Disability Insurance: Short-Term and
Long-Term Policies
Consumer Education and Advocacy Unit
The Maryland Insurance Administration (MIA) is the state agency
that regulates insurance in Maryland. The MIA:
• Licenses insurers and insurance producers (agents or
brokers).
• Examines the business practices of licensees to ensure
compliance.
• Monitors solvency of insurers.
• Reviews/approves insurance policy forms.
• Reviews insurance rates to ensure rates are not
inadequate, excessive or unfairly discriminatory.
• Investigates consumer and provider complaints and
allegations of fraud.
What is the Maryland Insurance Administration
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Introduction to Disability Insurance
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For most adult Marylanders, income from our jobs is critical to maintaining our
standard of living. We use our income from work for our rent or mortgage
payments, utilities, groceries, auto expenses, savings for college and retirement, as
well as many other expenses.
Short-term and long-term disability insurance offers protection for lost wages in
many situations when you get sick or are injured and cannot work. While most
disability insurance policies will not cover 100% of your lost income, it can provide
some help with your expenses while you are unable to work.
Many policies define disability/disabled as,
an employee is disabled if, because of injury or sickness:
• He or she is unable to perform the material duties of his or her regular occupation, or
solely due to injury or sickness, he or she is unable to earn more than 80% of his or her
income; and
• After disability benefits have been payable for at least 12 months, he or she is unable to
perform the material duties of any occupation for which he or she may reasonably
become qualified based on education, training or experience, or solely due to injury or
sickness, he or she is unable to earn more than 80% of his or her income.
What is a Disability?
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Many people think of severe injuries or a catastrophic health condition as the leading cause
of disabilities, but disabilities are more commonly the result of less severe injuries and
common conditions such as heart disease, back pain, arthritis, mental health conditions and
digestive disorders.
What is a Disability?
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Most Maryland workers understand that if they are injured on the job, or experience an
illness caused by their job, that they may be covered for lost wages by Workers’
Compensation.
Workers’ Compensation coverage provides coverage when the illness or injury happened at
work, or was a result of work activities. However, most disabilities do not occur at work, and
consequently, most are not covered by Workers’ Compensation.
More details about Workers’ Compensation in Maryland can be found at:
Workers' Compensation Commission
What about Workers’ Compensation?
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Short-term and long-term disability insurance provides partial income replacement if you get
too sick or injured to work. Most disability insurance policies pay you a percentage of your
income if you get sick with a serious illness or experience an injury that prevents you from
doing your job. Some cover you in the short term immediately after an incident, while others
pay you if your injury lasts for an extended period.
Usually short-term disability policies cover you for up to six-months, and long-term disability
policies begin after you have been disabled for six months or more.
Disability Insurance Policies
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In general, a short-term disability insurance policy helps you immediately after an incident,
and a long-term disability policy helps provide financial protection for disabilities that can last
for years. However, disability insurance benefit plans can vary widely, and it’s important to
read and understand the policy you purchase.
You must continue to meet the definition of disabled as outlined in your policy. Most policies
require periodic updates from your providers to support that you are still disabled.
Disability Insurance Policies
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Insurance that replaces a portion of an employee’s income in the
event of a disability.
Each year, approx. 5% of American workers experience a short-term
disability.
Short-term disability policies generally pay benefits for short periods of
time – typically three months, six months, or one year, after a brief waiting
(elimination) period.
Short-Term Disability Insurance
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Benefit payments typically starts within two weeks of a qualifying illness or
injury (the elimination period)
Short-term disability insurance usually replaces 40-70 percent of a
policyholders income
Short-Term Disability Insurance
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In order to qualify for disability benefits from an employer, an insurance company, or the
government, a beneficiary’s disability must meet the definition of disability as defined in their
policy, and be confirmed by a physician.
Short-term disability insurance can be very expensive to purchase as an individual policy,
but group plans are typically less expensive than long-term group plans. Many employers
offer a short-term disability group plan as a company-paid or partial company-paid benefit to
all employees.
Short-Term Disability Insurance
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To trigger your benefits from a short-term disability insurance policy, you generally submit a
claim to your insurer that includes information about your condition from your healthcare
provider. Under the terms of most policies, the benefits are paid directly to you without
limitation on how you can use that money.
While employees can qualify for time off to care for a sick relative under the Family and
Medical Leave Act (FMLA), short-term disability policies will not provide benefits if the
employee is not the one with the injury or illness.
Short-Term Disability Insurance
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Long-term disability policies generally kick in after at least a 6 months period of
meeting the policy definition of disabled.
Many employers offer a group long-term disability insurance policy as a job benefit.
Many work in tandem with a short-term disability (STD) plan. In some cases when the
STD plans ends, Long-term disability (LTD) benefits may begin. Without an STD
policy in place, there may be a three to six months waiting period.
Long-Term Disability Insurance
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Long-term disability insurance policies generally pay benefits for a duration of
time longer than a year, as long as you continue to meet the definition of disability
as defined in your policy. Some LTD benefits continue to a certain age, such as
65, and some LTD plans pay benefits for a defined period of time, such as 5 or 10
years, and some continue as long as you meet the insurer’s definition of disability.
LTD plans typically covers 60-80 percent of lost wages.
Long-Term Disability Insurance
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Qualifying for LTD benefits can often be different than with a STD policy. With an
STD policy, benefits are generally awarded when the policyholder is unable to do
their job. Sometimes LTD benefits are awarded only if an employee is unable to do
any job. It’s important to read and understand disability insurance policies.
In most cases, if and when an employee or policyholder qualifies for another form of
income replacement, such as SSDI, the LTD policy may request reimbursement for
benefits paid.
Long-Term Disability Income Insurance
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Social Security Disability Insurance (SSDI) is a federal program for individuals who suffer
from disabilities that prevent them from working for at least one year. If you qualify for SSDI,
the income provided currently averages about $14,000 a year.
Being awarded SSDI benefits can take months or years. It’s important to understand what
your own benefits would be if you qualified for the program and how any disability policy you
own or are considering purchasing works if you are awarded SSDI benefits.
SSDI Information: 800-772-1213
Frequently Asked Questions https://faq.ssa.gov/en-US
Social Security Administration https://www.ssa.gov/
Where does SSDI fit in?
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We generally can not anticipate if or when we’ll be diagnosed with an illness or an
injury that will leave us unable to work at our jobs. It’s important to have a plan in
place for what you will do if you can not work, and short-term and long-term disability
insurance is often an important part of that plan.
In Conclusion
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Resources
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• Division of Rehabilitation Services
(DORS)
Phone: 410-554-9442 or 888-554-0334
toll free
Email: [email protected]
• Employed Individuals With Disabilities
(EID)
Phone: 877-463-3464 OR 410-767-6500
• Developmental Disabilities
Administration
Phone: (410) 456-7837
Email: anthony[email protected]
• Workers’ Compensation Commission
Phone: (410) 864-5100 or 800-492-0479
Maryland Relay Dial 711 or 800-735-2258
Email: [email protected].md.us
• Social Security Administration
Phone: 800-772-1213
Frequently Asked Questions about
SSDI https://faq.ssa.gov/en-US
Social Security Administration
https://www.ssa.gov/
• American Job Centers
Employment or training help:
Phone: 1-877-US2-JOBS
(1-877-872-5627)
TTY:1-877-889-5627
CareerOneStop help:
