STD Benefit Duration Has Direct Impact on Costs

STD Benefit Duration Is Key Cost Component in Your Short-Term Disability Plan

What should your STD benefit duration be, i.e., how long should Short Term Disability benefits last?

Well, “short term” usually means somewhere between three months and two years. The period of the plan almost always covers multiples of thirteen weeks.

So your plan will either cover 13 weeks, 26 weeks, 39 weeks or 52 weeks if the duration is a year or less. For longer durations, I’ve never seen anything besides a 104-week plan.

Of these time lengths 13 weeks is the most common, and 26 weeks is second. I’ve never seen a 39-week plan, and 52 weeks is extremely uncommon. Only once in twenty-five years have I seen a 104-week plan.

Sometimes your plan won’t “look” like it covers one of the periods above.

For example, we talked about integrating your STD benefit period with your sick-pay plan. As a result, you might want to wait for two weeks before paying a benefit (a “15/15/x” plan).

If you choose that design, your benefit period will only last 11 weeks.

Why? Well, the plan covers 13 weeks even though the benefit period doesn’t. The two weeks waiting period plus the 11-week benefit period add up to 13 weeks.

With 30-day or other long waiting periods you get descriptions like 30/30/9 and 60/60/18. But it usually works the same way: The waiting period in # of weeks, when added to the benefit period in # of weeks, always comes up to 13, 26 or what-have-you.

So Which One Do I Choose, for Heaven's Sake?

Which one to choose? Just how long should your STD benefit duration be?

If you have Long Term Disability, you’ll want to integrate the Short Term with that. For example, if your waiting period for the Long Term is 90 days, that suggests a 13-week Short Term plan. If it’s 180 days, use 26 weeks.

What if you don’t have a Long Term Disability plan? I suggest you consider a 26-week plan. Social Security begins to consider a person for benefits after they’ve been disabled for 180 days.

By choosing your Short Term plan for 26 weeks, you cover the disabled employee until he’s eligible for Social Security.

Extending the benefit period to 26 weeks increases cost, of course, but if you’ve decided to provide the best coverage you can without having a Long Term Plan, you may be stuck with that.

If this is confusing, or if you're not sure what you should choose, click here and we'll talk through your plan.

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