Imagine waking up one morning with severe back pain and hearing your doctor say you’ll need several months to recover before returning to work. Your first thought probably isn’t, “Do I have disability insurance?” It’s more likely, “How am I going to keep paying my bills?”
When you’re unable to work because of a covered illness or injury, your paycheck may stop, but many of your expenses don’t. Mortgage or rent payments, groceries, utilities and other monthly bills continue to arrive whether you’re working or not.
That’s where disability insurance can help.
What is Disability Insurance?
Disability insurance replaces part of your income if a covered illness or injury prevents you from working, helping you manage everyday expenses while you focus on recovery.
Many employers include disability insurance as part of their benefits package. It works alongside other benefits you may have, like health and life insurance, by adding an extra layer of financial protection. Understanding how disability insurance works can help you make confident decisions about your coverage options during open enrollment.
Short-Term Disability Insurance vs. Long-Term Disability Insurance
Not every illness or injury puts you out of work for the same amount of time. Some people recover in a few weeks, while others may need months or longer before they’re able to return. Disability insurance usually comes in two forms: short-term disability insurance (STD) and long-term-disability insurance (LTD). Each is designed to help protect your income during different stages of recovery.
Your employer might offer one or the other or both as part of your benefits package. Some employers pay the full cost of coverage or offer it as a voluntary benefit, which are optional insurance plans that employees can choose to pay for through their workplace. The options depend on your employer and the plan they provide.
Did you know?
Most disabilities are caused by everyday health conditions like back pain, heart disease and cancer—not accidents.
Group Disability Insurance Through Your Employer
Instead of buying an individual policy on your own, you’re covered through a plan offered by your employer. This is usually offered as group disability insurance in your benefits package.
Group disability insurance is usually easier to get than an individual policy because it’s tied to your job. You can enroll during open enrollment, and some employers pay all or part of that cost. Others offer coverage through payroll deductions.
But because it’s tied to your job, your coverage usually ends if you leave your employer. That’s why it’s important to understand what’s included and whether additional disability coverage options are available.
Supplemental Disability Insurance
Group benefits are offered to support a wide range of people. Missing part of your paycheck can affect everyone differently. That’s why some employers offer supplemental disability insurance for employees who want additional income protection. This optional coverage works with your group disability insurance instead of replacing it.
Is supplemental disability insurance right for you? Well, that depends on your financial situation and the level of coverage you’re looking for. This might be a good option if replacing only part of your paycheck would make it hard to keep up with your monthly expenses.
Did you know?
Nearly 4 in 10 adults in the U.S. say they couldn’t cover an expected $400 expense without borrowing money or carrying a balance.
How Disability Insurance Works
No one expects to need disability insurance. But if you ever do, knowing what to expect can make the claims process feel less overwhelming. While every plan is different, most disability claims follow the same general steps.
- File a disability claim
If a covered illness or injury keeps you from working, you’ll need to let your employer know and file a disability claim. - Claim review
The insurance carrier reviews your claim to confirm it meets your plan’s requirements. Your plan might also ask for additional documents like medical records from your doctor. - Waiting period
Most disability insurance plans include a waiting period or elimination period before benefit payments start. During this time, you may not be eligible for benefits but will receive payment once those periods are satisfied. - Receive benefits
If your claim is approved, you’ll start to receive disability benefits based on your plan to help replace part of your income. - Return to work
Disability benefits usually end when your leave ends.If you need more time to recover, your benefits might continue if your plan allows. Many plans also include programs that help injured workers return to work sooner and safely.
Making More Confident Benefit Decisions
Open enrollment can feel like a checklist: You compare plans, make your elections and move on. With so many benefits to review, it’s easy to spend more time on the coverage you’ll likely use right away. That can make disability insurance one of the easiest benefits to rush past during open enrollment.
You might never need to file a disability claim, and hopefully you won’t. But if you understand your coverage ahead of time, you’ll already know what financial protection is available and what to expect if you ever need to use it. Making more confident benefit decisions today can give you one less thing to worry about tomorrow.
Frequently Asked Questions
Short-term disability insurance (STD) helps replace part of your paycheck if you’re unable to work for a few weeks or months due to a covered injury, illness or medical procedure, while long-term disability insurance (LTD) is made for longer recovery periods.
No. Disability insurance usually replaces only a portion of your income if you’re unable to work because of a covered illness or injury. The amount depends on your employer’s plan. If replacing only part of your income would make it hard to cover your bills, you can also consider supplemental disability insurance.
No. Workers’ compensation provides benefits for illness or injuries that occur while on the job. Disability insurance is available for covered illness or injuries that happen at or outside of work that prevent you from working.
Yes. Some employers offer both short-term and long-term disability insurance as part of their benefits package. Short-term disability insurance (STD) can replace part of your income during shorter absences from work, while long-term disability insurance (LTD) is there if your recovery is taking longer.
It depends on your employer and your plan. Group disability insurance is usually tied to your employment, which means coverage often ends when you leave your job. If you’re changing employers, review your benefits to understand when your current coverage ends and whether your new employer offers disability insurance.
No. Disability insurance isn’t required by federal law for most employees. Whether it’s available and whether enrollment is automatic depends on your employer and your benefits package. If disability insurance is offered, you usually can review your options during open enrollment.
