Do You Get Paid for the Waiting Period of Short-Term Disability?

Short-term disability (STD) insurance provides a portion of an individual’s income when an illness or injury temporarily prevents them from working. A common feature of these policies is a defined “waiting period,” a specific timeframe before benefits begin.

Understanding the Waiting Period

The “waiting period,” also known as an “elimination period,” refers to the initial days of a disability during which short-term disability benefits are not paid. It starts on the first day an individual cannot perform job duties due to their health condition. This period operates similarly to a deductible, but it is measured in time rather than a monetary amount. The primary purpose of this waiting period is to manage risk for the insurer and discourage claims for very brief absences from work.

Income During the Waiting Period

Individuals do not receive payments from their short-term disability policy during the waiting period. This is a standard design element across most private plans. Income alternatives are necessary to cover expenses during this unpaid timeframe.

Many employers allow the use of accrued paid time off (PTO), sick leave, or vacation time to bridge this financial gap. Some employers may have internal policies that provide income during the waiting period, though this is less common.

Certain states have temporary disability insurance programs, which may have different waiting period rules or offer benefits that could overlap with a private policy’s waiting period. These state programs are typically funded through employee payroll deductions.

Factors Determining Waiting Period Length

The length of a short-term disability waiting period is dictated by the terms of the individual or group STD insurance policy. Waiting periods commonly range from seven to 30 days, with 14 days being a frequent duration. For employer-sponsored plans, the employer often selects the waiting period as a component of the overall plan design. The nature of the disability can also influence this period; some policies differentiate between an illness waiting period and an accident waiting period, with the latter sometimes being shorter or even non-existent. In states with mandated short-term disability programs, the waiting period length may be set by state law.

Preparing for the Waiting Period

Individuals can take proactive steps to mitigate the financial impact of a short-term disability waiting period. Reviewing the terms of one’s short-term disability policy, including the waiting period length, helps understand potential income gaps.

Building an emergency fund is a strategy to cover living expenses during any period without pay. Financial professionals recommend saving three to six months of essential living expenses in an accessible account.

Understanding an employer’s policies regarding paid time off or sick leave is beneficial, as these can be utilized to ensure continued income during the waiting period. Communicating with human resources or a benefits administrator can provide clarity on company-specific procedures and available resources. Researching whether one’s state offers a mandated short-term disability program can help identify supplementary benefits or different rules.