The Elimination Period in Income Continuation
The elimination period is the waiting time between the start of a disability and the first income continuation payment. A shorter wait costs more, and the choice should fit the employer’s leave policies.
What to know.
Employees need a way to bridge the gap, usually paid time off or sick pay. The plan should say how those overlap with the waiting period.
Compare the elimination period against the group disability policy, so a gap does not open between the employer’s pay and the insurance.
Where to look next.
Income Continuation Overview
How these accounts work.
Disability Plan Coordination
How employer pay and insurance fit together.
Compensation Strategy
How benefits fit total pay.
How to Choose the Waiting Period.
A longer elimination period lowers premium, and a shorter one raises it. The right choice depends on how an employee would be paid during the wait, through paid time off, sick leave or short-term programs.
A gap between the end of one benefit and the start of another is where employees feel stress. Plan the periods so they connect.
Coordinate with leave policies, including any state or federal leave that applies.
Common questions on this topic.
Four questions to settle before you rely on it.
What is a typical elimination period?
It varies by plan. Short-term often has a short wait, and long-term a longer one. Ask your carrier.
Can paid time off cover it?
Often yes. Many employers let employees use sick time or PTO during the wait.
What if there is a gap?
Design the policy so there is none, or tell employees how to bridge it.
Is it taxed?
Treatment depends on who paid the premium. See the income continuation guidance.
How does it connect to short-term disability?
Many employers use a shorter wait for short-term and a longer one for long-term, so that coverage flows from one to the other.
Does the period affect cost?
Yes. Longer periods generally reduce premium.
Can we change it later?
Usually at renewal, subject to the carrier.
Ready? Upload your renewal, or talk it through with someone first. No cost, no obligation.
General information, not legal or tax advice. Plan-specific questions belong with your counsel or CPA, and we will bring them in.
Related guides.
Income Continuation Accounts
The overview this page belongs to.
Compliance Services
How CFH supports the compliance side of your plans.
Why Income Continuation Pay Is Taxed as Wages
A related question on the same program.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
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.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →