Short Term Disability Insurance (STD) and Benefits Q&A, Part 1

(Note: the following is geared towards the State of California. Your state will likely have something very similar, but be sure to check your state regulations and your policy's terms and conditions.) Click here for California state disability details

As readers of my blog and website, most people know that I like to keep things light and fun. Unfortunately, the subject doesn't really have a light side and it's certainly not fun. I mean who really wants to talk about getting injured, right? So I apologize to this article is a little bit dry and boring, but I think that you'll find it very informative.

What is short term disability coverage?

Short term disability coverage provides income replacement to people who experience income loss due to a disability caused by injury or sickness. Most short term coverage lasts for six months, although it can last up to one year. Short term disability coverage is for non-work related illness or injury. Work related illness or injury would be covered by your state's workers comp coverage although you might want to consider adding supplemental insurance to this since it may not cover enough of your expenses when you are on disability.

There are two ways you can obtain short term disability coverage: either through a group or individual plan. Your employer, a professional group or association, or fraternal Association can offer group coverage, and if they do offer it, they must offer it to everyone. They may not exclude any employee or member from purchasing a policy. However, these groups and associations must be formed for a purpose other than purchasing insurance. As an individual, you can purchase short term insurance from either an insurance broker or insurance agent based upon your medical history.

How does one become eligible for short term disability insurance?

Before you can become eligible to receive short term group disability benefits from your employer, you must have worked there for a certain amount of time. This period of time, which is normally 30 to 90 days, is referred to as "service wait." If you sign up for short term group disability insurance from a professional group or association, there will also be a set period of time that you will have to be a member before you will be able to receive benefits. Individual policies generally do not have a set amount of time before you become eligible to receive benefits. However, most insurance companies will take two to three weeks to process your application and you will not be ensured until the process is completed, which is otherwise known as the activation date. Furthermore, if you had had medical treatment for a potentially disabling medical condition during the past 10 years (considered to be a pre-existing condition), you most likely will not be able to purchase individual, short term disability insurance. This includes doctors consultations and medication for certain conditions.

If you sign-up for short term disability insurance through your employer, there will be an active work requirement that you will have to meet in order to be eligible for benefits. With regards to professional groups are associations, you will have to have been part of their group for specific time before you can receive benefits from the plan. Whether you receive your insurance from your employer or a group, each one is significantly different and will have different requirements. So be sure to check the summary plan of your policy for further details.

How much do I get paid if I cannot work due to injury or sickness?

Every short term coverage package is different. When you're disabled, some will pay either a percentage of your gross pre-disability income or a specific dollar amount based on the number of days that you are unable to work. Be sure to check your plan details because all plans are different. Most short term disability plans only pay 55% to 70% of your pre-disability income. Therefore, if you know that you cannot live off this amount, you should seriously consider purchasing supplemental income from a company such as Aflac.

One extremely important point to keep in mind is that if you suffer from a pre-existing condition, the best time to enroll in short term disability insurance is during the initial enrollment period. Why is this the best time? Because your medical history is not subject to medical underwriting; the insurance policy is being issued to the group instead of just an individual. If you don't sign up during the initial enrollment period, your pre-existing condition may limit or delay the use of coverage. Simply put, enrolling during the initial enrollment period qualifies you for every potential disability. This is one aspect of insurance where timing is everything.

A few times now we have mentioned pre-existing conditions. So what are pre-existing conditions? Well, a pre-existing condition is any medical condition for which “medical care” was received three to six months prior to the effective date for coverage. Just about every short term insurance plan has pre-existing conditions exclusionary periods. Until the pre-existing exclusionary period ends, the prior medical condition will not be covered by the policy but as soon as the period ends, it will be covered. (Continued on next page)

Here's more Q&A about short term disability insurance:

• What is STD coverage?
• How does one become eligible for STD insurance?
• How much do I get paid if I cannot work due to injury or sickness?
• Does STD insurance cover health coverage?
• What kind of requirements, do I need to meet for enrollment and eligibility?
• What restrictions are there with the STD coverage?
• What's the difference between private STD coverage and federal and state programs?
• What happens if I am laid off or fired?
• How long does STDlast?
• I am on STD and I was recently terminated because I have no more sick time. I pay $20 a week through payroll and I would like to know if my employer has to pay the premium?
• I purchased a Aflac STD policy seven months ago because I was told that it covers pregnancy since it can be used for maternity. I am now pregnant and am due to deliver in seven months. What are the steps I need to take to receive my benefits?
• I have a Doctor's note stating not to lift weights heavier than 15 lbs for a period of 5 weeks. Human Resources has approved the doctor's note and says I have to be on STD because my job description requires me to lift 50 lbs. However, my department head is thinking about putting me in a different role for those 5 weeks that would not require me to do heavy lifting. My questions are: 1) Can I choose STD over the desk job or is that up to my department head? 2) Is he legally allowed to keep me in the office and pay me a lower wage just to avoid paying me STD? 3) What if the desk job pays me even less than I would have gotten for STD payments?
• I was in a car accident and my neck and back suffered a sprain. I have been doing physical therapy and have not been working since for the past two months. My employer does not want to pay for anything else after four weeks of being off so if I go back to work now and still suffer from pain would my whole STD process start over?
• When I first applied for my insurance I did not apply for STD. I am now 8 months pregnant and I have already been put on leave and discovered that my employer mistakenly cancelled my insurance. They have re-enrolled me and I opted for STD as well. Then my paycheck did not have the premiums deducted so I brought it to the attention of my employer. They said I will have to be reinstated once again. Well, I may have this baby at any time, so what are my rights? If the insurance goes through, will I get paid for my maternity leave?
• I pay for my STD through work which covers me for 6 months in the event of a disability but could get additional months coverage to compliment my long-term policy which kicks in after 6 months. Does the premium you pay for a Short-Term group plan cost more if you choose a plan when applying for coverage with a longer duration of coverage, since the insurance company would be taking a greater financial risk having to pay you for additional months?
• My employer does not offer STD insurance. Anybody know of good insurance companies that offer INDIVIDUAL STD insurance? I want to purchase my own, personal disability insurance before I have my baby in six months. Do you have any recommendations?