Short Term Disability Insurance? Yay or Nay?

[EverLucky1]

Just wanted to get a feel for everyone's thought on the matter. My wife just started her new attending job and short term disability is one of the offered benefits. The company pays for basic long term disability and life insurance. We already have a individual long term disability insurance policy with one of the major providers.

The short term policy would cost about $90/month ($1080/yr) for up to $1500/week benefit up to 24 weeks. It does cover up to 8 weeks of 'disability' after C-section which may be useful if we have another child...I suppose if she took off a few months after delivery that'd be worth it... It doesn't say that pregnancy is an exclusion but since it specifically mentions C-section for 8 weeks, I do wonder if just regular vaginal delivery would be covered.

$1080/yr just seems high compared to the relatively cheap supplemental life and disability we're going to buy through the employer. We have a growing emergency fund which isn't quite there yet but is large enough where we'd still be ok in the short term if something were to happen.

Would you go with short term disability or just save the money and add it to your emergency fund?

[VagabondMD]

A couple things...

1. I am not sure that it would cover her electively "taking a couple months off" after delivering a child. You should ask the company specifically, but I suspect that she would have to be certified as disabled.

2. What is the long term disability policy's elimination period?

3. Would you suffer financial hardship for her being disabled for 24 weeks (6 months) that would be alleviated or significantly mitigated by an extra $1500 per week ($36,000) during that period?

[Hatton]

Short term disability is useful if your wife has an actual complication during her pregnancy like preterm labor.  Recovery from a csection or vaginal delivery would be covered by maternity leave.  Fmla allows people to take unpaid time off without losing their job.  Talk to human resources and the insurance provider.  You could take the policy out for a few months and then cancel when your emergency fund is built up.

[jhwkr542]

I think you should figure out if you're having another kiddo and if so, when. You'll also need to get the details of what would be covered and run the numbers. My wife and I had this dilemma and decided for short term disability because it covered pregnancy and provided her more time off to be with the new babies. We also knew we'd be having kids soon. It really worked out when we started popping out kids every year and a half (we're more fertile than we thought). We'll be dropping it like a bad habit when the 3rd and final (at least planned) one gets here.

[jfoxcpacfp]

LBKCLU (Larry Keller) may be able to help - this is his specialty. He is also a moderator on the forum and will hopefully see this thread.

[EverLucky1]

Vagabond MD wrote:

A couple things…

1. I am not sure that it would cover her electively “taking a couple months off” after delivering a child. You should ask the company specifically, but I suspect that she would have to be certified as disabled.

2. What is the long term disability policy’s elimination period?

3. Would you suffer financial hardship for her being disabled for 24 weeks (6 months) that would be alleviated or significantly mitigated by an extra $1500 per week ($36,000) during that period?

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1. We've contacted the HR department to confirm but I did do a quick google search (for whatever it's worth) that suggests that FMLA can be eligible for short term disability. We can also confirm with the insurance company too if necessary.

http://www.babycenter.com/0_maternity-leave-the-basics_449.bc

2. 3 months elimination period

3. hardship yes...but we would make all financial obligations

hatton1 wrote:

Short term disability is useful if your wife has an actual complication during her pregnancy like preterm labor.  Recovery from a csection or vaginal delivery would be covered by maternity leave.  Fmla allows people to take unpaid time off without losing their job.  Talk to human resources and the insurance provider.  You could take the policy out for a few months and then cancel when your emergency fund is built up.

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That would be the other option. She just started so we're filling out the enrollment package but open enrollment should be starting soon anyway. I do think she can be on FMLA and short term disability at the same time so some of those weeks are paid

http://www.hri-online.com/blog/what-you-should-know-about-maternity-leave-short-term-disability-and-the-fmla

jhwkr542 wrote:

I think you should figure out if you’re having another kiddo and if so, when. You’ll also need to get the details of what would be covered and run the numbers. My wife and I had this dilemma and decided for short term disability because it covered pregnancy and provided her more time off to be with the new babies. We also knew we’d be having kids soon. It really worked out when we started popping out kids every year and a half (we’re more fertile than we thought). We’ll be dropping it like a bad habit when the 3rd and final (at least planned) one gets here.

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Good to know it worked for you guys! We figured we'd have another kid in the next 2-3 years so from my estimates, it seems to work out in our favor...

$1500/wk x 6 wks = $9000 worth of short term disability benefits (assuming it covers a normal pregnancy and 6 wks of FMLA)

vs

$1080/yr x 3 yrs = $3240 worth of short term disability preminum

Not sure if I missed anything there though.

[EverLucky1]

Pregnancy aside for a moment though...is anybody buying short term disability 'just in case'? Like buying long term disability 'just in case'? Is that a worthwhile pursuit?

[conniebird]

short term disability should be covered by a emergency fund.

Highly recommend you get regular DI.

[EH]

I wouldn't bother. I'm essentially covered by work suck leave for any short term disability though (and we have ca state disability too which pays out better than that plan!). I can certainly cover with my emergency fund if needed as well.
Sounds like it's worth considering for pregnancy though!

[Hatton]

Once you are out in the real world for a short period of time you should have an emergency fund to cover the elimination period of DI or pregnancy.  Eventually you will hit FI and not need any of these.  I personally never had short term disability offered to me.  When I was a young lass I might have bought it for a year or two.

[jhwkr542]

If those are the numbers, go for it. I don't see this decision as a "if you can afford to self insure, don't buy it" scenario. It's a risk to buy it, but if you're confident in the desire(and ability) to have a kid soon, then it's very low risk with potential for high rewards. Could you enroll in 2 years instead of now? I'd double and triple check the numbers too. Our details: it costs us about $100-150 per month. My wife's job has its own disability that gets her to 100% of her paycheck. The DI added 60% for about 8 weeks. All after tax money. For a year with a pregnancy, we'd benefit by several thousand dollars. And we did that twice. Hard to get that kind of "return" but since we knew we were going to have more kids, it made good financial sense. We'll be dropping it ASAP with no more kiddos in the plans. Hard to imagine short term DI being useful in any other scenario where you don't plan on using it. Probably the best thing to do is to sit down with someone in her benefits office and discuss how much you'd get paid with the insurance in the event of a normal vaginal pregnancy. Then you'll get the real numbers.

[Scott at MD Financial Services]

If you don't have an emergency fund then get it but otherwise I would not recommend it.

[jfoxcpacfp]

Scott @ MD Financial Services wrote:

If you don’t have an emergency fund then get it but otherwise I would not recommend it.

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Scott - I am sorry that I didn't mention you above, it was not intentional, just an oversight on a quick post.