How Long Do Short-Term Disability Benefit Payments Continue?

Dan Suprenant is a senior director of Insurance Solutions at Northwestern Mutual.

You probably insure your home, your car and your health. But it can be easy to overlook insurance for your ability to earn an income. Given the tremendous value of a lifetime of work earnings, this is important protection. Disability income insurance provides that essential protection if an illness or injury prevents you from working.

While you might think you’re healthy and would be able to shoulder anything that comes your way, the chance of a disability is more common than many people realize. According to the Social Security Administration, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year before they reach their normal retirement age because of a disabling condition.

How long do short-term disability insurance payments typically last?

Short-term disability (STD) insurance usually provides weekly income replacement benefits for either 13 or 26 weeks, usually just long enough to cover you until long-term disability insurance benefits kick in. Once they begin, STD benefit payments are typically deposited into your bank account on a weekly basis. (Keep in mind, if your employer pays your STD premium on your behalf, you’ll most likely need to pay taxes on the benefit payments).

The maximum length of time during which you can receive weekly benefit payments from the STD insurance company is called the benefit period, and it’ll be specified in your STD contract. Your contract will also explain if there’s an elimination period before the benefits begin.

The elimination period, or waiting period, is the number of days you must be disabled before your STD benefit payments begin. For a typical STD plan, the elimination period is seven or 14 days after your disability begins. Some STD policies waive the elimination period for disabilities involving treatment of cancer, overnight hospital stays or outpatient surgeries—providing quicker financial relief.

You can use your STD benefit payments for anything you wish, most likely to pay ongoing bills and maintain your lifestyle. It can prevent you from depleting your savings, tapping into investments, or pausing contributions to your retirement accounts while you’re unable to work.

How long is my job at my place of work protected while on short-term disability?

While short-term disability insurance is a great way to continue some of your income while you’re temporarily unable to work, it doesn’t protect your job. But the federal law called the Family and Medical Leave Act may protect your job. In certain situations, it requires that an employer give you leave and hold your job for 12 weeks to manage a serious health condition or care for a loved one with a serious health condition.

Does a short-term disability payout automatically turn into a long-term disability payout?

No, receiving short-term disability benefits does not automatically mean you will also be approved for long-term disability (LTD) insurance benefits. LTD insurance coverage provides separate benefits with distinct criteria, waiting periods and benefit durations. Even if your STD and LTD coverages are with the same insurance company, the specific details of those two policies will be applied to your disability situation to determine if and when benefits will be paid on either, both or neither coverage.

Where do I get short-term disability insurance?

The overwhelming majority of people get STD insurance coverage through their place of work. While the STD premiums are usually paid by the employer, it is also possible to have the premium paid in part or in full by the employee. Whatever percentage of the premium is paid for by the employee, the same percentage of any benefits paid would generally be tax-free.

What are the benefits of short-term disability insurance?

The key benefits of STD insurance are:

1. Fast coverage: Benefits typically kick in relatively quickly.

2. Often employer-provided: Most people get coverage through their work at little to no cost—and in some instances may have the opportunity to purchase additional coverage on their own.

3. Provides a bridge: It can provide income for bills and to maintain your lifestyle while you’re waiting for long-term disability insurance benefits to begin.

Can I use short-term disability insurance for maternity leave?

In most cases, short-term disability insurance provides coverage during a maternity leave.

If you’re thinking about having a baby, it’s a good idea to check on your disability benefits through work. For example, a plan may pay a six-week benefit for a natural birth and eight or nine weeks for a C-section. If you were recently hired, be sure to note how long you need to work for your employer before you become eligible for coverage.

What are the benefits of long-term disability insurance vs. short-term?

Compared to STD insurance, LTD insurance provides protection for your paycheck if you're unable to work for a longer period of time. As long as you qualify, you can collect on long-term disability insurance until you’re no longer disabled or until your policy’s coverage ends (often a typical retirement age like 65 or 67).

Other considerations for disability insurance coverage

Because it protects what’s probably your most valuable asset—your ability to earn an income— disability insurance is an important part of your financial plan. It protects the income that will maintain your lifestyle and fund your goals over your lifetime.

Many employers offer long-term disability insurance at little to no cost to their employees. However, in many cases, employer long-term disability insurance will cover only a portion of your income—typically 40 to 70 percent. Also, benefits are usually taxed, meaning you’ll take home even less.

That’s why people often purchase extra coverage called supplemental individual disability income insurance. And because many people would find it difficult to sustain their standard of living with a 50 percent reduction in pay, having more than one policy can be wise.

Because there are many aspects to disability insurance, your Northwestern Mutual financial advisor can be a valuable partner. They can recommend the right type and amount of coverage for you. Your advisor can also explain how disability insurance can prevent you from depleting your savings, tapping into investments or pausing contributions to your retirement accounts.

Not all contracts and optional benefits are available in all states. Disability insurance policies contain some features and benefits that may not be available in all states. The ability to perform the substantial and material duties of your occupation is only one of the factors that determine eligibility for disability benefits. These policies also contain exclusions, limitations and reduction-of-benefits provisions. Eligibility for disability income insurance, additional policy benefits and qualification for benefits is determined on a case-by-case basis. For costs and complete details of coverage, contact your Northwestern Mutual Financial Representative or your group plan administrator.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life insurance, disability insurance, annuities, and life insurance with long-term care benefits).