03/18/2026
Do you have disability insurance? Do you know which type you have? Most people don't. Here's a short description of the four different types.
This is a pretty quick read. Call me if you'd like to discuss which one suits you best.
***It can be difficult to keep all the different types of disability insurance straight. What’s the difference between
short- and long-term disability insurance? What about employer-paid or supplemental disability insurance versus
Social Security disability benefits versus workers’ compensation?
It’s important for benefits administrators to know the ins and outs of disability insurance — both as you’re
selecting benefit plans for your workforce, and for the time when an employee needs to file a claim. Use this
cheat sheet to get up to speed.
Short-term disability insurance
Short-term disability insurance typically helps cover employees experiencing a temporary covered illness or
injury that keeps them out of work for a period of around three to six months, though the length depends on the
specific policy. A short-term disability policy typically pays employees a greater portion of their income than a
long-term disability policy. Also, the “elimination period” — the amount of time that employees must wait to begin
collecting benefits — for short-term disability insurance is usually only about two weeks or less. However, shortterm disability policies only allow employees to collect benefits for a span of months, rather than years. Common
triggers for short-term disability claims include accidental injuries, cancer and pregnancy, which is technically
considered a “disability” for purposes of leave and other employee benefits in some states.
Long-term disability insurance
A long-term disability policy pays employees a smaller share of their income than short-term disability insurance,
but does so over a longer period of time. Benefit periods can extend for a certain number of years, or until
employees reach retirement age, depending on the plan. Because the potential lifetime benefit of a long-term
disability policy is much greater than that of a short-term plan, premiums for long-term disability coverage are
typically higher. The elimination period for long-term coverage may extend up to six months or more. Common
sources of long-term disability insurance claims can include musculoskeletal disorders, cancer and mental health
issues.
Short-term disability insurance vs. long-term disability insurance: Should my employees have both?
It is common for people to carry both short-and long-term disability coverage, with the short-term policy
providing benefits during the elimination period before the long-term policy kicks in.
Social Security Disability Insurance
Often referred to as SSDI, Social Security Disability Insurance pays benefits to any person who sustains a
qualifying disability, so long as the person has worked long enough (and recently enough) and paid Social
Security taxes on his or her earnings. For instance, a 50-year-old typically needs seven years of work credits
to qualify for SSDI.
Unlike many private disability insurance policies, SSDI only helps cover employees who are completely unable to
work due to a severe, long-term, total disability. This means that the disability must prevent an employee not
only from carrying out his or her current job, but also prevent the person from working in any other capacity. If you COULD work in another field, you may be required to.
(There are some conditions that allow a person to work part time and still receive SSDI, but there is a strict
income cap.) SSDI has a five month waiting period. The majority of claims are initially denied, and the appeals
process can be lengthy due to being a multistep process.2
Workers’ compensation
Workers’ compensation insurance (often called “workers’ comp” or “workman’s comp”) only helps cover
disabilities that stem from workplace-sustained injuries or illnesses. Most states require companies with
employees to carry workers’ compensation insurance, and requirements vary from one state to another.
Generally, workers' compensation works when employees become injured or sick due to a work-related cause,
and they have a certain period of time to report their condition to their employer. Then, the company can file
a claim on behalf of the employee with a state Workers’ Compensation Board or other agency responsible for
processing claims. Employers are also required to quickly report incidents to the Occupational Safety and Health
Administration.
Workers’ compensation insurance helps cover disabilities such as carpal tunnel, back injuries from repetitive
movement, lung damage from inhaling toxic substances, workplace falls and injuries sustained in work-related
automobile accidents. However, workers’ compensation does not cover injuries that occur off the job
