Short-term disability cover replaces a share of somebody's pay while they cannot work, for a limited number of weeks, after a waiting period, up to a weekly cap. Those four variables are the whole product, and almost every difference between two quotes is a difference in one of them. This page sets out the four, explains why the state you employ in can make the cover redundant or essential, and gives the questions that make two proposals comparable.
The four variables that are the product
Replacement rate: what share of pay is paid, commonly a defined percentage rather than all of it. Duration: how many weeks, after which long-term cover takes over if it exists. Elimination period: how many days of absence before payment starts, which is why short absences are usually the employer's own sick pay rather than an insurance question. And the weekly maximum, which is the variable that decides whether the cover means anything to your higher earners. Read all four before comparing prices.
The weekly cap is where cover quietly fails
A replacement rate sounds generous until the weekly maximum bites, at which point a well-paid employee is receiving a much smaller share of their income than the headline rate implies. Work the cap against your own salary distribution rather than against an average, and you will see immediately which part of your workforce the cover actually protects. This is the single most common gap between what an employer believes it bought and what its people receive.
Where you employ changes the answer
Several states run their own statutory disability or paid family and medical leave programs, and where one exists it sets a floor that private cover sits on top of rather than replaces. California's own published schedule pays 70% of weekly wages up to a maximum of $1,765 at the top band, and $1,127 in the middle band it publishes, which is a real floor an employer should know before buying anything. In states with no program, private cover is the only cover. Establish which of your states have one first.
What makes two quotes comparable
Ask for replacement rate, duration, elimination period and weekly maximum as four numbers, then ask how the cover coordinates with any state program and with your own sick pay, and finally ask what the definition of disability is and who decides. The last question is the one most often skipped and the one that determines whether a claim is paid. Two quotes that agree on the four numbers can still behave completely differently on the fifth.
Questions people ask about short-term disability insurance
What does short-term disability insurance actually pay?
A defined share of pay, for a defined number of weeks, after an elimination period, up to a weekly maximum. Those four variables are the product, and the weekly maximum is the one that decides whether the cover means anything to a higher earner.
Do we need it if our state runs its own programme?
Where a state program exists it sets a floor rather than removing the question: private cover sits on top. California's published schedule, for instance, pays 70% of weekly wages up to a $1,765 maximum at its top band. Establish which of your states run one before buying anything.
Why do two quotes at the same price behave differently?
Usually the definition of disability and who decides it, which is the question most often left unasked. Two policies can agree on rate, duration, waiting period and cap and still pay different claims.
Is this the same as sick pay?
No. Your own sick pay usually covers the first days, which is what the elimination period assumes. Insurance takes over for longer absences. An employer that has not lined the two up leaves a gap exactly where an employee will find it.