Short-term Disability Insurance on Maternity Leave

Short-term disability insurance ensures a continued flow of income in case people are unable to work on account of occupational and non-occupational injuries. Since job-related injuries are covered by workers' compensation allowance, This insurance comes in handy when people fall sick, get injured or when women are unable to work due to pregnancy or pregnancy related complications. According to a survey, women constitute a large percentage of short-term disability insurance claimants.

Understanding Short-term Disability Insurance Applicable on Maternity Leave

Provisional Benefits
According to the Family and Medical Leave Act, working women are entitled to 12 weeks of unpaid leave to care for a newborn or an adopted child, with the guarantee of the same job when they return provided they have been employed for at least 12 months in the same firm before their time-off and have worked for a minimum of 1,250 hours during the same period.

In the US, the following five states, viz. Hawaii, New Jersey, New York, Rhode Island and Puerto Rico, require the employer to provide short-term disability benefits. Employers in California pay up to 55% of the employee's gross salary in lieu of disability insurance for a period of 52 weeks. In New York, employers are expected to pay up to 50% of the employee's salary for 26 weeks while in New Jersey, claimants are entitled to 26 weeks of benefits to the tune of 66.66% of their salary. Hawaii's short-term disability plan pays 58% of the employee's salary for up to 26 weeks and claimants from Rhode Island are eligible to receive benefits based on a percentage of their quarterly earnings over the base period.

Women who are residing in the remaining states may have the benefit of short-term disability insurance, provided by their employer. This is highly advantageous to the employees since the employer pays the premium on the policy. In case the employer does not provide insurance, women will have to purchase individual disability insurance on maternity leave and pay the premium on the policy. The premium will vary depending on the risk factors. The standard coverage is about 65% of the usual pay for up to 6 weeks for a regular birth and 8 weeks for a C-section. Women can elect benefit periods of 3, 6, 12 and 24 months. The longer the benefit period, the higher the premium.

Are the Benefits Taxable?
A number of employers offer disability insurance as part of their employee benefits program. In the absence of the same, women may be forced to purchase short-term disability insurance on maternity leave. Short-term disability benefits are not taxed if the insured has funded the premium for the policy. On the other hand, if the employer pays the premium, the amount of disability benefits are taxable.

Waiting Period and Elimination Period
These plans have a waiting period of around 14 days and typically, women exhaust their paid leave before the plan kicks in. The elimination period for the insurance on maternity leave is around 10 months.

The maternity leave compatibility with short-term disability insurance, enunciates and covers illness or injury at no additional cost, where women are not expected to pay any additional premium for complications arising out of pregnancy, delivery, and premature birth. Considering that a number of employers do not offer maternity benefits, women should definitely consider insurance for maternity leave, even if it means funding the plan all on their own.