The distinction between STD and LTD is tested frequently, especially in group benefit contexts.
Short-term disability (STD) plans typically:
- Pay from day one of an accident, or after a short elimination period (7 to 14 days) for sickness.
- Last a limited period, commonly 15, 26, or 52 weeks.
- Pay a higher percentage of pre-disability salary (often 66.7 to 100 percent for early weeks, stepping down later).
- Are commonly self-insured by the employer (the employer bears the risk) or insured with a carrier.
Long-term disability (LTD) plans typically:
- Begin after STD benefits end or after a longer elimination period.
- Pay for extended periods (2 years, 5 years, to age 65).
- Pay 60 to 70 percent of pre-disability earnings, subject to an all-source maximum.
- Are insured with a carrier and include integration, own/any occupation transitions, and rehabilitation provisions.
A plan design where STD and LTD mesh without a gap is important to review at the group benefits needs-analysis stage.