If injury or illness causes you to miss work, there are a couple of different ways you may be financially protected. At the top of the list are the Family Medical Leave Act (FMLA) and disability insurance.
While you may be covered at work by FMLA, short-term disability insurance, or both, many workers in the United States do not have this luxury. Here's what you need to know about the features and benefits of each.
Short-term disability insurance, explained
Short-term disability insurance replaces part of your income if a temporary injury or illness derails you from working at your job. It usually covers issues that people generally will recover from, such as a surgeon breaking an arm or a plumber dealing with mental illness.
Where can you get short-term disability insurance? You can purchase it individually from a private insurance company or, commonly, through an employer.
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Family & Medical Leave Act, explained
The Family and Medical Leave Act (FMLA), a government provision, provides employees with up to 12 weeks of unpaid, job-protected leave each year with health benefits.
FMLA lets families take time off for family and medical reasons. All public agencies, schools, and companies with 50 or more employees must adhere to FMLA. All qualified employers must allow for 12 weeks of unpaid leave each year for qualified employees for any of the following reasons:
- Birth and care of the newborn child of an employee
- Placement with the employee of a child for adoption or foster care
- Care for an immediate family member with a serious health condition
- Medical leave when you cannot work due to a serious health condition
As the employee, you'll have to meet a few requirements to qualify for FMLA:
- You must work for an employer for at least 12 months for at least 1,250 hours.
- You must work at a location where the company employs 50 or more employees within 75 miles.
You may go back to your original job or an equivalent job with the same pay, benefits, and other terms and conditions of employment. FMLA cannot count against you through hiring, promotions, or discipline.
FMLA vs. short-term disability differences
You can miss up to 12 weeks from work per calendar year through FMLA. You can take the full 12 consecutive weeks off work, or you can take days off over the course of the year. Your employer might require you to provide 30 days of advance notice before you choose to use FMLA.
On the other hand, short-term disability plans can involve various lengths through different employers and insurance firms. Some plans provide you with income benefits for up to a year. As with most types of insurance, the more expensive plans tend to provide the most comprehensive coverage. A few quick notes:
- Short-term disability insurance generally replaces about 60% of your income from three months to one year (sometimes longer). FMLA protects your job for 12 weeks while you are on medical leave, but it does not provide pay.
- That said, short-term disability does not protect your job while you are on leave like FMLA does.
- Disability insurance may also pay benefits after your FMLA leave expires.
Personal short-term insurance can act as the go-between for FMLA because it can replace your income during the time you're not at your job.
Check out this video we put together that compares short term disability vs FMLA:
Pros & cons of short-term disability
Let's walk through the pros and cons of each, starting with short-term disability.
Pros of short-term disability
Provides monthly income when you get ill or injured
Unlike FMLA, a short-term disability plan offers a monthly benefit when you can't work. You can get between 40% and 60% of your monthly income paid, though the amount varies. You may also tap into a benefit that gives you your full pay amount.
Stability and peace of mind for health and recovery
Short-term disability ensures that you have income coming in during your disability period.
This can offer a big benefit if you don't have emergency savings on hand. Short-term disability insurance can substitute for this lack of emergency fund savings. Something to keep in mind: If you couldn't cover your expenses over the long term, you may want to tap into long-term disability options.
An"own occupation" definition of disability (most of the time)
An"own occupation" definition of disability means that if you become disabled, you cannot do your actual job. An"any occupation" definition of disability means you cannot perform any type of work at all.
For example, let's say you are a teacher and you develop vocal cord lesions. You can't talk for a specified period of time. Under an "own occupation" plan, this means you cannot do your job because you cannot talk to your students. Under an "any occupation" plan, your insurance company may argue that you can still use your skills to teach sign language (in which you're proficient).
Learn More: Own-Occupation Disability Insurance
Cons of short-term disability
Most plans contain exclusions and limitations
It's a good idea to know the details about exclusions and limitations within each short-term disability plan, including the following:
- Pre-existing conditions: If you have a pre-existing condition, the insurer may still extend you an offer for coverage, but it will likely include an exclusion for your pre-existing condition.
- Self-inflicted injuries: Many disability insurance policies will not cover self-inflicted injuries, the same way a life insurance policy will not cover suicide or death caused while committing a criminal act.
- Recovery time after labor and delivery: Some plans limit your labor and delivery benefits unless you have a C-section or suffer complications during and following the birth of a child.
- Occupational illness or injury: Some plans will not cover occupational illness or injury that occurs at work. Other plans have specific limitations.
You will face a waiting period
Although some policies pay out benefits immediately after a claim is approved, chances are you will need to wait for a predetermined period of time. This disability insurance waiting period, also known as an elimination period, typically lasts anywhere from one week to one month.
Pros & cons of FMLA
Now, let's take a look at the advantages and disadvantages of the Family and Medical Leave Act.
Pros of FMLA
Helps you balance work and family life
FMLA helps you balance work and family responsibilities for certain family and medical reasons. It allows you the flexibility to take time when you need to. Note: FMLA also provides financial stability for men who choose to go on paternity leave.
You can't get fired for taking FMLA
Employers cannot fire employees for requesting or taking FMLA leave. However, employees can still become terminated while on FMLA or if they just return to their jobs as long as the termination was unrelated to FMLA leave.
Cons of FMLA
FMLA doesn't guarantee pay
More than 120 countries around the world have made it a law to provide paid maternity leave and health benefits, except Australia, New Zealand, and the United States, according to the International Labour Office (ILO). FMLA offers an unpaid benefit.
You must meet the requirements for FMLA
You may not yet meet the requirements if you're a new employee. If you haven't worked for an employer for at least 12 months and at least 1,250 hours over the past 12 months, you cannot qualify for FMLA. You must also work at a location where the company employs 50 or more employees.
Furthermore, your employer gets to decide whether your family member's illness constitutes leave under FMLA, which can lead to ambiguity between cases.
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