Having a group disability insurance plan can provide important income protection for Canadian employees if illness or injury prevents them from working. A group plan can be divided into 2 categories, which are short term and long term disability insurance.
This article will examine key features of short term disability insurance in Canada, including eligibility requirements, benefit amounts and duration, plan integration with Employment Insurance sickness benefits, and more.
What is Short Term Disability?
Short term disability insurance provides income replacement for a limited time if you become unable to work due to a non-work-related illness or injury. It helps protect your finances by paying a portion of your salary if you can’t work.
That said, short-term disability provides crucial financial support when employees face temporary health challenges. But what happens when a disability lasts longer than expected?
At that point, understanding the differences between short-term and long-term disability insurance is essential for making informed decisions about coverage.
You can learn more about how these benefits compare in our guide: Long Term vs Short Term Disability Insurance in a Group Plan
Key Points About Short Term Disability
Short term disability insurance provides crucial financial protection if health issues prevent you from working. It helps you focus on recovery without worrying about bills.
- It replaces part of your income, usually 50-70% of your salary, for a defined period if you can’t work due to illness or injury.
- The maximum benefit period is usually 3-6 months.
- It does not cover work-related injuries covered by workers’ compensation.
- Most policies have an elimination period, such as 7 or 14 days before benefits start.
- Premiums are typically low cost, often less than 1% of salary.
- It can be purchased through an employer or individually. Group coverage is cheaper than individual policies.
- Pre-existing conditions may be excluded for 12 months.
Source: Short Term Disability and Long Term Disability Benefits – ltdlawyerontario.com
How Long Does Short Term Disability Last?
The maximum short term disability benefit period is typically 3-6 months. This provides income replacement during the initial weeks and months of disability, allowing time to recover or transition onto long term disability benefits.
Short Term Disability Policy Duration
Short term disability policies specify the maximum length of time you can receive benefits. Common durations include:
- 3 months: A 3 month STD policy is the shortest option. It provides 12-13 weeks of benefits.
- 6 months: A 6 month STD policy is the most common duration, giving 26 weeks of coverage.
- 12 months: Some group STD plans through employers offer up to 12 months of benefits. This is less common than 3 or 6 months.
- Custom duration: Some insurers allow you to choose a custom benefit period, such as 9 months on individual policies.
The needs of your occupation and income requirements will determine the ideal policy length. A shorter 3 month period has lower premiums, while a longer 6 month plan provides more financial protection.
Short Term Disability Claim Duration
The duration of your individual disability claim depends on your recovery timeline. Benefits continue until the earliest of:
- You recover and return to work
- You reach your policy’s maximum benefit period
- You begin receiving long term disability benefits
- You pass away
So, while STD policies provide 3-6 months of coverage, your actual claim may be shorter based on your recovery and RTW timeline.
What Conditions Qualify for Short-Term Disability?
Short term disability insurance covers illnesses and injuries that prevent you from working at your occupation. Common qualifying conditions include:
Injuries:
- Broken bones
- Severe sprains
- Joint damage
- Back injuries
- Neck injuries
- Concussions
Illnesses:
- Cancer
- Respiratory illnesses
- Digestive disorders
- Mental health conditions
- Cardiac conditions
- Neurological disorders
- Strokes
Pregnancy Complications:
- Bed rest
- Preeclampsia
- Complications after childbirth
Surgeries:
- Outpatient procedures
- Inpatient surgery and recovery
STD insurers evaluate how your condition impacts your ability to perform your normal work duties. Supporting medical evidence is required to confirm your group disability insurance.
How to Apply for Short Term Disability
Applying for short term disability benefits involves contacting your insurer, submitting claim forms, and providing medical documentation. Here is the typical STD claim process:
Notify Your Employer
- Inform your manager and HR department that you must take disability leave due to illness, injury or pregnancy.
- Ask about the process, requirements and forms to submit an STD claim.
Contact Your Insurer
- Call your STD insurance carrier to begin a claim. Provide details on your condition and work absence.
- Ask what documents, claim forms, and medical evidence you must submit.
Complete Claim Forms
- Obtain STD claim forms from your employer or insurer. Forms confirm your inability to work and duration.
- Forms may include an Attending Physician Statement detailing your condition, treatment, and limitations.
Submit Medical Evidence
- Provide medical records, test results, and documentation of your illness, injury or pregnancy complications.
- An insurer may request that you undergo an independent medical exam by their doctor.
Claim Decision
- The insurer will evaluate your documentation and make a claim determination.
- If approved, STD checks or direct deposits will begin after the elimination period.
Work closely with your doctors and insurer to ensure proper STD claim submission. Call your insurer if you have any questions during the process.
How Much Does Short Term Disability Pay?
Short term disability policies pay a percentage of your gross salary, typically 50-70%. The maximum weekly benefit is based on your earnings.
Income Replacement Percentage
- Most STD plans pay 60% of your gross weekly earnings
- 50% of salary is generally the minimum replacement percentage
- 70% is sometimes offered on group STD plans but is less common
Maximum Weekly Benefit
- The maximum benefit is a percentage of your salary, often 60%
- STD payments are capped at a weekly maximum amount
- Higher incomes can purchase increased coverage on individual policies
The benefit amount aims to provide sufficient income to cover bills without being an increase in take home pay. Taxes are deducted from payments.
How to Get Short-Term Disability Approved for Anxiety and Depression
It can be challenging to get short term disability benefits approved for mental health conditions like anxiety, depression and stress. Here are 5 tips for getting your STD claim approved:
See a Specialist
Seeing a psychiatrist or psychologist lends credibility to a general practitioner. Specialists have expertise in diagnosing and treating mental disorders.
Document Severity
Provide evidence of severe symptoms and impairment. Include test results, mental status exams, and clinical observations demonstrating an inability to work.
List Functional Limitations
Explain how anxiety or depression symptoms prevent you from performing your job duties. Detail how cognitive deficits and anxiety attacks impact work.
Show Ongoing Treatment
Insurers want to see you are actively treating your condition with psychotherapy, medications or other modalities. Gaps in care raise suspicion.
Avoid Activities
Refrain from social media posts and activities indicating you can work. Focus on treatment and limit social interactions until your claim is approved.
Supporting documentation and compliance with treatment demonstrate you are genuinely disabled from a mental health standpoint. Be thorough and detailed when submitting your claim.
How to Claim Short Term Disability Benefits
Claiming short-term disability benefits involves prompt notification and submission of the required claim forms. Here are the key steps in filing a successful STD claim:
Notify Your Employer
- Alert your supervisor and HR about needing disability leave for illness, injury or surgery.
- Ask about claim forms, procedures and return to work policy.
Contact Insurer Within 48 Hours
- Report your claim to the STD carrier within 1-2 days of becoming disabled.
- Provide details on your condition, work limitations and projected absence duration.
Obtain Claim Forms
- Acquire claim forms from employer or insurer. Forms authorize the release of medical records.
- Forms include an Attending Physician Statement to be completed by your doctor.
Submit Medical Documentation
- Send supporting medical records, test results, chiropractic and physical therapy notes.
- An independent medical evaluation may be required by insurer.
Return Completed Forms Promptly
- Sign and return claim forms to insurer within 10 days to avoid delays.
- Clarify the next steps and timeline for the claim decision.
Who Pays for Short Term Disability?
There are two main short term disability insurance options – employer-paid group plans and individual policies paid by employees.
Employer-Paid Group STD
Many companies provide STD insurance as an employee benefit in Canada. The employer pays the full premium cost. Group STD benefits are guaranteed issue in most cases without medical underwriting.
Group STD plans have the advantages of lower rates and not requiring health questions. A significant downside is loss of coverage if you leave your job.
Employee-Paid Individual STD
Purchasing individual short term disability insurance means you pay the premiums personally. Rates are higher than group plans but coverage continues if you change jobs.
Individual STD policies require medical underwriting. Pre-existing conditions may be excluded for 12 months. Portable individual plans provide ownership of your policy.
Some group STD plans are contributory, meaning employers and employees share the premium cost. Disability insurance gives crucial income protection that employees greatly value.
How is Short Term Disability Calculated?
Short term disability payments are calculated using your gross weekly earnings, benefit percentage, and maximum benefits.
Determine Gross Weekly Earnings
- Add up your gross annual salary and any additional income from bonuses, commissions, or self-employment
- Divide this total by 52 weeks to calculate your average weekly earnings
Multiply by Benefit Percentage
- STD plans pay a percentage of weekly salary, typically 60%
- Multiply your gross weekly earnings by the benefit percentage
Compare to Maximum
- Most STD policies specify a maximum weekly benefit amount
- Your calculated benefit cannot exceed the maximum
- If your calculated benefit exceeds the max, the max becomes your benefit amount
Let’s look at an example:
- Gross Annual Salary: $60,000
- Gross Weekly Earnings: $60,000 / 52 = $1,154
- STD Replacement Percentage: 60%
- Initial Calculation: $1,154 * 60% = $692
- Maximum Weekly Benefit: $600
Since $692 exceeds the policy maximum of $600, the weekly STD payment would be $600.
The benefit calculation aims to replace adequate income while preventing over insurance. Understanding the math helps set expectations on claim payments.
Frequently Asked Questions about Short Term disability Insurance in Canada
Q: What is short term disability insurance?
A: Short term disability insurance provides partial income replacement if someone becomes unable to work due to illness, injury, or disability for a short period of time, typically up to 6 months.
Q: Who provides short term disability benefits in Canada?
A: Some employers provide STD insurance as part of employee benefits. If not, Employment Insurance (EI) sickness benefits may apply. Private STD plans are also available.
Q: What percentage of income does STD insurance replace?
A: STD plans typically replace 60-75% of pre-disability income, up to a maximum benefit amount. EI pays 55% of average insurable weekly earnings.
Q: When do STD benefits start?
A: There is an elimination period of generally 7-15 days from onset of disability before STD benefits begin. EI sickness benefits start after 1 week.
Q: How long do STD benefits last?
A: Most STD benefits continue for 15-26 weeks, to integrate with EI sickness (15 weeks) and long term disability plans.