region where you live, your compensation may vary between 40% or 60% of your gross income.
Of course, this percentage only reflects the legal duties from your employer to you. You can always go for extra insurance with another provider. Working with insurers directly, they will offer you different packages, covering various liabilities, where the amounts paid out depend on the premium you choose to pay, usually on a monthly basis.
Once again, depending on the country or the region where you live, those insurances may or may not be subject to income tax.
Usually you will start receiving your benefits two weeks after you have suffered the injury – those benefits will be paid out to you in varying period from nine weeks to a year. It is a common practice, that the victim of the injury will have to use up their sickness days, before getting to the eligible short-term disability period.
Ask your employer – sometimes they will already work with an insurance company making offers of various services and compensation for workplace injuries or workplace disability.
Regardless of who the provider is that is paying out insurance for you, your injury or short-term disability will probably be the subject of analysis by their medical board.
The doctors will determine whether you’re injury is eligible for you to receive short-term disability benefits, or not. Or you might be even upgraded for long term disability benefits that are paid out from 10 to 53 weeks.
DISABILITY IN THE USA
In this section of the article we will try to give you an overview of the legislation on short-term disability. Please have in mind that the information laid out below is subject to change and varies from state to state and from country to country.
The information here is only supposed to give you a general overview and maybe give you an idea what to look for in your own research. If you have a short-term disability and are looking to collect the benefits via your employer, always consult with your management first, and, if you have to, with your local workers rights authority.
You can take on short-term disability insurance, to protect yourself against the loss of income, caused by an injury or an illness or a bad accident that causes you to be unable to work temporarily. It’s an insurance check to substitute for your paycheck.
If you have a work related accident or an injury, things will not be covered by the short-term disability insurance. Such an accident will be covered by your compensation insurance.
Unlike the compensation insurance, the short-term disability insurance is not really related to the costs of your recovery. It is related to the income that you are missing out on. And that is why the disability insurance is usually a percentage of your salary.
Short-term disability insurance is usually offered by an insurance company for you as an employee via an insurance agent. You will be given a choice of benefits packages. Usually, the employers will offer at least one option for insurance, but if they don’t the employee can take on an insurance themselves – an individual plan instead of corporate one.
Regardless of who is the owner of the insurance, the disabled employee will need to check some boxes in order to be fully eligible to receive benefits.
- Length of service. Based on how long they have worked for the company, the employee might not be eligible for disability benefits at all, where the amount or percentage of their salary could vary.
- Other breaks from work. There might be a requirement for the employee to have worked for a particular amount of months consecutively for the company before they are eligible for benefits. If the employee has been on a prolonged vacation, on a sabbatical, on a prolonged paid or unpaid sick leave, they might have become ineligible for further aids.
- Sick leave requirement. Some employers will ask you to use up all of your sick leave days before they give you the status of a worker who can take short-term disability benefits.
- Doctors confirmation. The employer or the insurance company could ask you to visit a doctor appointed by them to verify the injury or illness that you are suffering from.
As explained before, the short-term disability insurance amounts could vary, and they are always based on a percentage of the pre-disability salary. The percentage is usually about 65%. But it could vary between 50% and 70%.
Disability insurance comes to substitute for the loss of income. However, the time for which you are taking your monthly benefit payments may not match the time that you are unable to work. Most commonly, the minimum amount of time is 10 weeks and could go up to 26 weeks. Once again, this is something that varies from insurance company to insurance company, or based on the employee’s relationship to the employer – for example the length of service, or the level of their position.
If the short-term disability period expires, the employer could suggest to the employee that they use the benefits for a long term disability.
Employers are usually happy to discuss options for short-term and long term disability benefits. Those are highly appreciated by the workers their family and friends, because they provide a safety net through their income.
Whenever you’ll suffer from on injury, the psychological effects of your recovery are usually enough without you having to worry about your financial situation. That is why employers who offer better help to their existing or potential employees are seen as more preferable to work with. In the current labor market climate, social benefits are appreciated higher and higher in relation to the net salary.
Whether or not the employer will ask you to take your sick days before the short-term disability period kicks in, depends on their internal policy.
Always contact your employer to ask to inform yourself about the conditions of taking short-term disability leave from the very first days of your injury or sickness. You might be required to put in an application for requesting short-term disability leave earlier then your first day of taking that leave.
Another thing you might be required to do, is to provide documentation from your doctor to prove:
- The cause of your injury
- The duration you’re expected to take for your recovery
- The implications of your sickness or injury to your work
- The duration for which your sickness is supposed to affect your work to the extent where you cannot participate in the process
- Whether you’re a sickness or injury prevents you from doing your work or it just limits amount of hours you can spend on it
They could ask the employee in short-term disability to have their medical status verified by a third party, or to have their recovery progress checked by a doctor appointed by the employer, or an occupational medicine centre. The employee will then be expected to provide information for the progress of the condition as soon as there are any significant news. The third-party that is supposed to track progress must have its costs covered by the employer.
These measures are taken in order to prevent insurance fraud.
The extent to which a third-party will be involved in the short-term disability recovery tracking will depend on several factors:
- The employee must have worked for the employer for a prolonged amount of time. The minimum is 6 months, or the duration of their trial period.
- Full time working contract. The amount of hours varies, however, the minimum is usually 30 hours a week.
What will usually be included in a short-term disability package:
- A percentage of the employees salary calculated on the basis of the past 6 to 12 months, paid out weekly, where the percentage is between 40% and 60%.
- The duration for which those weekly payments will be received varies. Usually, it will be sometime between 10 weeks and 1 year.
Once again, the conditions could vary between states. In most states employers will be highly encouraged, by workers, by unions, or by tax complications to offer some sort of strategy of disability benefits to their employees.
But only in five states there are mandatory guidelines – California, New York, Rhode Island, Puerto Rico, and Hawaii.
DISABILITY IN EUROPE
The European Union is spending more than €280 billion a year for social expenditure and disability benefits. On average the member states spend about 7.3% average total budget for social benefits for disability.
For 2014, Finland, Luxembourg, Estonia, Sweden, Croatia and Denmark are leading the top charts for the expenditure on disability over 10% of the total budget for social benefits.
Europe‘s framework for work injury legislation starts in 1884. The current regulations date from 1996. The program that holds the regulations about work injury and temporary disability is the social instruments system.
Who is covered for a temporary disability in Europe? It is not only employed people. However not all self-employed people are eligible for the benefits. In fact most self-employed people are not included in the coverage.
In contrast, most students in school and university are eligible for some sort of compensation.
Employees are not supposed to co-pay for their insurance or a compensation unless they are self-employed. Out of the self-employed people, contributions will vary according to the level of risk.
Employers contribute an average for 1.3% of the gross salary of the worker. Some of the benefits are covered by the government – for university and high school students, for children in day care, and in some cases, for volunteers.
Interestingly enough, in Europe there is no minimum qualifying period for disability.
In Europe usually temporary disability measures are used instead of short-team disability. Disability benefits are paid out from the day after the disability occurred. Benefits may go up to 80% of the gross wage of the insured worker. The employer usually takes care of the benefits for the first six weeks.
The benefit is paid out until recovery or the receiving of transition benefit.
A transition benefit is an amount that is paid if a rehabilitation measures are required during the period of the disability. 65% of the temporary disability benefit is transmitted, unless the injured has at least one child which makes the amount 75%.
The amount of the benefit is based on the annual earnings of the victim. There is a minimum of €19,900 and a maximum of about €100,000.
DIFFERENCE BETWEEN SHORT-TERM DISABILITY AND TEMPORARY DISABILITY INSURANCE
Even though it happens more often than you might think, it rarely crosses the mind of the workers that one day they will no longer be able to do their job and they will lose their income.
Luckily for them, most employers do offer short-term disability insurance or a temporary disability insurance.
As soon as you’re hired ask your employer to tell you more about the benefits package. If you believe those will not be sufficient if your do suffer an injury make sure you are signing for your own insurance.
If you are going to enquire about such insurance products yourself you will need to know the difference between temporary disability and short-term disability.
Temporary disability insurance is a requirement from the government to the employers to offer to employees. It provides financial help to those who have suffered illness or injury outside of their work and cannot perform their duties because of their health condition.
If the injury or illness is caused or suffered at the workplace, it is not covered by the temporary disability insurance. It is covered by compensation benefits. Temporary disability insurance, does include in its coverage pregnancy and childbirth.
Temporary disability insurance will pay you’re a percentage of the salary you had been receiving 6 to 12 months before your first day off. It will last for 3 to 6 months. If you are still unable to perform your duties after that period, you’ll be assigned to long term disability benefits.
Short-term disability insurance has its advantages. For example, one of the most important things, is that it covers employees for who have suffered an injury or have gone through an accident outside of work. Another benefit from the insurance, is that it is based on a percentage of your salary instead of some minimum amounts to cover your costs. This is obviously beneficial to people who are higher paid. Additionally, the employee has a say about what sort of benefits package they will be using, because they’re free to sign them for their own insurance.
On the negative side, short-term disability insurance does not cover an accident that did happen at the workplace. It is created to compensate the loss of income of the employee. But at the same time it does not cover the entire income – it only covers 60% to 80% of the gross salary. It is surely a disadvantage that the accident makes the person who is injured or disabled the subject of investigation from the insurance company – they will go through the employees medical history and documents from the accident or sickness and they will want to track the progress of their recovery.
Another inconvenience is that the short-term disability insurance only covers a limited amount of time. Afterwards its validity expires. In order to sign up for the insurance, the worker has to pay their own monthly premium. Finally, the insurance will not cover the period of the sick leave of the employee, and, as we already know some employers might encourage the employees to use up all of their sickly days before they recognize their short-term disability period has started.
Temporary disability insurance sounds similar but it does have some distinct differences. Usually, for a temporary disability insurance the employer will offer some solution – the employee doesn’t have to be that engaged. It covers injuries and illnesses that are not suffered that the workplace. Similarly to short-term disability insurance, the payment amount is connected to the salary – at about 60%. The payment period covers about 3 to 6 months. Temporary disability insurance is not necessarily in conflict with short-term disability insurance because it can take place before the SDI is activated.
On the negative side, temporary disability insurance does not cover the entire recovery process for some workers. No accidents suffered at work will be covered. It is based on the salary level but it is not based at 100%. It carries a relatively short exploration period after which the employee has to upload for long term disability benefits.
Sometimes the payment on the insurance will be difficult to get and the payment will not be in after substitute for your loss of income. Here are several things that you need to do to protect yourself:
- Make sure you are informed of your package. Most employers will share their policies on the matter on your first day of work, but if you’re like most employees you will not care to check about anything important there before you get sick or are pregnant.
- Find out what is your elimination period – the amount of days you will be required to take sick leave before the disability status takes place.
- Find out what is the percentage of your coverage and make sure that you have enough savings to compensate for the missing percentages up to 100% of your salary for at least one year.
- Learn more about the accessibility of your office – do they offer transportation if you are no longer able to drive? is there a disability ramp? What in your job description makes it possible or impossible for you to do your job after you have suffered through a particular injury?
Do not allow yourself to be ignorant about the rules of your employer. Most of us will be conscious enough to ask about working conditions, but not all of us or we’ll think of the possibility of worst days to come when it comes to your health.
We hope we have helped you to take the decision to do your own research about the legal requirements in your state or your country. We strongly encourage you to signup for insurance that will help your cover for your everyday expenses in time of need.