Short Term Disability

Group Short Term Disability (STD) is an employer provided benefit that is designed to assist an employee in replacing income, on a short term basis, lost as a result of a disability. The method in which most insurance companies use to calculate the percentage of replaceable income usually falls in the range of 60% of gross weekly income. The goal being that the STD plan is designed to replace a portion of an employees lost income that is close to the employee’s after-tax take home pay. The following are some provisions that make up the bulk of a Short Term Disability contract:

Maximum Covered Salary – This is determined by the employer and the total volume of salary of the employees in the company.

Elimination Period – This is the amount of time that must pass before a disabled employee becomes eligible for benefits. This can be anywhere from the 1st day of disability to the 30th day

Duration of Benefits – This represents how long benefits will be payable, i.e. 4 to 26 weeks.

Own Occupation Protection – This feature ensures that if an employee is disabled, and cannot perform the material duties of his or her own occupation that they were trained for–they will still be considered totally disabled. This can be as short as 2 years or as long as standard retirement age (ADEA).

Residual Disability – If an employee is disabled and then returns to work, and experiences an earnings loss of 20% or greater, the employee will still receive a benefit to offset this earnings loss.