The term short-term disability insurance refers to a benefit program that provides income to a covered individual unable to work due to an injury or illness. Short-term disability insurance can be purchased through traditional insurers, or it may be offered through a local government agency.
Also known as temporary and state disability insurance (SDI), short-term disability insurance provides the insured with income if they are unable to work due to a covered injury or illness. While short-term disability insurance can be purchased from traditional carriers, several states also offer their residents this benefit too. The states of California, Hawaii, New Jersey, New York and Rhode Island all have programs.
Typically, the money required to provide this benefit comes from a combination of employer and employee taxes. Eligibility may include a combination of:
- Minimum Wage Requirements: the individual must meet certain wage requirements in order to be eligible to receive benefits. For example, the insured must work a minimum number of weeks or earn a minimum amount of money in the prior twelve months.
- Non-Duplication of Benefits: the compensation paid may be reduced if the individual is receiving benefits through another program.
- Medical Limits: in order to receive benefits, the insured may need to pass certain minimum medical requirements. For example, the claimant must be disabled for a certain number of days before benefits are provided. Individuals may also be required to prove they are under the care of a licensed medical professional.
- Duration: as the name implies, this type of insurance will only provide the recipient with a source of income for a limited number of weeks or months.
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