The income gap in a disability claim almost always sits at a handoff between two programs.
Sick time ends, short-term disability starts after a waiting period, long-term disability starts after its own, and a state benefit may offset one of them. Each plan can be sensible on its own and still leave an employee with weeks of no income. We line the plans up end to end, on one calendar, before anyone files a claim.
Three handoffs decide whether income is continuous.
We lay every program on one timeline, from the first missed day to the long-term benefit, and look for the days no plan pays.
Sick Time to Short-Term
The short-term plan’s elimination period should match what sick time or PTO can realistically cover. A long elimination period and a small PTO bank leave new and lower-paid employees exposed first, because they have the least time banked.
Short-Term to Long-Term
The long-term plan should start paying the day short-term benefits end. When the two are bought separately, a gap of weeks is common, which is why we design and market them as a pair.
The Definition of Disability
Short-term plans often test the employee’s own job while long-term plans may shift to any occupation after a period. An employee approved by one and denied by the other loses income at the worst moment, so we compare definitions line by line.
Offsets and taxes decide the check, not the benefit percentage.
A plan’s stated percentage is before offsets for other income and before tax. Under IRS rules, benefits from an employer-paid plan are taxable to the employee; benefits from a plan the employee paid for with after-tax money are not.
Other Income Offsets
Long-term plans usually reduce benefits by Social Security disability and state disability payments. We show employees the net benefit, since the gross percentage in the plan summary is the number they remember.
Who Pays the Premium
Employer-paid coverage is simple to offer and produces a taxable benefit. Employee-paid coverage costs employees each paycheck and produces a tax-free one. We model both, and some employers choose differently for each plan.
Pre-Existing Conditions
Many long-term plans exclude conditions treated shortly before coverage began. A new hire with a known condition can have short-term coverage and no long-term coverage, which HR should know before it becomes a surprise.
A disability claim and a leave of absence are two processes about the same person.
The disability carrier decides whether income is paid; the employer decides whether the job and the health coverage are protected. They rarely talk unless the process makes them.
FMLA Runs Alongside
Time on short-term disability can be designated as FMLA leave, but paid time off cannot be required as a substitute while disability benefits are being paid. The policy has to say what happens to PTO during that period.
When Protected Leave Ends
FMLA can run out while disability benefits continue. What happens to the job then can become an accommodation question as much as a leave question, so we flag the date well ahead and bring in counsel.
Salary Continuation
Some employers self-fund short-term disability as salary continuation. It is flexible, and it puts the employer in the position of deciding claims, which needs a written standard applied the same way every time.
State Disability Programs
In states with mandatory disability or paid leave benefits, the group plan should coordinate with the state benefit rather than duplicate it, so the employer is not paying twice for the same weeks.
What employers ask about disability coverage.
Should short-term disability be employer-paid?
It depends on what you want the benefit to do. Employer-paid coverage reaches everyone and is easy to explain; employee-paid coverage produces a larger net check. We show both on your own census.
Why was a claim approved for STD but denied for LTD?
Usually a different definition of disability, a pre-existing condition exclusion or a missed filing deadline. We review the file with the employee to find which, and whether an appeal is worth pursuing.
Do we need both plans?
Short-term coverage handles frequent claims; long-term coverage handles the rare, costly ones. Dropping long-term coverage saves the least and exposes employees to the largest loss, so it is usually the last plan we cut.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Cookies on This Site
We use cookies to keep the site working properly and to understand how it is used. You can decline anything that is not essential. See our Privacy Policy for the detail.
- Essential — needed for the site to load and for you to move around it. These cannot be switched off.
- Analytics — tell us which pages get read, so we know what is worth writing more of.
- Advertising — set by third parties such as ad and social platforms to measure and target campaigns.