Short-Term Disability Insurance

The short-term disability coverage (also known as weekly indemnity benefit) is put in place to enable compensation of the employees for loss of income due to time away from work due to sickness or accident. If you are an employer that offers the coverage, you may opt-out of the Employment Insurance Sickness Benefit (E.I) so that you reduce the premiums for the E.I. For you to opt out, the Short Term Disability plan must be better if not equal to E.I plan. The main characteristics of a short-term disability plan include:

Elimination Period 

The elimination period is put in place to cut the administration costs for claims means for the short durations. Most of the Short Term Disability plans cover the employee from the first day of hospitalization to the 15th day after accidents. The short elimination period results in high premiums. In the period, the employee gets cover from the employer salary continuance plan.

Benefit Schedule 

The schedule of getting the benefits depends on the set percentage of the earnings before the disability. The tax status of the benefits is considered when the schedule is drawn up. The benefit is taxable when it is received. However, if the member contributed the entire premium or the employer pays on behalf of the employee, the benefit is not taxed. The taxable Short Term Disability is based on higher percentage of pre-disability gross earnings that the non-taxable one.

Benefit Maximum 

Two maximum types apply to the Short-Term Disability benefits- an overall benefit maximum and non-evidence maximum. Insurance volumes, nature of business and size of the group, determines the maximums.

The amount of cover provided by the insurer without a requirement for evidence of good health is called non-evidence maximum. The Short-Term Disability plan has a high non-evidence maximum to enable employees to get minimal coverage. (Income levels are checked). Those that qualify for the excess of non-evidence maximum require medical evidence (and income verification). The overall maximum is the maximum compensation under the contract.

Benefit Period 

This is the maximum period for the payment of Short-Term Disability benefits. This period is usually 15 weeks like E.I benefit period, 17 weeks and up to 26 weeks. The Short-Term Disability plan can also be integrated with Long-term disability (LTD) benefit. It helps cover the elimination period in the Long-Term Disability.

Definition Of Disability 

To be eligible for Short-Term Disability benefits, you must be unable to perform vital duties in your occupation and be under the watch of a physician.

Employment Insurance Integration

Employment Insurance sickness plan is usually the second payer in most of the cases. It mostly pays from the 15th day to 15 weeks. When integrated with Short-Term Disability, the E.I benefit is carved out so that the Short-Term Disability pays before and after E.I benefits period. The Short-Term Disability can also be wrapped around the E.I in that it pays when one is not qualified for E.I payments. In both of the cases, you cannot qualify for E.I Premium reduction as E.I is paid in 15 weeks.