Group Short-Term Disability Insurance

Group short-term disability insurance is also referred to as weekly indemnity and provides a percentage of a person's salary if they are unable to work for a short period of time due to sickness or injury. Group short-term disability insurance policies typically have a limit on the benefit amount that will be paid and a limit on the amount of time benefits will be paid for. Typically, group short-term disability insurance is designed in conjunction with the features of a long-term disability benefits plan.

Waiting Period:

The payment of group short-term disability insurance benefits will typically begin after a specified number of days, which is commonly referred to as the elimination period. The length of the elimination period typically depends on whether the disability is due to illness or injury, and whether the employee is confined to a hospital. Some examples of waiting periods based on the type of disability are as follows:

  • Accident waiting period: from the first, fourth, eighth or fifteenth day.
  • Sickness waiting period: from the fourth, eighth or fifteenth day.

Benefits are typically paid from the first day that an employee is confined to a hospital.

Benefit Schedule:

The benefit schedule is typically based on the appropriate tax status of the plan. If the employee enrolled in the plan pays the entire premium than the benefits received by the disabled employee are non-taxable. If an employer is paying the premium, the benefit will be taxable when received by the employee.

A group short-term disability insurance plan that is taxable will typically have a benefit of 50% to 75% of weekly earnings. A plan that is non-taxable will typically have a benefit of 55% to 66.66% of weekly earnings.

Non-Evidence Maximum (NEM):

The non-evidence maximum is the amount of insurance that the insurer will provide to an individual without them being required to submit evidence of good health. Any amount an employee is eligible to apply for above the non-evidence maximum requires the employee to submit medical evidence to the insurer. The insurer will then ask for further information if required, approve or decline the excess coverage. Some employees may not qualify for coverage medically, the non-evidence maximum wherever applied is an extremely valuable and important feature of a group benefits plan.

Overall Maximum:

The overall maximum is the maximum amount of insurance that the insurer will provide under the terms of the contract.

Benefit Period:

The benefit period is the maximum amount of time or duration that the short-term disability benefits are payable. Benefit periods typically range from 15 weeks (to coincide with the E.I. Sickness Benefit period), 17 weeks and 26 weeks. The short-term disability benefit period is typically integrated with the Long-Term Disability (LTD) benefit. For example, when short-term disability insurance and long-term disability insurance benefit periods are integrated together, an employee can receive benefits seamlessly.

Definition of Disability:

An employee is generally considered disabled if he or she is unable to perform any or all aspects of his or her regular occupation due solely to sickness or accidental injury. This is commonly assessed on whether the employee can perform the essential duties of their job or any other work for remuneration or profit. The employee must be under the care of a physician.