Disability & Medical Insurance

Often employers offer a benefits package for their employees that not only includes medical insurance coverage, but coverage for disability as well. This is typically broken into long and short term disability.

Medical Insurance

• Medical insurance is offered by the employer where the company pays a portion of the premium, while the employee pays the remaining fees. This has tax benefits for both employer and employee, and pools risk that can make insurance more cost effective for the employee than an individual policy.

Short-Term Disability

• Short-term disability, or STD, is a wage-replacement program for those who are unable to work because of a short-term medical condition. Typically, you need to work for a certain length of time to be considered eligible. The allotment of benefits can vary from policy to policy, from a percentage of your wage to a very specific dollar amount. This can last up to one year.

Long-Term Disability

• If you are unable to work after you've exhausted your STD, long-term disability takes over. It provides up to 50 to 60 percent of your salary for two to five years, or until you turn 65. If your after-tax wages pay for your long-term disability, then any payment you receive would be tax-free. If your employer pays for your plan, then you would be required to pay tax on your benefits.