GMS Blog What is Short-Term Disability Insurance and What Qualifies?

Short-term disability insurance is a crucial benefit that provides employees with financial protection when they are temporarily unable to work due to a medical condition. For employers, offering short-term disability insurance can enhance recruitment efforts, improve employee retention, and contribute to a healthier workforce. This blog will walk you through everything you need to know about short-term disability insurance, including what it covers, its benefits for both employers and employees, supplemental insurance options, and how to integrate it into your benefits package. What Is Short-Term Disability Insurance? Short-term disability insurance replaces a portion of an employee's income when they cannot work due to non-work-related illnesses, injuries, or medical conditions. Unlike workers' compensation, which covers work-related injuries, short-term disability insurance provides coverage for medical issues that occur outside of the workplace. What Does It Cover? Short-term disability insurance typically covers conditions that temporarily prevent an employee from working, such as: Recovery from surgery Severe illnesses (e.g., pneumonia, COVID-19 complications) Pregnancy and childbirth recovery Injuries like fractures or sprains Mental health conditions requiring hospitalization or extended treatment How Long Does Coverage Last? Most short-term disability policies provide benefits for three to six months, depending on the plan. There is usually a waiting period of seven to 14 days before benefits begin, meaning employees must use sick leave or unpaid time off before their short-term disability coverage takes effect. Is Short-Term Disability Insurance Necessary? Short-term disability insurance can help ensure you and your loved ones are financially supported while you recover. To decide if it's right for you, consider whether you have enough savings to cover living expenses and medical costs, if you have dependents relying on your income, if you're at higher risk due to health or job factors, and if you qualify for any disability benefits. Ultimately, the decision depends on your personal circumstances and financial situation. The Benefits of Offering Short-Term Disability Insurance For Employers Improved recruitment and retention: A strong benefits package, including short-term disability insurance, can set your company apart in a competitive job market. Employees are more likely to stay with a company that offers financial security in case of medical emergencies. Increased productivity: Employees with access to short-term disability benefits are more likely to take the necessary time to recover before returning to work, reducing the risk of prolonged absences due to untreated conditions. Reduced turnover costs: Employees who feel supported during medical hardships are more likely to stay with their employer, reducing turnover costs associated with hiring and training new workers. For Employees Financial stability during recovery: Short-term disability insurance provides a percentage of an employee's income (typically 50-70% of their salary) during their leave, allowing them to cover essential expenses like rent, utilities, and medical bills. Peace of mind: Knowing they have financial support while recovering allows employees to focus on their health without the stress of lost wages. Faster return to work: Employees who can afford proper medical care and recovery time are more likely to return to work in a healthier, more productive state. Supplemental Insurance Benefits Some businesses offer short-term disability insurance as a supplemental benefit, meaning employees can opt into coverage and pay premiums themselves. This approach allows businesses to provide an essential benefit without increasing costs. Additionally, employers can enhance their benefits package by offering supplemental insurance options, such as: Long-term disability insurance: Provides coverage for extended medical leaves lasting six months or longer. Accident insurance: Covers medical expenses related to unexpected injuries. Critical illness insurance: Offers financial support for serious illnesses like cancer, heart disease, or stroke. By giving employees access to these supplemental benefits, businesses can create a well-rounded benefits package that supports workforce well-being. Short-Term Vs. Long-Term Disability Insurance Short-term disability insurance provides coverage for a limited period, typically up to six months, for disabilities that temporarily prevent you from working. It helps replace a portion of your income during recovery from illnesses, injuries, or surgeries. On the other hand, long-term disability insurance offers coverage for extended periods, often several years or until retirement age, for disabilities that significantly impact your ability to work long-term. It provides a more substantial income replacement to support you over a longer duration. How to Integrate Short-Term Disability Insurance into Your Benefits Package If you're considering adding short-term disability insurance to your employee benefits, follow these steps to ensure a smooth integration: Assess Employee NeedsSurvey your employees or analyze past leave requests to determine whether short-term disability insurance would be valuable for your workforce. Choose the Right CoverageWork with an insurance provider or a professional employer organization (PEO) like Group Management Services (GMS) to find a plan that aligns with your company's budget and employee needs. Communicate the Benefits ClearlyEnsure employees understand: What the coverage includes How to enroll How to file a claim when needed Partner with a PEO for Simplified Benefits AdministrationManaging short-term disability insurance and other benefits can be complex, especially for small and mid-sized businesses. GMS simplifies benefits administration by: Connecting you with top insurance providers Handling enrollment and claims processing Ensuring compliance with federal and state regulations How GMS Can Help At Group Management Services (GMS), we specialize in helping small to midsize businesses implement cost-effective, comprehensive benefits packages that include short-term disability insurance. Why partner with GMS? Competitive rates: Access to top insurance providers for competitive rates. Tailored solutions: Customized benefits solutions tailored to your company's needs. Big business health benefits: Greater buying power through economies of scale. Our Master Health Plan (MHP) offers access to one of the largest national networks, providing significant savings on both employee and family premiums. Offering short-term disability insurance is a smart investment that enhances your company's appeal, supports employee well-being, and creates a more productive workplace. Let GMS help you design and implement a benefits package that works for your business and your employees. Ready to learn more? Contact GMS today to explore your options!