In construction and other skilled trades, employee illness and injury is a common occurrence. As a result, many employers provide short term disability insurance that protects their employees when they cannot work. Since most workers’ savings might last only a few months of missed paychecks, employees are increasingly choosing companies that offer the best insurance packages.
What is Short Term Disability Insurance?
Short term disability insurance is a type of coverage that will pay a percentage of an employee’s salary if they cannot perform the duties of their job because of illness, injury or the birth of a child. The insurance benefit amounts to about 40 to 60 percent of an employee’s weekly gross income. The exact size of the benefit varies depending on the chosen plan.
Many contractors across the country have short term disability policies available for their employees. New York, New Jersey, Rhode Island and Hawaii require employers to provide at least 26 weeks of short term disability coverage. In California, employers must provide 52 weeks.
What is the Definition of a Short Term Disability?
A short term disability is defined as when an employee is unable to work in their chosen occupation due to an illness or injury.
What does Short Term Disability Insurance Cover?
Disability coverage insures employees for illnesses and injuries that do not occur on the job. Although workers compensation insurance provides coverage for work-related incidents and accidents, 63 percent of all disabling injuries and illness occur outside of work, according to the National Safety Council.
Short term disability coverage usually begins after an employee’s sick leave is exhausted. Workers may be eligible for as little as nine weeks and as long as one year of coverage. Typically, the length of short term disability insurance is based on how long an employee has been working at a company.
Workers who receive short term disability benefits typically suffer from issues, such as mild illnesses.
Short Term vs. Long-Term Disability Insurance
Long-term disability insurance takes effect after the benefits of a short term policy are exhausted. It typically covers about 60 percent an employee’s income.
Long term disability can last anywhere between one year and the rest of a policy holder’s life. The average long term claim is about 35 months. Employers usually have both short term and long term disability insurance simultaneously.
Enrolling in disability insurance is a smart business strategy to attract and retain high-quality employees. Whether you own a growing or established contracting company, you can choose from a variety of insurance coverages that will fit your company’s needs.