Short-Term vs. Long-Term Disability Insurance: What's the Difference?
Updated: Feb 22
Open enrollment can be a difficult time for both employers and employees. Employers, for example, may deal with additional paperwork and time-consuming open enrollment and benefits administration processes. Meanwhile, employees may spend extra time searching for the best options without their employer's support, or not understand how to use the enrollment tools provided to them.
In an effort to simplify this process, SynchronyHR is sharing a series of employee benefit product overviews that can help your employees better understanding the benefit options available to them. This specific post in this series focuses on short-term (STD) and long-term (LTD) disability insurance.
Disability Insurance Coverage
Illnesses and injuries are often unavoidable, with some taking employees out of work for an extended period of time. Some employees will try to rely on workers' compensation or government benefit programs to get through these situations. But, workers' compensation can limit the individual's options and social security can be hard to qualify for.
That's why many employees turn to disability insurance, which can provide this coverage and can coincide with other benefit programs.
Disability can pay up to 50 to 70 percent of your average salary depending on your circumstances. There are two different coverage options available for individuals opting for disability insurance: short-term (STD) and long-term (LTD).
Short-Term Vs Long-Term
The duration of time in which you receive coverage is called the benefit period.
Short-term disability insurance covers, as stated, a short period. This often looks like around three to six months, but might be able to last one year.
Long-term disability insurance can cover a far longer period, such as five to 20 years, or when the disability ends. In certain cases, when it comes to things like military injuries, it can last until retirement age. The average long-term disability claim can range from three to five years.
Making the Choice When selecting a coverage option, ask yourself how long you might need the benefits to last if you were to become injured or ill. Or ask yourself how long you could go without a paycheck from your employer.
While there is no telling how serious your injury or illness might be, there is always a chance that you may miss months, or even years, of work. This may depend on preexisting conditions or risks on the job, which are variables to consider.
The Elimination Period
Another component of disability insurance is the elimination, aka the waiting period. This period is the length of time between the start of an injury or illness and receiving benefit payments through the insurance provider. During this time you, the policyholder, are responsible for required care.
For short-term policies, this period can last around 14 days. Long-term disability, however, can range from 30 days to two years to solidify, with the average case taking around 90 days to build.
When selecting your policy, be sure to also consider the length of the coverage's elimination period and your ability to pay for care during that time. The longer the elimination period, the less expensive the policy. But, it also means that you have to wait longer to receive those benefits.
As stated in the introduction, business owners that work with an HRO can provide their employees with benefits, such as short and long-term disability, along with professional assistance.
Most HROs have experts on hand to guide employees through their benefit selection, and support their use of the plans. Those that are having trouble making plan selections, or understanding coverage options can look to these professionals for help.
Working with SynchronyHR
If you are a business owner looking to provide your employees with large corporate benefits, along with enrollment support, consider working with SynchronyHR.
Contact us today to learn more about our robust benefit offerings.