Short Term Disability Insurance
As the name implies, Short Term Disability Insurance (STD) helps replace some of your income for a short period of time; anywhere from a couple of weeks up to only a couple of years. This type of insurance policy is useful for major, but relatively brief, disabilities such as those suffered from an accident or a non-terminal sickness.
To be covered by short term disability insurance, you or your employer must pay a monthly premium. When an illness or injury does occur and prevents you from working (and you are running out of sick days at work), you apply for benefits by speaking with your human resources representative or contacting your insurance agent. Most of these policies will require documentation from your doctor that explains your condition and estimates how long you’ll be unable to work. Depending on your policy and your medical condition, you may need to report on the status of your disability. There will probably be a waiting period known as the "elimination period" between the date you stop working and the date when you actually begin to receive benefits.
Once the elimination period is over, you will generally get a set percentage of the wages you were earning before you were disabled. Although the amount varies, payments are generally around 60% of your previous wage. For example, if you were paid $2,000 per month at work and your policy pays 60% of your pre-disability earnings, you will get a benefits check of $1,200 per month. Short term disability policies generally lasts between 9 weeks and 52 weeks (or in some cases, 2 years), after which time your benefits will end.
Often, short term disability insurance is only a portion of how people protect their income in a situation where they cannot work. They will also use means such as emergency savings, workers' compensation, paid leave and other forms of insurance in conjunction with short term disability. However, when these other benefits are exhausted (or, if you never had them in the first place), short term disability insurance can provide critically important funds.
When your short term disability benefits end, you may have the option of moving to a Long Term Disability (LTD) policy or receiving Social Security Disability Insurance (SSDI). Some short term plans may automatically transition to a long term disability plan if you are still disabled after the benefits period ends, however, this should always be checked as per the conditions of your policy agreement. The benefits period is the amount of time that you will get a benefits check. If you anticipate needing SSDI, you should apply as soon as possible.