It can be difficult to keep all the different types of disability insurance straight. What’s the difference between short- and long-term disability insurance? What about employer-paid or supplemental disability insurance vs. Social Security disability benefits vs. workers’ compensation?
It’s important for benefits administrators to know the ins and outs of disability insurance—both as you’re selecting benefit plans for your workforce, and for the time when an employee needs to file a claim. Use this cheat sheet to get up to speed.
Short-term disability insurance
Short-term disability insurance typically covers employees experiencing a temporary covered illness or injury that keeps them out of work for a period of around three to six months, though the length depends on the specific policy. A short-term disability policy typically pays employees a greater portion of their income than a long- term disability policy will. Also, the “elimination period”—the amount of time that employees must wait to begin collecting benefits—for short-term disability insurance is usually only around two weeks or less. However, short-term disability policies only allow employees to collect benefits for a span of months, rather than years. Common triggers for short-term disability claims include accidental injuries, cancer and pregnancy, which is technically considered a “disability” for purposes of leave and other employee benefits in some states.
Long-term disability insurance
A long-term disability policy pays employees a smaller share of their income than short-term disability insurance, but does so over a longer period of time. Benefit periods can extend for a certain number of years, or until employees reach retirement age, depending on the plan. Because the potential lifetime benefit of a long-term disability policy is much greater than that of a short-term plan, premiums for long-term disability coverage are typically higher. The elimination period for long-term coverage may extend up to six months or more. Common sources of long-term disability insurance claims include musculoskeletal disorders, cancer and mental health issues.
Short-term disability insurance vs. long-term disability insurance: Should my employees have both?
It is common for people to carry both short-and long-term disability coverage, with the short-term policy providing benefits during the elimination period before the long-term policy kicks in.
Social Security Disability Insurance
Often referred to as SSDI, Social Security Disability Insurance pays benefits to any person who sustains a qualifying disability, so long as the person has worked long enough (and recently enough) and paid Social Security taxes on his or her earnings. For instance, a 50-year-old typically needs seven years of work credits to qualify for SSDI.1
Employees do not need a special policy to qualify for SSDI benefits, but these benefits alone are barely enough to keep a recipient above the poverty level.2 Also, unlike many private disability insurance policies, SSDI only covers employees who are completely unable to work due to a severe, long-term, total disability. This means that the disability must prevent an employee not only from carrying out his or her current job, but also prevent the person from working in any other capacity. (There are some conditions that allow a person to work part-time and still receive SSDI, but there is a strict income cap.)
SSDI has a five-month waiting period. The majority of claims are initially denied, and the appeals process can be lengthy.3
Workers’ compensation insurance (often called “workers’ comp” or the more archaic “workman’s comp”) only covers disabilities that stem from workplace-sustained injuries or illnesses. Most states require companies with employees to carry workers’ compensation insurance, and requirements vary from one state to another.
Generally, though, here’s how workers’ compensation works: When employees become injured or sick due to a work-related cause, they have a certain period of time to report their condition to their employer. Then, the company can file a claim on behalf of the employee with a state Workers’ Compensation Board or other agency responsible for processing claims. Employers are also required to quickly report incidents to the Occupational Safety and Health Administration.
Workers’ compensation insurance covers disabilities such as carpal tunnel, back injuries from repetitive movement, lung damage from inhaling toxic substances, workplace falls and injuries sustained in work-related automobile accidents. However, workers’ compensation does not cover injuries that occur off the job.
Short- and long-term disability insurance vs. Social Security Disability Insurance and workers’ compensation
Unlike workers’ compensation insurance, both short-and long-term disability policies can cover employees regardless of whether their disabilities stem from workplace injuries. And unlike Social Security Disability Insurance, both short-and long-term disability insurance require employees or their employer to buy a policy to obtain coverage.
Get started on helping to protect your workforce with disability coverage from Aflac. Contact your Aflac benefits advisor today, or complete the “Request Info” form at Aflac.com/business.
1 Social Security Administration. “Social Security Credits.” Accessed 3.31.2021.
2 Social Security Administration. “Facts.” Accessed 3.31.2021.
3 Social Security Administration. “SSI Annual Statistical Report, 2019.” Published August 2020. Accessed 3.31.2021.
This article is for informational purposes only and is not a solicitation for insurance.
Aflac | Aflac New York | WWHQ 1932 Wynnton Road | Columbus, GA 31999Aflac/Aflac Group herein means Continental American Insurance Company (CAIC)
and/or Continental American Life Insurance Company. Continental American Insurance Company | Columbia, SC
The Aflac Plus Riders may not be available in all states, including but not limited to, in Idaho, New York, Pennsylvania or Virginia.
Information herein is intended to provide general overview and does not constitute legal, tax, or accounting advice regardingany specific situation.
Coverage is underwritten by Aflac. In New York, coverage is underwritten by Aflac New York.
Short-term disability: In Idaho, Policy A57600IDR. In Oklahoma, Policies A57600OK and A57600LBOK. In Virginia, Policies A57600VA and A57600LBVA. Coverage may not be available in all states. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies/riders have limitations and exclusions that may affect benefits payable. For complete details, including availability and costs, please contact your local Aflac benefits advisor.