Job seekers are going up against a lot in the current economy. Not only is unemployment soaring, but competition is becoming steeper by the day. Many companies are also offering freelance positions to combat the cost of bringing on a new member, and some are cutting corners in any area they can. While it is understandable that everyone is doing what they have to do to survive financially, applicants should make sure they read all fine print before accepting an offer. Particularly: pay attention to the insurance coverage your potential new employer includes as part of the package.
How come? If you get sick—whether with COVID-19 or something else— or become pregnant, you need a firm understanding of your short-term disability rights. Considering there are limitations, professionals need to prioritize companies who go above and beyond to support their teams. Here, lawyers provide the 101 on this all-too-important policy:
First up, what is short-term disability?
Michael Cole, the lead employment counsel at Gusto, defines short-term disability as a form of insurance that provides wage replacement if you are ill, injured, or disabled, and thus, unable to work as a result. When you are approved for this benefit, Cole says you won’t receive your full salary, but rather, around 60 to 80 percent of your regular pay, and you may be subjected to a weekly pay cap.
The variation in the offering is due to the fact there is no federal law mandating employers to provide paid leave. The keyword here is paid. The Family and Medical Leave Act does give the right to take up to 12 weeks for the birth of a child, an illness of a loved one or a severe health condition; it doesn’t require your company to pay you.
While in response to the COVID-19 pandemic, Congress passed the Family First Coronavirus Response Act to provide paid time off—funded through tax credits to employers—Cole says it’s limited in scope.
“There is a patchwork of state and local laws that require employers to provide various forms of paid sick leave, but these laws vary significantly and only provide paid time off for very short term illness, like a cold, and not chronic illness or injury,” Cole continues.
Why should you care about short-term disability when accepting a new job?
No one likes to think about the worst-case scenario, but if 2020 has taught us anything, it’s that sometimes, life changes quickly. And should you have a near-death experience, receive a scary diagnosis, or quite simply break your leg, Cole says it’s vital to know how your potential new boss will step up. “If you have a serious health condition that necessitates more significant time off, it is good to know whether your employer has a short-term disability policy. It can be critical to providing income replacement,” he shares. “It’s another factor to consider when deciding whether or not this job works with your life.”
During the hiring process, Tony Landry, the benefits account manager at G&A Partners, recommends asking pointed questions. If they don’t offer a competitive short-term disability insurance policy, but you still want to take the gig, make sure you have the power to get it on your own. “Having short-term disability coverage through your employer—either company-paid or voluntary—usually allows you to get this coverage on a ‘guaranteed issue’ basis,” he continues. “This means that your personal health will likely not impact the ability to obtain coverage.” In other words: no matter the circumstance or condition, you should be able to receive the protection you need.
What every job-seeker needs to know about short-term disability
Employers can ask for a doctor’s note
When you apply to begin your short-term disability coverage, Edward Guldi from The Perecman Firm says employer will sometimes ask you to prove your need. It’s legal for them to ask you to be examined by a doctor, as long as they fork over the change. Though it’s rare, it’s important to remember it’s an option.
There’s usually a waiting period
Even if you fall incredibly sick tomorrow, you likely won’t receive funds for a while, since Michael Weiner, a partner at Slate Law Group says there is generally a waiting period between the time you are deemed disabled by a medical professional and when you are eligible to receive disability benefits. “This means that an individual may not receive any payments up to two weeks after filing. Disabled persons need to be cognizant of this when filing for SDI to ensure they are financially prepared for a possible two-week period of no income,” he adds.
You are eligible if you contract COVID-19
If you become ill with COVID-19 and, as a result, cannot work, Weiner says you are eligible for short-term disability payments. Those sick with COVID-19 may receive the benefits for the first day off work, rather than the typical waiting period, which has been waived for the pandemic. “However, an individual’s healthcare provider must submit a medical certification the individual has COVID-19. The certification must include the start date of the illness, diagnosis or statement of symptoms, and how long one’s inability to work is expected to last,” Weiner adds.
There’s a maximum
Dependent on where you live and your employer’s policy, there’s only so much you can receive. It varies by state, but generally speaking, you can only receive short-term disability for a maxim of 52 weeks. After that period, it becomes a long-term disability. And how much you receive weekly has a limitation too. As an example, Weiner says that in California, the max is $1,300, based on someone who usually earns at least $28,145.01 in a calendar quarter. Or, in other words: has a salary of around $113K.
Disability income may be subject to income tax
Weiner says these benefits are taxable only if paid as a substitute for unemployment insurance benefits. “This often occurs when a person was receiving unemployment insurance benefits and then became disabled,” he explains. “Only in this instance, where SDI benefits are received in lieu of unemployment benefits, will they provide the individual with a 1099G form showing amounts paid that are reportable: no more than the original unemployment insurance maximum. And then forward a copy of the 1099G to the Internal Revenue Service.”