Short term disability insurance (STDI) is an employee benefit that hourly workers easily disregard. More popular and controversial employee benefits such as healthcare, educational plans, and retirement packages get more attention from hourly workers and other employees. As such, many people don’t even know what short term disability is, what the benefits are, and how to qualify for it.
However, short-term disability benefits exist for a reason. While it may seem complicated at first, going through the details is essential. It’s important to do away with different myths and uncertainties to get the most out of your employee benefits. Here are 5 things hourly workers get wrong about their short term disability insurance.
Things Hourly Workers Get Wrong About Short Term Disability Insurance
#1. Short term disability insurance is the same as medical coverage.
When shopping and signing up for employee benefits, it’s easy to brush off short term disability insurance as the same thing as medical coverage. In the event you get into a disabling accident, after all, both plans can come into play. However, it’s very different from getting reimbursement or money for certain medical procedures.
STDI is an insurance product that actually replaces your income for a short period of time. For 3 to 6 months, depending on your plan, you will still get typically up to 80% of your gross income while you stop working.
Unlike medical coverage, STDI allows you to still spend as usual for food, bills and other necessities.
#2. I don’t need short term disability insurance.
Though you might think you don’t need short term disability insurance as regular office hourly workers, there’s a case for getting STDI. Most disabling incidents through the course of a person’s career aren’t actually caused by workplace accidents. Freak office accidents and injuries while in a construction job can be scenarios where STDI can apply, but most often the cases are due to chronic and other health conditions. These include heart disease, cancer and back injuries.
Depending on the insurance plan, pregnancy can also count as a disability.
#3. Short term disability coverage is the same as long-term disability insurance.
While the two forms of insurance have functionally the same purpose, short-term disability insurance and long-term disability insurance (LTDI) cover two different periods. LTDI only applies after an “elimination period” or waiting period, which is typically 90 days depending on your policy.
Unlike STDI, LTDI can last for years. LTDI is generally more expensive than STDI.
#4. I can “collect” disability payments from different insurance coverage plans.
In the unfortunate event that you need to claim your short-term disability payments, you might be tempted into thinking of getting even more coverage from your other plans. For example, you might have Social Security disability benefits, or your particular case might be protected by Workers’ Compensation laws, which will also provide for a benefit. There are other group disability benefits, government disability programs, and other insurance companies.
Your benefit payments may be affected if you receive benefits or income from other sources. If you are claiming payments from any of the sources above, then your STDI payments will be reduced accordingly. Your payments will also get affected if you are still working while partially disabled.
#5. Getting an STDI is never worth it.
As always, you should consider STDI as it applies to your personal working life, economic status and financial outlook. Getting short-term disability insurance is great if it is offered by your employer for free or at a low cost. If not, you should look into more cost-effective alternatives like long-term disability insurance or getting an emergency fund.
ARCHER JORDAN Helps You Learn more about Employee Benefits for Hourly Workers
ARCHER JORDAN is a third party administrator providing fringe benefits to government contractors and hourly workers. With our decades of experience and expertise on this subject, we can help you navigate the different insurance schemes and employee benefit packages offered in the market. Contact us today!