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Short-term disability insurance can help plug a temporary pay gap

A qualifying illness or injury can interrupt a paycheck. Short-term disability insurance may replace part of it, but the policy fine print calls the shots.

Sal Moretti

By Sal Moretti · Money Reporter

4 min read

Short-term disability insurance may replace part of your income when a qualifying non-work-related illness, injury or medical condition temporarily prevents you from working. MetLife says the money is paid directly to the claimant and can be used for everyday expenses such as rent, mortgage payments and groceries.

It is commonly offered through an employer, though MetLife says an individual policy may be available if an employer does not offer coverage. Work-related illnesses and injuries generally fall under workers’ compensation rather than short-term disability, according to MetLife.

How payments usually work

A claim generally requires a covered condition, proof that it prevents work and insurer approval. MetLife says some policies require medical documentation from a doctor, therapist or other medical professional; Principal says its claims process can require medical records or other proof of disability.

There is usually a delay before benefits start. This is the elimination period, and its length depends on the plan. Principal describes an eight-day elimination period for its coverage, while MetLife gives 14 days as an average example for short-term disability.

Benefits replace a portion of pre-disability earnings, not necessarily a full paycheck. MetLife says weekly payments generally range from 40% to 70% of pre-disability earnings and may last about nine weeks to six months, while Principal describes benefits usually equal to 50% to 60% of salary under its coverage. Exact amounts and benefit periods vary by policy.

Employer coverage may be employer-paid, employee-paid or shared-cost, MetLife says. Principal says group coverage through an employer may be offered at a lower cost than individual coverage, with premiums deducted from a paycheck.

What may qualify, and what can block a claim

MetLife lists serious illness, accidental injury, pregnancy and childbirth, surgery recovery and mental-health conditions among situations that may qualify. Principal also lists childbirth, certain injuries, mental disorders, prolonged illness and surgery recovery. These are policy-dependent examples, not coverage promises.

Exclusions and limitations can change the answer. MetLife says policies may limit coverage for pre-existing conditions. State Farm’s disclosed policy forms, for example, exclude normal pregnancy and childbirth while covering physician-diagnosed pregnancy complications as sickness, and include a pre-existing-condition limitation. State Farm also says its terms may vary by state.

State disability insurance or paid medical leave can also affect the payment. MetLife says those benefits may offset a short-term disability payment, reducing what the private policy pays.

The policy terms to compare

  • Benefit amount: the percentage of earnings or dollar amount paid, plus any maximum.
  • Elimination period: how long you must wait before benefits begin.
  • Benefit period: the maximum time the policy pays for a disability.
  • Definition of disability: the plan’s standard for qualifying. Principal, for example, uses an own-job standard and also describes eligibility tied to being unable to earn 80% of pre-disability income while working in a modified capacity.
  • Exclusions and limitations: especially pre-existing-condition rules and provisions for the health risks most relevant to you.
  • Offsets: whether state disability or paid-leave benefits reduce the insurer’s payment.

Check whether savings, sick leave or other benefits can cover the waiting period, then compare the expected benefit with essential bills. Review the policy or plan document for the exact coverage terms before relying on it.

Short-term disability versus long-term disability

Short-term disability is designed for a temporary inability to work and usually begins after a shorter waiting period. Long-term disability is designed for a more extended absence; MetLife says benefits may last for years or up to Social Security normal retirement age, depending on the policy.

MetLife says long-term disability benefits may begin after short-term disability benefits end. The two coverages have separate terms, so check both policies if an absence could last longer than a short-term plan’s benefit period.

Frequently asked questions

Can short-term disability benefits be reduced by state disability or paid-leave payments?

They can be. MetLife says payments from a short-term disability policy may be offset by state-mandated disability or paid medical leave benefits, which can reduce the policy payment. The plan document sets the exact coordination rule.

Does short-term disability cover pregnancy or mental-health conditions?

It may, depending on the policy. MetLife and Principal list pregnancy, childbirth and mental-health conditions among examples that may qualify. State Farm’s disclosed policy forms show how terms can differ: they exclude normal pregnancy and childbirth but cover physician-diagnosed pregnancy complications as sickness.

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