Define short term disability

Written by rod howell
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Define short term disability
Suffering a short term disability can cost you money. (money image by cico from Fotolia.com)

A short term disability is a medical condition that an employee suffers and prevents them from being able to work. There are several types of illnesses and injuries that can lead to a short term disability. However, there are insurance plans available to cover individuals who suffer a short term disability, helping them until they are able to get back to work.

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Types

Any injury or illness that keeps a person from work for a temporary period of time is considered a short term disability. This can include injuries such as broken bones, sprained or strained ligaments, arthritis and back pain. Illness and medical conditions such as the flu, cancer, diabetes, heart attacks and pneumonia can also be considered a short term disability depending on its severity. Maternity leave is also classified as a short-term disability.

Facts About Short Term Disability

According the Social Security Administration, three in 10 workers that are 20 years of age will experience a disability at some point of their working lifetime. The most common causes of short term disabilities are medical conditions such as diabetes and heart attacks followed by back pain and arthritis, according to the Council for Disability Awareness.

Considerations

A condition that is considered a short term disability will only last for a temporary period of time. Most short term disabilities last for a few weeks to a few months. Conditions that are scheduled to last longer than two years are typically not considered short term disabilities, but rather long term disabilities.

Short Term Disability Insurance

To protect them from financial loss due to a short term disability, employees may opt to buy a short term disability insurance (STDI) policy. Plans can be bought individually or employers may provide coverage as part of their benefits package. Most plans provide coverage and pay benefits for up to two years. There may be a waiting period before any benefits are paid which can be waived or last up to a couple weeks.

Warning

Depending on how the premiums for short term disability insurance policies are paid, benefit amounts can be taxed by the IRS. If the plan is individually owned and premiums are paid with after tax dollars, the benefits will not be considered taxable income. However, if an employer pays the premiums, then disability insurance payments made to the employee will be taxed. Also benefit payments will not cover an employee's entire salary (typically 60 to 70 per cent, according to MetLife). This is to prevent workers from not having an incentive to return to work.

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