Sometimes an employee has an illness or injury that requires them to be out of work for an extended period that workers’ compensation or a medical leave of absence won’t cover. Short-term disability insurance is a safety net that provides partial wage replacement while the employee is out of work for a set period.
But how does short-term disability work, and what happens if it overlaps with leave laws like the Family and Medical Leave Act (FMLA)? Here’s what HR professionals need to know about short-term disability coverage, including how long it lasts, who pays for it, and what else you need to consider when an employee has a temporary disability.
How Does Short-Term Disability Work?
Short-term disability provides partial income replacement to employees who can’t work due to a temporary medical condition. It’s typically part of an employee benefits package, and is administered by an insurance company or a state agency. Some state laws mandate disability insurance, while others don’t.
Short-term disability differs from FMLA leave in that it’s an insurance policy, not a leave entitlement. Employees who take short-term disability leave may simultaneously qualify for job-protected leave under FMLA, but the eligibility criteria differ. Similarly, they may qualify for paid medical leave and/or state disability insurance.
Long-term disability insurance is similar to short-term disability insurance, the primary difference being the length of the benefit period. Workers’ compensation, on the other hand, is specifically for on-the-job injuries, while short-term disability benefits are only available for non-work-related conditions.
How Long Is Short-Term Disability?
Short-term disability benefits usually last for 13 to 26 weeks, although some may last up to 52 weeks. The exact amount will depend on your insurance plan. There’s typically a waiting period (called the elimination period) of one or more weeks after the illness or injury before the employee can start receiving insurance benefits.
If an employee’s condition continues after their short-term benefits run out, they may be able to transition to a long-term disability policy or to Social Security Disability Insurance (SSDI), which covers long-lasting or permanent conditions, often until retirement age.
If they’re able to return to work, they may still be eligible for reasonable accommodation under the Americans with Disabilities Act (ADA) to help them perform their job duties.
Who Pays for Short-Term Disability Benefits?
Because short-term benefits are a type of insurance plan, they’re funded by insurance premiums. These may be paid by the employee, by the employer, or shared, and come directly out of the employee’s paycheck. When the employee makes a disability claim, they receive disability payments from the insurance company or state agency.
For example, in California, employers can choose between State Disability Insurance (SDI) or a private disability plan. Employees on the state plan are eligible for benefits from the Employment Development Department, with the benefit amount covering 70-90% of their wages, up to a maximum of $1,765 per week.
Other policies may provide smaller payments, as low as 40% of an employee’s income. Short-term benefits are usually paid weekly, while long-term disability recipients receive monthly benefits. Short-term disability payments are processed separately from payroll, and are considered taxable income if the employer paid the premiums.
In some states, self-employed workers can opt in to state disability insurance plans, or purchase their own from a private insurer.
What Qualifies for Short-Term Disability?
Short-term disability insurance covers a wide range of conditions, with some exclusions for work-related injuries and pre-existing conditions. It covers things like:
- Temporary disability due to a car accident
- Recovery from surgery or medical procedures
- Pregnancy, childbirth, and associated conditions
- Digestive and musculoskeletal disorders
- Drug and alcohol rehabilitation
- Mental health conditions
Whether or not a condition is covered will depend on the policy and the nature of the claim. Employees may need to provide medical records from a health care provider to verify eligibility. Some plans allow employees to work part-time while still receiving benefits, or participate in rehabilitation programs so they can return to work sooner.
How Does Short-Term Disability Work with FMLA?
Short-term disability claims often overlap with state and federal laws, like the Family and Medical Leave Act (FMLA). They have different eligibility criteria and provide different sets of benefits, but may cover the same conditions over the same period of time.
FMLA leave is unpaid, but job-protected. So, if an employee qualifies for both FMLA leave and short-term disability, they would receive benefit payments from their disability insurance and job protection from FMLA. Without FMLA protections, there’s nothing stopping an employee from being fired while on leave.
At the same time, FMLA covers situations that aren’t eligible for short-term disability, such as caring for an ill or injured family member. If an employee has used all of their FMLA leave (up to 12 weeks per year), they would no longer be protected by FMLA when they file a short-term disability claim for another condition.
In some cases, employees may have a choice between taking paid leave benefits and short-term disability insurance. In New York, for example, NY.gov states, “While the two benefits cannot be taken at the same time, eligible employees can choose how they can use both benefits to support the needs of their families.”
How to Process a Short-Term Disability Claim
Short-term disability claims require coordination between the employer, employee, and third-party insurance provider. HR teams can use a claims management platform like Pulpstream to facilitate record-keeping and communication. Here’s what employers need to do to process a short-term disability claim:
1. Verify Eligibility
First, confirm the employee’s eligibility to make a claim. While the insurance company will decide whether to approve or deny it, you may need to confirm some details, such as the employee’s job duties, salary, and employment status. You may also need to review paperwork, such as medical records, to substantiate the claim.
When you use a platform like Pulpstream to handle claims, employees can access a self-service portal to upload documents safely and securely.
2. Consider Multi-State Interactions
The more states you operate in, the more laws you need to comply with. Even if you operate in a single state, like New York or California, there may be multiple types of leave or disability insurance available to your employees.
HR automation platforms can help you navigate the interactions between insurance policies and leave laws with AI-powered recommendation engines. Our 2026 State of Leave Management Report found that HR teams that use digital tools to manage multi-state interactions can process cases 40-50% faster.
3. Track and Manage Claims
In some cases, such as an accident, a short-term disability claim might be approved right away. Often, there’s a waiting period of one to two weeks. Keep the employee informed, and work with them to appeal if the insurer denies their claim.
Remember, the employee might have other types of leave available. Use digital leave tracking to manage FMLA leave, paid sick leave, and other types of personal leave that an employee can draw from.
4. Facilitate the Return to Work
While short-term disability insurance can last six months or more, an employee may be ready to return to work much sooner than that. Employers should avoid asking them to perform job duties while on leave, but can take steps to facilitate their return to work. This could include part-time work, rehabilitation, or modifications to their duties.
Manage Short-Term Disability Leave with Pulpstream
Short-term disability insurance provides a partial wage replacement to eligible employees who can’t work for a temporary but extended period. Employer-sponsored disability programs give employees peace of mind that they’ll be taken care of if they need to recover from surgery, pregnancy, or a non-work-related injury.
Short-term disability claims can be complex and may interact with state and federal leave laws, such as the Family and Medical Leave Act. Use a platform like Pulpstream to manage claims, track leave balances, and facilitate communications. You can even integrate it with your payroll processing tool to calculate insurance premiums.
Request a demo today to see how it can streamline claims processing.
