3 Differences Between Long-Term and Short-Term Disability

Disability insurance provides partial income for someone who cannot work due to an illness or injury. Depending on your circumstances, you may qualify for short-term or long-term disability insurance. Both types serve specific purposes. By going over these differences, you can better understand your options and know which one is right for you if you become ill or injured in the future. Doing the research now will make it easier for you in the future to correctly file for long-term or short-term disability.

1- The Average Benefit Period of Short-Term and Long-Term Disability Insurance

Short-term disability insurance is used when you anticipate a temporary absence from work due to pregnancy, rehabilitation after surgery, mental health issues, or an accident. The average benefit period is three, six, or twelve months. The elimination period refers to the amount of time between the onset of your injury or illness and when you can begin receiving benefits from your insurance policy. For short-term disability insurance, the average elimination period is 14 days.

Long-term disability insurance is for situations during which you cannot work for an extended period. These situations may be due to a severe injury or chronic illness like cancer that will significantly limit your work capacity for a lengthier period of time than short-term disability insurance can cover. The average benefit period for long-term disability insurance is two, five, or ten years. The elimination period for long-term disability claims is typically 90 days, beginning on the date of your diagnosis or injury.

2- The Differences in Income Coverage Levels

Although both types of disability insurance allow flexibility in the amount of coverage you can select, short-term disability usually pays out more because it covers temporary conditions. With short-term disability insurance, the insurance company has a lower risk of paying out a substantial amount of money, which is why premiums are often lower. In some conditions, short-term disability insurance can cover up to 70% of your anticipated income. Long-term disability insurance covers severe illnesses or injuries, so the premiums are usually higher. In general, long-term disability insurance pays out benefits between 40-70% of your income for a longer time frame.

3- Part-Time Employees and Disability Insurance Eligibility

Whether or not a part-time employee is eligible for either type of insurance coverage depends on the individual company, the hours worked, and the length of time the employee has worked there. In some cases, part-time employees may qualify for short-term disability coverage. Most long-term disability insurance policies require that employees work at least 30 hours per week at the time of illness or injury to qualify.

If you file a disability claim and receive a denial, you can still contest it. First, make sure to review the denial letter and gather as much medical evidence as you can that will support your case. Then file an appeal. You may also consider speaking with a disability lawyer to help you navigate the process. In some situations, you may need to file a lawsuit in federal court to get the coverage you deserve.