What is short-term disability insurance?
Short-term disability insurance is a type of insurance that offers some compensation to replace income lost due to an injury or illness that keeps you from working. Childbirth is considered a qualifying reason. This type of insurance only lasts for a short time. Short-term disability is different from workers’ compensation, which offers compensation due to a work-related illness or injury.
Although employers can offer their workers short-term disability insurance, in the United States, they are not required to by law. However, they can receive a federal tax deduction if they do, so many include it in their benefits package. Some states mandate companies to offer this kind of coverage.
Typically, if your employer doesn’t offer short-term disability insurance, you can purchase it privately. However, this can be expensive, ranging from between 1 and 3 percent of your annual income.
Because the amounts paid and lengths of coverage vary, it’s important to talk to your insurance provider or human resources (HR) department about the specific policies. If you want to consider this option, it’s a good idea to find out if short-term disability is available before you conceive. You become ineligible to apply for it after you’re already pregnant.
Coverage for short-term disability usually begins between 1 and 14 days after it has been approved. It’s common for employees to use their sick days before short-term disability kicks in.
Using short-term disability for maternity leave
There are several reasons why using short-term disability for parental leave can be an important part of your financial plan. It’s vital to apply for short-term disability long before you begin packing your bag for the hospital.
Unpaid leave can be an excellent choice for families who can afford it, giving them additional time to bond with their baby. This time allows new mothers to rest, recuperate, and heal after delivery. It also provides extra time to organize your home, look for the right daycare, and prepare to return to work.
It’s vital to apply for short-term disability long before you begin packing your bag for the hospital.
Most families are eligible for 12 weeks of unpaid parental leave, but few families can afford to go 12 weeks without an income. The average physical recovery time for a vaginal birth is six to eight weeks (six weeks to a year for a C-section), so you need a lot of that time to heal and bond with your new baby. Returning to work too soon can also take a toll on new parents. For all these reasons, applying for short-term disability for parental leave is a smart choice.
Using short-term disability insurance for parental leave is standard practice, as pregnancy is considered a preexisting condition. Many policies also specifically address parental leave. Each plan will explain how much time off is offered, which can vary depending on birth circumstances.
FMLA vs SDI
FMLA refers to the Family and Medical Leave Act, which provides some employees with up to 12 weeks of unpaid, job-protected leave per year. But how does it compare with short-term disability insurance (SDI)?
FMLA provides up to 12 weeks for families who have recently had a child. It also requires that their group health benefits be maintained during the leave. FMLA can be used in the following circumstances:
- For the birth and care of a newborn child
- For placement of a child for adoption or foster care
- To care for an immediate family member (i.e., spouse, child, or parent) with a serious health condition
- To take medical leave when you are unable to work because of a serious health condition
Employees are eligible for leave if they have worked for their employer for at least 12 months, for at least 1,250 hours over the past 12 months, and at a location where the company employs 50 or more employees within 75 miles. Whether an employee has worked the minimum 1,250 hours is determined according to Fair Labor Standards Act principles.
There are exemptions to the law related to company size, length of employment, and level of income. Companies with fewer than 50 employees are not eligible for FMLA. Similarly, employees who have worked with a company for less than 12 months or who make income in the top 10 percent of wages are generally not eligible for FMLA.
FMLA provides up to 12 weeks for families who have recently had a child. It also requires that their group health benefits be maintained during the leave.
If both parents work for the same company, the 12 weeks can be divided between them and counted as a total accumulation of both workers’ time off. So, for instance, you could take four weeks, which would leave eight weeks available for your partner, or vice-versa.
Short-term disability insurance, on the other hand, does not apply to both parents simultaneously. SDI can be taken for 12 weeks, but it can also be taken for up to six months. This depends on your individual company and its specific policy.
Another key difference is that if SDI is provided by your employer, it is paid leave. Unlike FMLA, which is unpaid, SDI can pay you a portion of your wages for the entire length of time it is taken. Typically, this amounts to between 40 and 80 percent of your usual take-home pay. Because it is paid, SDI may also be subject to income tax.
How to apply for short-term disability for pregnancy
If you’re wondering how to get short-term disability approved while pregnant, the process begins by talking with your human resources department to know exactly what your coverage options are.
You’ll want to find out if there is a state mandate for family leave time and if FMLA is available. Benefits may also depend on whether this is your first or second birth.
You should also ask questions about any policies and restrictions for using vacation or sick time along with unpaid time. Many companies require employees to use vacation or sick time before unpaid leave kicks in. Finally, you will also want to find out who pays your premiums when you take leave. You want a clear sense of what happens to your benefits while you’re on leave, regardless of whether anything changes in your employment status.
Here are some more suggestions for making your parental leave the best it possibly can be:
- Early in your planning process, talk to HR to learn all the details about your parental leave. What options do you have? Confirm that short-term disability benefits consider pregnancy to be a preexisting condition where you work. Ask specifically if short-term disability covers parental leave. Getting answers to these questions is an important first step in planning your options.
- Talk with your partner about what you can afford, then discuss what you know with your employer. Again, this is important to do ahead of time. The more time you have, the more relaxed you will feel about your upcoming leave and postpartum experience.
- Learn your company’s policy around parental leave. Some companies are more understanding than others, and this may affect when you decide to share your news with them, as well as future employment plans.
- Early conversations with your boss and fellow employees can help ensure your duties will be covered while you’re away. With enough time, you may be able to help train the person who will cover for you. You can discuss any project insights and suggested strategies for covering your workload effectively. This can help put both you and your company at ease, and provide a smooth transition when you return.
Remember that you want to discuss short-term disability before you’re pregnant, not after delivery. The earlier you can reasonably begin planning, the better.
It’s important to apply for short-term disability insurance as early as possible to ensure you receive the benefits. Don’t wait until after you have given birth, or you won’t qualify. Speak early on with your HR representative to learn the details of your benefits, as well as other parental leave options such as unpaid time off.