Short-Term and Long-Term Disability Insurance


Getting Benefits

If you get injured or become ill, contact your human resources department or insurance agent as soon as possible to begin the application process. You are eligible to get disability benefits if you cannot work for any health-related reason; your injury or illness does not have to be work-related.

Once you apply for cash benefits from your disability insurance plan, there is usually a waiting period before you can begin to get benefits. For Short-Term Disability Insurance (STD), the waiting period is typically a few days, but can be as long as a month or more. Many policies also require you to take your sick days before you are allowed to collect your benefits.

The Long-Term Disability Insurance (LTD) waiting period typically is at least 30 days, but can be as long as a year. Many disability insurance policies offer shorter or longer waiting periods. Generally, the lower your premium is, the longer the waiting period will be.

Once the waiting period is complete, you should get your benefits check about a month later.

The Benefits

Each policy has a different way of figuring out how much money you will get. Some send you a set dollar amount, while others give you a percentage of the wages you made before becoming disabled. Depending on your plan, bonuses, tips, and commissions from your job may or may not be included in the calculation of your wages.

Depending on how your disability insurance is paid for, your benefits may or may not be taxed when you get them. If your employer paid your premium, you usually will have to pay taxes on your benefits. If you paid for an individual policy with your own taxed income, you probably won’t have to pay taxes on the benefits. Contact your income tax professional or human resources department for more information.

Public Disability Benefits

While you are getting private disability benefits, you may want to apply for public benefits like Social Security Disability Insurance (SSDI). For example, if you know that your LTD will soon end, it is important for you to apply for SSDI as soon as possible.

If you get benefits from other programs, like SSDI or Supplemental Security Income (SSI), at the same time as you get STD or LTD, most private disability insurance policies will reduce your benefits by the amount those benefits programs pay you. For example, if your LTD benefits check is $2,000 per month and you begin to get an SSDI check for $800 per month, your LTD benefits will be reduced to $1,200 a month.

Some LTD policies even require you to apply for SSDI. Once you are approved for SSDI, your private disability insurance benefits may not be automatically or immediately reduced. As a result, your disability insurance policy provider may overpay you. If you are overpaid, you will be required to pay back the difference.

The advantage of being enrolled in SSDI or SSI while getting disability insurance is that they can make you eligible for Medicare or Medical Assistance (MA), health coverage which isn’t provided by disability insurance.

Health Coverage

STD and LTD insurance gives you money, not health coverage. For the first 12 weeks that you are unable to work due to a medical condition, you may still be entitled to be covered by your employer's benefits (including your employer's health plan) under the Family and Medical Leave Act (FMLA).

In order to be entitled to continuing coverage, you must still be employed at your organization. The FMLA allows you to get up to 12 weeks of unpaid leave for a medical condition or for care for a family member with a medical condition if you have been employed at the organization for at least 12 consecutive months prior. During the leave, your employer must continue to offer you the health benefits they offered prior to the leave.

Even though this leave will be unpaid, during your FMLA leave you can still get paid if you use sick time, vacation time, or you get STD benefits. Click here to read more about the FMLA. After the 12 weeks of leave, your employer has the right to let you go if you are still unable to return to work. If you want to continue to get your health coverage through your employer’s health plan after you are laid off, you can continue that coverage by paying out of pocket for COBRA.

Another option for private health coverage is to find an individual plan on MNsure. Depending on your situation, the government may help pay for your premium for an individual plan through tax subsidies. Or, you may become eligible for public health coverage like Medical Assistance (MA), Medicare, or MinnesotaCare. To learn more about different health coverage possibilities, see DB101's Health Care Coverage section.

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