Disability insurance is one such crucial safeguard, providing income support if you’re unable to work due to illness or injury.
When planning for the unexpected, it’s essential to understand the options available to protect your financial well-being. Disability insurance is one such crucial safeguard, providing income support if you’re unable to work due to illness or injury. At Malden Solutions, we help clients navigate these options. Two primary types of disability insurance are short-term disability (STD) and long-term disability (LTD). Both offer wage replacement but serve different needs. Let’s explore the key differences.
Benefit Period
- Short-Term Disability (STD): STD policies generally cover a shorter period of time, typically ranging from 3 to 12 months, depending on the policy. This insurance is designed to help you manage temporary conditions, like recovery from surgery or injury.
- Long-Term Disability (LTD): LTD coverage, on the other hand, kicks in after an extended period and lasts much longer—up to 2, 5, or 10 years. In some cases, the benefits can even extend for life.
Elimination Period
- Short-Term Disability: The elimination, or waiting, period for STD is usually brief. Most policies have a waiting period between 7 to 30 days, with 14 days being the most common. This means benefits start soon after your disability begins.
- Long-Term Disability: LTD policies typically have a longer elimination period of about 90 days, though policyholders can choose a longer waiting period to reduce premium costs.
Benefit Amount
Both short-term and long-term disability policies offer similar benefit amounts. They typically cover 40-80% of your lost wages, helping you maintain financial stability while recovering.
Cost of Coverage
Surprisingly, the cost of both STD and LTD policies is similar. Premiums typically range between 1-3% of your pre-tax salary. However, opting for longer elimination periods or customized policies can help lower these costs.
Where to Get Coverage
Both types of insurance can be obtained through employer-sponsored plans, supplemental policies, or private coverage. Many businesses offer disability insurance as a benefit, and some states even require it. If your employer does not provide it, private options are available to ensure you have the coverage you need.
Eligibility for Benefits
- Short-Term Disability: Most STD policies cover any medical condition that considers an employee unable to perform their specific job duties, as determined by a healthcare professional. Coverage often applies even for part-time employees, depending on the hours worked and how long they’ve been employed.
- Long-Term Disability: LTD policies can be more restrictive. Most policies require you to be unable to perform any job, depending on the policy’s definition. In most cases, employees must be employees that work between 30-35 hours per week to qualify.
Employer Contributions
Both short-term and long-term disability policies may be offered as employer-paid benefits, although this depends on the employer and the state’s specific requirements. In some cases, states mandate that employers carry disability insurance for their employees, making it important to check local regulations.
Whether you need temporary assistance to recover from an injury a long-term solution for more serious conditions, Malden Solutions is here to help you find the right plan for your unique needs. Contact us today to explore your options!
Find the Right Health Insurance Solutions for Your Needs
Malden Solutions has a wealth of expertise in providing employer insurance solutions, HR solutions, and individual insurance solutions to businesses both big and small. Our team of seasoned professionals can help you navigate the rapidly changing world of insurance with ease. We partner with businesses and individuals throughout the country to provide our dedicated services for employee benefits but also work within our surrounding communities in Maryland, Northern Virginia, and Washington, D.C. Contact us today to learn more about how we can provide effective, dynamic solutions for your business. Stay connected with us on Twitter, Facebook, and Linkedin