Short Term Disability Insurance: What Qualifies & How Long Does it Last?
By: Benefits by Design | Tuesday August 25, 2020Updated : Wednesday June 9, 2021
When people think of Disability Insurance, their first thought is often the more permanent disabilities covered by Long Term Disability (LTD) Insurance.
What is Long Term Disability Insurance and How Does it Work?
But what if you’re only temporarily disabled, say for a period of only a few weeks? You’ll still be off work and unable to make an income, but unable to qualify for LTD.
That’s where Short Term Disability (STD) Insurance comes in.
What is Short Term Disability?
Short Term Disability (STD) Insurance provides income for a covered plan member when they are unable to work for a short period of time due to hospitalization, an accident, or becoming ill.
Why Should Employers Offer Short Term Disability Insurance?
Provide Income Replacement
STD offers financial assistance to supplement income if an employee is unable to work due to accident, injury, or illness. The supplemental income helps employees and their families focus on recovery, not their finances. The ability to work and bring in an income is among a person’s most valuable assets.
Offer Added Protection
In Canada, we have government programs to assist individuals who are unable to work, namely Employment Insurance (EI). This program is generally not as robust as a good STD benefit.
Attract and Retain Top Talent
Prospective employees are looking at an employer’s benefit plan when weighing their job options. The more comprehensive the plan, the better, and Disability Insurance is near the top of the priority list. Employers who want to remain competitive when it comes to acquiring and keeping their talent should look carefully at Disability Insurance options.
How Can I Qualify for Short Term Disability?
To qualify for STD you must first have STD insurance. You only qualify for STD if you experience a covered accident, illness, or injury that prevents you from performing the duties of your occupation. The specific definition of disability will vary by Insurer; however, generally speaking, STD could provide coverage for common situations such as:
- Recovery following major surgery
- Mental health issues or leave
- Recovery following an injury or accident
How Long Does Short Term Disability Provide Income Replacement?
STD provides income replacement for up to a period of 17 or 26 weeks. Employees still unable to return to work at the end of the STD period may be eligible to transition to Long Term Disability if they are covered for this benefit.
Short Term vs. Long Term Disability Insurance
What are the Benefits of Short Term Disability?
STD provides crucial income replacement when a person is unable to work and bring in an income. Ask yourself — could your family pay all their bills and maintain their current lifestyle if you were unable to work for up to 26 weeks?
If the answer is “no,” you can begin to see how STD can help ease financial strain and the stresses that come with an accident, illness, or injury that prevents you from working.
Download the Disability in Action Infographic (PDF: 685 KB)
How Does Employment Insurance Work with Short Term Disability?
Employment Insurance (EI) is a federal benefit that operates very similarly to STD, providing income replacement in the event an accident, illness, or injury prevents you from working. If you become unable to work and have STD through an employer, your STD benefit will take priority over any EI benefits.
Since the coverages work very similarly, we’re often asked something along the lines of, “Why should I have STD if EI already covers me?”
While it’s true that EI offers similar coverage, there are several advantages to a STD plan over EI benefits. EI is not usually as comprehensive an employer-sponsored STD plan, often having longer waiting periods and lower weekly payments. Furthermore, EI’s income replacement is taxable to the employee, whereas STD benefits, depending on plan design, are not. Both STD and LTD benefits can be set up as taxable to the employee (employer pays the premiums) or non-taxable to the employee (employee pays the premiums).
Can I Work While on Short Term Disability?
STD serves as income replacement for employees unable to work, beginning from the onset of the disability. However, employees on STD who are making progress towards recovery can work with their employer to arrange for an early return to work or an accommodated work schedule.
This arrangement benefits all parties involved:
- Employees are able to get back to work gradually, facilitating recovery while also getting back into the norm of working.
- Employers are more likely to retain the employee with a gradual return to work.
- Insurers help employees get back to work faster and pay less in STD payments on an accommodated work schedule.
Where Can I Get Short Term Disability Insurance?
STD is most often provided through an employee benefits plan offered through an employer.
Individual coverage may be available through various Insurers, but is generally significantly more expensive on an individual basis.
How Do I Go on Short Term Disability?
To begin the process of going on STD, you will first need to meet any waiting period requirements. The length of the waiting period will depend on the plan design setup, but can be up to a week. Depending on the nature of the disability and the plan design of your STD benefit, your benefits can start at different times.
- If the disability is the result of an accident, your benefit could start from the first day of the accident.
- If you are hospitalized, your benefit could begin from the hospitalization date.
- Illness coverage usually begins on the 8th day.
That week can be used proactively to get started on your claim. To begin a STD claim, you’ll need the following three statements:
- A Physician’s Statement, detailing the nature of the disability and any doctor’s recommendations.
- Employer’s Statement, confirming details about your position, such as salary, hours worked, and your duties and responsibilities.
- Claimant Statement, which details the nature of the disability, claim information, and more.
Your Plan Administrator will be able to provide you with these forms.
Short Term Disability (STD) Insurance is only one piece of the puzzle. For true protection in the event of a serious accident or illness that prevents someone from working for a prolonged period, you’ll also want to consider Long Term Disability (LTD) Insurance.