Sample Short-Term Disability Policy

I. Policy

.01 [Company name] provides a Short-Term Disability Program available to eligible full-time regular employees as approved by [company name] designed to assist those regular employees unable to work due to extended illness or disability lasting up to six months.

.02 All regular employees with more than one year of continuous service based on date of employment as a regular employee are eligible for consideration of Short-Term Disability benefits.

.03 This plan is to be integrated with [company name] Employees Long-Term Disability Plan, which provides benefit payments to regular employees with at least one year of service, after six months of total disability.

.04 Any illness or impairment of health verified by a certified doctor s written statement, that requires an employee to be absent from work for 6 or more continuous working days, qualifies the employee for consideration of benefits under the Short-Term Disability Program.

.05 Benefits are available only to an employee who is under a certified physician s care. A doctor must certify the starting, continuing, and ending dates of the employee s disability on Disability Certification Form. Payment of the employee s Short-Term Disability benefits will be delayed or denied if we are unable to certify the initiation or continuing status of the disability period.

.06 Short-Term Disability benefits must be approved before benefits are paid. The fact that an employee presents a doctor s certificate indicating an illness/disability does not in and of itself establish eligibility for Short-Term Disability benefits.

.07 [Company name] retains and reserves the right to request additional information from the employee or the employee s physician and/or to request the employee to obtain certification of the illness/disability from a physician of [company name] s choice at [company name] s expense, prior to granting approval of Short-Term Disability benefits under this program.

.08 Benefits under this program must be requested by the employee through [name of person who receives requests] and approved by [name of person who approves requests].

.09 [Company name] may place employees on a medical leave of absence without pay if doubt exists as to the bona fide nature of the illness/disability or if additional medical information is required to substantiate the claim. When additional medical information is requested, employees remain on medical leave of absence without pay until the illness/disability is certified and an effective date obtained based on the additional information from the employee s physician or a physician of [company name] s choice.

.10 Reconfirmation of disability or long-term illness by the patient s physician will be required by [company name] every two weeks unless a physician is able to project at the outset a total period of disability. These recertifications may be subject to review by a physician called in at the company option and expense.

.11 Short-Term disability benefits start on the date of the doctor s certificate or the first day of the disability period as indicated by the effective date of the doctor s certificate, whichever is earlier.

.12 Maximum benefits under the Short-Term Disability Program are 130 working days at full pay or a combination of full and half pay totalling 130 working days, after which time a determination may be made regarding an employee s eligibility for company-paid Long-Term Disability benefits. Short-Term Disability benefits are paid in accordance with the following schedule:

.13 The basis for calculation of an account representative s or other incentive compensation employee s benefits is either:

a. 80% of the total income of the prior 24 months divided by 52 bi-weekly periods (or, if newly eligible, the prior 12 months divided by 26) to determine the average bi-weekly paycheck; or

b. 100% of the true total annual earnings divided by 26 to determine the bi-weekly paycheck, whichever is greater. These employees will be paid Short-Term Disability benefits based on the schedule in .12 above. Commission payments cease while the incentive compensation employee is paid Short-Term Disability benefits.

.14 Regular employees are eligible for the different amounts as stated above according to length of service on their anniversary date. If an anniversary date occurs while an employee is receiving Short-Term Disability benefits, he/she will be eligible for the greater amount of coverage, as outlined in the chart in .12 above.

.15 At the end of six months of continuous disability, an assessment will be made to see if the employee qualifies for disability benefits under the [company name] Long-Term Disability Plan. If at that time, the employee cannot be certified disabled by the Long-Term Disability Plan Administrator, his or her employment may be terminated with the option for rehire when the employee s health allows. If it becomes clear that the employee s return to work is imminent, after paid Short-Term Disability benefits lapse, a leave of absence without pay may be authorized by [name of person or persons who authorizes leaves of absence].

.16 [Company name] bases disability payments on an incident of disability, rather than on a calendar-year basis. A period of disability begun in one year could extend into the following year.

.17 When the employee returns to work following a period of extended disability or illness and has subsequent absences related to the original disability within 30 calendar days of the return to work, those absences will be considered part of the original disability period.

.18 Pregnancy is treated the same as is any other illness under the Short-Term Disability Program. Commencement of short-Term disability benefits for a maternity leave must be based on actual disability of the individual, not the mere fact of pregnancy.

.19 If the request for Medical Leave is determined by [name of person who grants leave requests] to be unwarranted, the employee will be notified of the denial of the request. If the employee is not actively at work at this time, his/her failure to return immediately will be considered a resignation.

.20 If false claims for Short-Term Disability benefits are discovered at any time, or if an employee fails to report to work on the first regularly scheduled workday following absence under the Short-Term Disability Program, he/she will be subject to disciplinary action up to and including termination of employment.

.21 Employees receiving benefits under the [company name] s Short-Term Disability Program will be eligible to continue participation in the [company name] Comprehensive Health and Life Insurance plans and continue to accrue service for purposes of the [name of the company retirement plan, if applicable] in accordance with plan provisions.

.22 [Only if applicable] In states where employees are required to maintain disability insurance (California, Hawaii, New Jersey, New York, Rhode Island and Puerto Rico), [company name] will coordinate benefits available under this program with those available under state-mandated programs.

.23 Under no circumstances will the combined benefits from a State Disability Plan or the Short-Term Disability program exceed the salary of the employee.

.24 The company may require periodic verification of an employee s inability or ability to work (including, for example, examination by a doctor designated by the company).

.25 Company policy provides that an employee s position may be filled while on a leave if this is necessary in order to meet business requirements. If this occurs, upon conclusion of the medical leave, every reasonable effort will be made to return the employee to the position formerly held or to one of similar responsibility and salary level.

.26 Exceptions to this policy will be determined by [name of person who determines benefits policies]. 

II. Responsibilities 

.01 The employee is responsible for completing his/her section of the Disability Certification Form and for obtaining the necessary information from the attending physician or a physician of [company name] s choice, who must certify the nature, extent of illness or injury and projected duration of the employee s disability on the Disability Certification Form.

.02 [Name of person responsible for monitoring disability-related claims] is responsible for monitoring an employee s eligibility for the Short-Term Disability Program.

.03 [Name of person responsible for calculating benefits] is responsible for the calculation of benefits under the Short-Term Disability program.

.04 [Name of person responsible for coordinating workers comp benefits] is responsible for coordinating the benefits under this program with benefits available under Workers Compensation or State Disability Programs, where applicable.

.05 [Name of person responsible for status-related issues] is responsible for initiating the appropriate Personnel Status Change form for any employee who becomes eligible for the Short-Term Disability Program and for obtaining approval of the change.

.06 [Name of person responsible for approving payments] is responsible for approving payment of benefits under this policy.

.07 [Name of person responsible for overseeing disability benefits] is responsible for monitoring the Short-Term Disability Program and for coordinating with physicians.

.08 Employee is responsible for submitting copies of all check stubs and documentation of payments of all State Disability benefits to [name of person to whom documents are to be delivered] within five (5) days of receipt of last payment.

.09 [Name of person responsible for payments] is responsible for the payment of Short-Term Disability benefits. 

III. Procedures

Note: Your procedures may be much simpler. If so, modify the following to reflect your circumstances.

.01 Employee obtains physician s statement (Disability Certification Form), certifying nature, extent and duration of illness/disability and forwards it to [person to whom the statement should be delivered].

.02 [Person who reviews the documents] reviews documentation and [person who oversees leave policies, if different from reviewer] regarding leave period. [Person who oversees pay and benefits] may request additional information or request [company name] s physician to confirm illness/disability before final approval.

.03 [Person who oversees pay and benefits] initiates Status Change Form authorizing Short-Term Disability benefits, obtains [name of person who must sign it] s signature on it.

.04 [Person who handles payroll] adjusts casual illness absence or vacation balance, if necessary, and disburses a check consisting of full or partial pay for the portion of the certified period of disability, during which the employee is entitled to benefits.

.05 [Only if applicable] In states where [company name] employees are required to maintain disability insurance (California, New Jersey, Hawaii, Puerto Rico, New York, and Rhode Island), [company name] will coordinate the benefits available under this plan with those available under state-mandated programs, as well as with Workers Compensation.

.06 [Person who handles employee issues] estimates the benefit amount employee is expected to receive from State Disability (where applicable) during the period of an approved medical leave.

.07 [Person who handles payroll] will deduct the amount of the benefit from Short-Term Disability benefits paid during the period of the leave.

.08 [Person who handles employee issues] ends Short-Term Disability benefits when employee s illness/disability terminates.

Reprinted with permission. © CCH