What is short-term disability?
Short-term disability (STD) insurance provides temporary income replacement to employees who cannot work due to illness, injury, or medical conditions. It typically covers a percentage of an employee’s wages for a few weeks to six months.
For businesses using Homebase payroll, understanding short-term disability is essential for maintaining compliance with state laws and providing necessary support to employees when needed.
How does short-term disability insurance work?
Short-term disability insurance can be:
- Employer-provided – Many businesses offer STD as part of their benefits package.
- State-mandated – A few states require employers to provide coverage.
- Privately purchased – In cases where employers don’t offer coverage, employees may purchase their own STD policies.
Employees must meet specific eligibility requirements and provide medical documentation to qualify for benefits.
What conditions does short-term disability cover?
STD benefits typically cover income replacement for conditions such as:
- Serious illnesses (e.g., pneumonia, cancer, severe flu complications).
- Injuries from accidents (outside of work, as workers’ compensation covers workplace injuries).
- Surgery recovery (e.g., knee replacement, back surgery).
- Pregnancy and childbirth recovery.
The exact coverage amount and duration depend on the employer’s plan or state requirements.
Which states require short-term disability coverage?
Some states mandate short-term disability coverage, including:
- California
- Hawaii
- New Jersey
- New York
- Rhode Island
Employers in these states must deduct payroll contributions for STD insurance or provide coverage directly. Homebase payroll simplifies this by automating tax withholdings to ensure compliance with state disability laws.
How do employees qualify?
To receive benefits, employees typically must:
- Be employed for a certain period before filing a claim.
- Submit medical documentation proving they cannot work.
- Complete a waiting period (usually 7-14 days) before benefits begin.
Employers should have a clear short-term disability policy so employees understand how to apply for benefits.
Homebase simplifies short-term disability management
Managing short-term disability deductions and payroll can be complex, but Homebase payroll makes it easier by:
- Automatically handling state disability tax deductions
- Ensuring compliance with state-mandated disability programs
- Tracking employee leave and payroll adjustments
- Providing clear payroll reports for tax season
Try Homebase payroll today to automate payroll, benefits tracking, and stay compliant with disability laws.