We previously discussed the advantages of going out on a Family Medical Leave Act (FMLA) to protect your job for up to twelve weeks if you are a qualifying employee. But the main downside to FMLA is that, while it protects your job, you won’t receive any income during those weeks you are out on leave.
To replace your income, you will likely need private disability insurance. Some states provide paid time off as well as longer periods of time that you can take off while still protecting your job, but you will probably only receive a percentage of your usual pay. The following jurisdictions offer some kind of paid family leave: California; New Jersey; New York; Rhode Island; and the District of Columbia. The following jurisdictions offer some kind of paid sick leave: Arizona; California; Connecticut; Maryland; Massachusetts; Michigan; Nevada; New Jersey; Oregon; Rhode Island; Vermont; Washington; and the District of Columbia.
A long-term disability (LTD) insurance policy will replace about 60% of your pre-tax wages for up to a period of years. Should you recover from your disability during your FMLA but before you start receiving LTD benefits, you can return to work; if your disability extends past the FMLA period, you will start receiving LTD benefits as long as your elimination period ends around the same time. Elimination periods are time-based deductibles and ensure there’s a period of time between when you become injured and when you can start collecting insurance benefits.
A short-term disability (STD) insurance policy will cover your benefits for only a few months to one year, but it has a shorter elimination period. With this kind of policy, you can start to receive STD benefits while you are still out on FMLA leave.
You are eligible to receive either LTD or STD insurance benefits as long as you meet the insurance carrier’s definition of disability, and pregnancy and childbirth are usually covered. But there are many situations covered by FMLA that are not covered by LTD and STD insurance plans, including caring for a child you have adopted because you are considered physically able to work. Similarly, FMLA covers you even in the event of a pre-existing condition, but private disability insurance policies can exclude you from coverage on that basis.
If you are out on FMLA for a disability that’s expected to be completely disabling for at least twelve months, you should consider applying for Social Security Disability Insurance (SSDI). You need to have worked a certain number of years to qualify, along with meeting Social Security Administration’s (SSA) definition of disability, but if you are awarded benefits, you will receive payments to partially offset your lost income. You can apply for SSDI benefits as soon as you become disabled, but you cannot collect benefits while you are still out on FMLA leave.