Sample Disability Insurance Coverage ShortLong-term

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Disability Insurance Coverage (Short/Long-term)

Company: <Company Name>

Document Type: Disability Insurance Coverage (Short/Long-term)

Category: Benefits & Wellness

Version: <Version Number>

Policy ID: <Policy ID or Document Number>

Effective Date: <Date>

Last Reviewed: <Date>

Next Scheduled Review: <Date>

Policy Owner: <Total Rewards Leader Name/Title>

Policy Sponsor: <Executive Sponsor/Function>

Regions Covered: <Country> and applicable <State/Province> jurisdictions

Third-Party Administrator/Vendor: <Vendor Name>

Contact for Questions: <Email> | <Phone Number>

Purpose and Objectives

Purpose

Define and standardize <Company Name>’s short-term disability (STD) and long-term disability (LTD) coverage, ensuring income protection for eligible employees unable to work due to qualifying illness or injury.
Establish consistent plan design, administration, and governance practices that align with legal requirements and industry best practices.

Objectives

Provide clear guidance for Total Rewards and HR operations on plan eligibility, coverage levels, coordination with other benefits, and claims administration.
Ensure equitable and compliant administration across geographies, including integration with statutory disability programs where applicable in <Country> and <State/Province>.
Outline roles, responsibilities, controls, and review processes to manage risk and deliver a positive employee experience.
Define communication content for employees and managers that is accurate, accessible, and empathetic.

Scope and Applicability

In Scope

STD and LTD insured programs sponsored by <Company Name>.
Regular full-time and part-time employees meeting eligibility criteria described herein.
Coordination with statutory disability and paid family/medical leave programs in applicable jurisdictions.
Administration processes including claims initiation, adjudication, appeal, and return-to-work.

Out of Scope

Workers’ compensation benefits governed by separate policy and insurance.
Occupational injury programs, duty-related benefits, or union-specific disability provisions not covered under this policy.
Short-term paid sick leave or PTO policies, except where referenced for coordination.
Supplemental executive disability or individual disability policies outside the group plan, except as noted in the Salary Definition section.

Applicability

Applies to employees in <Country> in the business units and legal entities listed in Appendix A <Insert reference or placeholder>.
Excludes contractors, interns, temporary staff, and agency workers unless explicitly stated in employment agreements.
Local policies may supplement this document where required by law; where a conflict exists, the stricter standard or mandated benefit applies.

Key Definitions (Quick Reference)

Elimination Period: The waiting period before benefits commence.
Own Occupation: A definition assessing disability against the employee’s regular occupation.
Any Occupation: A definition assessing disability against any occupation the employee is reasonably qualified for by education, training, or experience.
Partial/Residual Disability: Reduced capacity to perform job duties resulting in income loss.
Offsets: Reductions to benefits based on other income sources such as statutory disability, Social Security, or workers’ compensation.
Pre-Existing Condition: A condition for which an employee received treatment or advice prior to coverage start, subject to plan limitations.
Statutory Disability: Mandatory disability programs in certain jurisdictions (for example, <State/Province> short-term disability programs).

Plan Overview

Plan Philosophy and Design Principles

Provide meaningful income protection to employees while balancing affordability and sustainability for <Company Name>.
Maintain compliance with applicable laws and support timely return-to-work through accommodations and transitional duties where feasible.
Offer a harmonized plan framework with localized variations only where required by law or market practice.
Align plan definitions, salary basis, and coverage levels with industry standards and vendor capabilities.
Support financial wellness through clear communication and predictable benefit levels.

Plan Options Summary

Feature	Short-Term Disability (STD)	Long-Term Disability (LTD)
Eligibility	<X> days of service; active work requirement	<X> days of service; active work requirement
Elimination Period	<7> calendar days (injury and illness)	<180> days (coordinates with STD)
Benefit Amount	<Percentage> of pre-disability weekly earnings up to <Amount> weekly max	<Percentage> of pre-disability monthly earnings up to <Amount> monthly max
Maximum Duration	Up to <26> weeks	To Social Security Normal Retirement Age or <Age> schedule
Definition of Disability	Unable to perform essential duties of own occupation; partial disability covered	Own occupation for <24> months, then any occupation; partial/residual disability covered
Offsets	Statutory disability, paid leave, and other income offsets apply	Social Security disability, workers’ compensation, and other income offsets apply
Pre-Existing Condition	Not applicable or limited by jurisdiction	<3/12/24> provision applies
Employer vs Employee Cost	<Employer-Paid/Shared/Employee-Paid>	<Employer-Paid/Voluntary>
Taxation of Benefits	If employer-paid: benefits taxable; if after-tax employee-paid: generally tax-free	Same principle; confirm with tax advisor

Eligibility

Employees become eligible after <X> days of continuous employment and must be actively at work on the coverage effective date.
Part-time employees with scheduled hours of <X> per week are eligible; per-diem and temporary employees are not eligible unless required by law.
Coverage ends upon employment termination, transfer to an ineligible class, or non-payment of required premiums.
Continuation during approved leave follows the Leave of Absence policy and applicable law.
Probationary periods mandated by local law supersede plan provisions.

Salary Definition for Benefit Calculation

Base Salary: Regular base earnings as of the day before disability onset.
Included Earnings: Base salary plus regularly scheduled shift differentials; optional inclusion of commissions or bonuses per plan setup.
Excluded Earnings: Overtime, discretionary bonuses, equity compensation, relocation allowances, or one-time payments unless otherwise noted.
Where executive or sales compensation is variable, define covered pay as <rolling 12-month average> of eligible earnings.
Document any country or unit-specific variations in Appendix B <Insert reference or placeholder>.

Geographic and Statutory Considerations

In jurisdictions with statutory disability (for example, <State/Province>), STD integrates with required programs. Employees must apply for statutory benefits; plan benefits offset by the statutory amount.
Where statutory paid family/medical leave applies, the STD benefit coordinates to avoid duplication while complying with anti-supplementation rules.
Country-specific tax and social security rules may impact net benefits; consult local advisors.

Coverage Details: Short-Term Disability (STD)

Qualifying Events and Definitions

A non-work-related illness or injury that prevents the employee from performing the material and substantial duties of their own occupation.
Requires certification from a licensed health care provider and ongoing medical management.
Work-related conditions typically fall under workers’ compensation; see Out of Scope.

Elimination Period and Benefit Commencement

Elimination period: <7> consecutive calendar days beginning on the first day of disability.
Employees may use <PTO/Sick Leave> during the elimination period per policy; usage is optional or required per <Company> rules.
Benefits begin after the elimination period if disability continues and all documentation is received.

Benefit Amount and Maximums

Weekly benefit equals <Percentage> of pre-disability earnings up to <Amount> weekly maximum.
Minimum weekly benefit: <Amount>.
Benefits are reduced by offsets including statutory disability, employer-paid salary continuation, and other income.

Duration and Recurrence

Maximum STD duration: up to <26> weeks per disability.
Recurrent disability within <14> days of return to work may be treated as a continuation without a new elimination period.
Pregnancy-related disabilities follow the same rules, with typical certification guidelines and durations per medical norms.

Partial and Intermittent Disability

Partial disability benefits available when employee returns to reduced hours or modified duty, with proportional benefit based on earnings loss.
Intermittent leave may be supported where permitted, coordinated with leave laws.

Exclusions and Limitations

Disabilities arising from criminal acts, intentionally self-inflicted injuries, or cosmetic procedures (unless medically necessary) are excluded.
Substance use disorders covered when under continuous treatment; limitations may apply per plan.
Medical documentation must substantiate functional impairment; lack of ongoing treatment may result in denial or termination.

Claims Filing and Documentation Requirements

Employee notifies manager and initiates claim with <Vendor Name> within <X> days of disability onset.
Health care provider completes medical certification forms and submits required documentation.
Employee authorizes release of medical information per privacy rules.
Vendor adjudicates claim and communicates decision to employee and <Company Name>.
If approved, payments begin according to payroll schedule or directly from vendor.

Appeals

One or two-level appeal process per vendor contract.
Appeal must be submitted within <X> days of denial notification, with additional medical evidence.
Independent review by vendor team not involved in initial decision.

Coordination with Other Leaves and Pay

STD may run concurrently with FMLA or other protected leaves where applicable.
Use of PTO during elimination period and benefit period follows Leave policy.
Salary continuation programs must be defined to avoid overpayments beyond plan maximums.

Coverage Details: Long-Term Disability (LTD)

Qualifying Events and Definitions

Disability continuing beyond the LTD elimination period and meeting plan definition.
Own occupation for <24> months followed by any occupation definition thereafter.
Mental health and substance use conditions may be limited to <24> months lifetime unless exceptions apply.

Elimination Period and Coordination with STD

LTD elimination period: <180> days from disability onset, typically matching maximum STD period.
Claims should be initiated at approximately day <90> of disability to allow processing time.
STD and LTD vendors should be coordinated to prevent gaps.

Benefit Amount and Maximums

Monthly benefit equals <Percentage> of pre-disability earnings up to <Amount> monthly maximum.
Minimum monthly benefit: <Amount>.
Offsets include Social Security disability benefits, state disability, workers’ compensation, third-party settlements, and employer salary continuation.

Duration and Age-Based Schedules

Benefits continue to Social Security Normal Retirement Age or according to the following schedule:

Age at Disability	Maximum Benefit Duration
<61 or younger>	To Normal Retirement Age
<62>	<48> months
<63>	<42> months
<64>	<36> months
<65>	<30> months
<66>	<24> months
<67>	<21> months
<68>	<18> months
<69 or older>	<12> months

Specific age schedule may vary by insurer; insert vendor-specific schedule.

Pre-Existing Condition Limitation

Standard provision: <3/12/24> rule.
No benefit is payable for disabilities due to a pre-existing condition if disability begins within the first <12> months after coverage effective date and the employee received treatment during the <3> months prior to effective date.
Waivers may apply with evidence of insurability (EOI) or continuous prior coverage.

Rehabilitation, Partial/Residual, and Return-to-Work

Residual disability benefits available when employee can work part-time with earnings loss.
Rehabilitation programs and workplace accommodations are supported; participation may be required when medically appropriate.
Recurrent disability provisions align with vendor policy to reduce re-qualification burden.

Exclusions and Limitations

Disabilities arising from war, criminal acts, and self-inflicted injury typically excluded.
Mental health and musculoskeletal conditions may have limited durations unless objective medical evidence supports ongoing functional impairment.
International assignments require adherence to local policy and enrollment in expatriate plans.

Claims, Appeals, and Social Security Advocacy

Employee initiates LTD claim via <Vendor Name> portal or phone at day <90> of STD.
Vendor requests medical, functional capacity, and occupational documentation.
Vendor may provide Social Security disability advocacy; employees are expected to cooperate.
Decisions communicated in writing with reasons and rights to appeal.
Appeals process mirrors STD with timelines defined in vendor contract and law.

Premiums, Funding, and Taxation

Funding Model and Cost Sharing

STD: <Employer-Paid/Shared/Employee-Paid>.
LTD: <Employer-Paid/Voluntary> with optional buy-up to <Percentage> or higher monthly max of <Amount>.
Employee contributions withheld <pre-tax/post-tax> via <Section 125 Cafeteria Plan> where applicable.

Tax Implications

Employer-paid premiums typically result in taxable benefits when paid.
Employee-paid premiums with after-tax dollars typically result in non-taxable benefits; mixed funding leads to proportional taxation.
Imputed income may apply if required by local tax law.
Employees should consult personal tax advisors; <Company Name> and vendor do not provide personal tax advice.

Non-Discrimination and Eligibility Rules

Benefit eligibility must be nondiscriminatory as required by applicable law.
Voluntary plans must follow enrollment windows, EOI thresholds, and portability provisions as defined by <Vendor Name>.

Coordination with Other Programs

Statutory Disability and Paid Leave

Employees must apply for statutory disability and paid leave programs where applicable.
STD and LTD benefits will be offset by statutory benefits to avoid overpayment.
Timing considerations for concurrent vs supplemental benefits should be built into payroll processes.

Workers’ Compensation

Occupational injuries and illnesses are handled under workers’ compensation.
If causation is disputed, STD may provisionally apply pending determination, subject to offsets and reimbursement if workers’ compensation is awarded.

Family and Medical Leave and Job Protection

STD/LTD payments are income replacement; they do not provide job protection on their own.
Job protection is governed by laws such as <FMLA/Local Law> and <Company Name>’s Leave policy.
The ADA/interactive accommodation process applies for qualified disabilities; HR must engage in timely dialogue.

Paid Time Off and Salary Continuation

PTO usage during elimination periods follows policy.
Salary continuation programs must be coordinated to prevent exceeding plan maximums and to avoid tax or offset complications.

Claims Administration and Operations

Process Overview and Timelines

Step	Owner	Target Timeline
Employee notifies manager and initiates claim	Employee	Within <X> days of disability
Medical certification submitted	Employee/Provider	Within <Y> days of request
Eligibility verification and payroll data sent	HR/Payroll	Within <3> business days
Claim adjudication decision	Vendor	Within <10-14> business days of complete file
Benefits start if approved	Vendor/Payroll	First pay cycle after approval
Ongoing certification and case management	Vendor/HR	Monthly or as requested

Data Requirements and Interfaces

Eligibility file: demographic data, coverage class, salary, standard hours, effective dates.
Payroll file: benefit amounts, taxable status, year-to-date totals.
Secure data transmission per <Vendor Name> specs and <Company> infosec policies.
Change events: new hires, terminations, leaves, and salary updates sent <weekly/biweekly>.

Overpayments and Recoveries

Overpayments due to retroactive statutory awards or payroll errors will be reconciled through payroll or direct repayment arrangements.
Vendor to notify <Company> within <X> days of identifying overpayment; repayment plan not to exceed <Y> months unless mandated otherwise.

Appeals and Escalations

Level 1 appeal to vendor within <180> days of denial; Level 2 appeal as permitted.
Escalations to <Company> Total Rewards for vendor performance or process issues; not for medical determinations unless plan documents provide such rights.

Privacy, Security, and Records

Medical information handled in accordance with <Country> privacy law and <Company> policy.
Records retained for <7> years or per legal requirement, whichever is longer.

Roles and Responsibilities

Total Rewards

Owns plan design, vendor governance, and policy updates.
Interprets plan provisions and ensures alignment with market practice and compliance.
Monitors metrics and trends; recommends changes.

HR Operations / Leave Administration

Coordinates claims initiation, eligibility verification, and employee communication.
Ensures concurrency with protected leave and manages ADA accommodations with managers.
Maintains accurate HRIS and payroll data feeds.

Payroll and Finance

Configures earnings and deductions, taxation rules, and offsets.
Reconciles invoices and manages overpayment recoveries.
Provides financial reporting and accruals.

Legal and Compliance

Reviews plan documents, communications, and vendor contracts for legal compliance.
Monitors regulatory changes in <Country> and <State/Province>.

Managers

Receive employee notifications and support time-off logistics.
Partner with HR on transitional duty and return-to-work plans.
Maintain confidentiality and refer medical discussions to HR/vendor.

Employees

Report claims timely, provide required documentation, and comply with treatment plans.
Notify vendor and HR of changes in medical status or return-to-work dates.
Apply for statutory benefits and cooperate with advocacy programs.

Implementation Guidelines

Plan Design and Vendor Selection

Define goals: coverage levels, affordability targets, and competitive positioning.
Solicit proposals from <Vendor Name A>, <Vendor Name B>, and <Vendor Name C> with standardized assumptions.
Evaluate network breadth for leave and disability case managers, digital tools, and Social Security advocacy.
Choose elimination periods and replacement percentages that coordinate with PTO and cash flow policy.

Project Plan and Milestones

Confirm plan design, classes, and salary definition.
Finalize contract, plan documents, rates, and EOI rules.
Set up HRIS and payroll codes, deductions, and taxation.
Build and test eligibility and payroll files with <Vendor Name>.
Train HR, managers, and service desk; publish employee materials.
Launch plan; monitor first 90 days; remediate issues.

Payroll Configuration Best Practices

Create distinct earning codes for STD vendor-paid vs payroll-paid and LTD offsets.
Automate tax treatment based on funding model to avoid manual errors.
Align benefit start/stop with pay periods and retro adjustments.

Integrations with Leave and Accommodation

Build a single intake channel for all leaves and disability to reduce confusion.
Trigger ADA accommodation workflow for expected LTD transitions.
Document return-to-work job offers and restrictions.

Quality and Control Measures

Quarterly audits of claim durations, offset application, and payment accuracy.
Vendor service level agreements: call answer time, initial decision time, appeal turnaround.
Annual compliance review and plan benchmarking.

Risk Management and Compliance

Maintain up-to-date plan documents and certificates filed with <Vendor Name>.
Monitor legal changes in <Country> and <State/Province> affecting disability, paid leave, and taxation.
Ensure communications avoid promises of guaranteed outcomes; plan documents govern in case of conflict.
Provide accommodations and avoid discrimination in accordance with applicable disability and employment laws.

Review and Approval Process

Total Rewards drafts or updates policy and plan design recommendations.
Legal reviews for compliance and risk.
Finance reviews for cost impact and reserve assumptions.
Executive sponsor approves final design and policy language.
HRIS/Payroll confirm system readiness and testing sign-off.
Publish updated documents with effective date and communicate to stakeholders.

Review Cadence

Formal review at least annually or upon significant legal or vendor changes.
Off-cycle updates permitted with approval from Policy Owner and Sponsor.

Exceptions

Exceptions require written approval from Total Rewards and Legal; document rationale, scope, and end date.

Metrics and Reporting

Claim incidence and closure rates by business unit and geography.
Average elimination period usage and average duration by diagnosis category.
Return-to-work rates and accommodation outcomes.
Financial metrics: paid benefits, offsets, overpayments, and premium-to-claims ratio.
Vendor SLA performance and employee satisfaction scores.

Record Retention and Documentation

Maintain claims correspondence, decisions, and payments for <7> years or as required.
Store plan documents, certificates, and communications in a controlled repository.
Limit access to those with a legitimate business need.

Change Log

Version	Effective Date	Summary of Changes	Approved By
<1.0>	<Date>	Initial release	<Name/Title>
<1.1>	<Date>	Updated LTD pre-existing condition language	<Name/Title>
<1.2>	<Date>	Adjusted STD elimination period to <7> days	<Name/Title>

Glossary of Terms and Definitions

Active Work Requirement: Employee must be performing the material duties of their job on the coverage effective date.
Any Occupation: Ability to engage in any gainful occupation for which the employee is reasonably qualified by education, training, or experience.
Benefit Offset: Reduction of disability benefit by other income sources such as statutory disability, Social Security, or workers’ compensation.
Disability Onset Date: First day the employee is unable to perform job duties due to illness or injury.
Elimination Period: Waiting period before benefits are payable.
Evidence of Insurability (EOI): Medical underwriting required for certain coverage levels or late enrollees.
Imputed Income: Taxable income attributed to an employee for certain employer-provided benefits.
Mental/Nervous Limitation: Time limit on benefits for mental health conditions as defined by the plan.
Own Occupation: The employee’s regular occupation at the time disability begins.
Partial/Residual Disability: Benefits payable when an employee can work in a limited capacity with reduced earnings.
Pre-Existing Condition: Condition treated or diagnosed during a defined lookback period before coverage takes effect.
Recurrent Disability: A disability that recurs within a specified time after return to work and is treated as a continuation.
Salary Basis: Definition of covered earnings for benefit calculations.
Statutory Disability: Government-mandated disability benefits in certain jurisdictions.
Voluntary Plan: Employee-paid coverage offered on an elective basis, sometimes with buy-up options.

Communication to Employees and Managers

What This Benefit Does

Short-term and long-term disability coverage from <Company Name> helps protect your income when a non-work-related illness, injury, or pregnancy prevents you from working. If you qualify, the plan replaces a portion of your pay while you focus on recovery.

How It Works

If you are unable to work, you file a claim with <Vendor Name>. After a brief waiting period called an elimination period, benefits can begin if your condition meets the plan definition of disability and your doctor provides supporting medical information. For most conditions, STD can provide income replacement for up to <26> weeks. If you continue to be disabled beyond that, LTD may begin and can last for years, depending on your situation and the plan’s rules.

What You Could Receive

With STD, you may receive <Percentage> of your weekly pay, up to <Amount> per week. With LTD, you may receive <Percentage> of your monthly pay, up to <Amount> per month. If you receive other disability payments from the government or other sources, your benefit may be reduced so that you do not receive more than the plan allows in total.

A Simple Example

If your weekly pay is <Amount> and the STD benefit is <Percentage>, your weekly benefit would be <Amount> before taxes and offsets. If you also receive <Amount> from a state disability program, your plan payment would be adjusted so that your combined benefits match the plan’s rules.

When to File a Claim

File your STD claim as soon as you know you will be out of work, ideally within <X> days of your first day of absence. If you think you may be out longer than a few months, your LTD claim should be started around day <90> of your leave so there is no gap when STD ends.

Steps to Start a Claim

Tell your manager you are out for a medical reason. You do not need to share private medical details.
Contact <Vendor Name> at <Phone Number> or <Website/Portal> to open a claim.
Ask your doctor to send medical information to <Vendor Name>. They will receive instructions from the vendor.
Watch for updates from the vendor and respond quickly to any requests. Keep your HR partner informed of your expected return-to-work date.

How Pay and Taxes Work

If <Company Name> pays the plan premium, the benefit you receive may be taxable. If you pay the premium with after-tax dollars, your benefit may be tax-free. Everyone’s situation is different; please speak with your tax advisor. The vendor and <Company Name> cannot give personal tax advice.

Job Protection and Your Leave

Disability payments replace income, but they do not guarantee job protection. Laws like <FMLA/Local Law> and our Leave policy may protect your job while you are out. HR will let you know what applies to you and what paperwork is needed. We will also work with you and your manager on reasonable accommodations and a safe return-to-work plan when you are ready.

What We Need From You

Keep in touch, attend your medical appointments, follow your treatment plan, and let us know if your return-to-work date changes. If you move to part-time or modified duties, tell the vendor and HR; partial benefits may be available.

Where to Get Help

For claims and medical documentation, contact <Vendor Name> at <Phone Number> or <Portal URL>. For questions about eligibility, pay, or taxes, contact <Company Name> at <Email> or <Phone Number>. If you need a workplace accommodation, contact HR at <Email>.

Important Notices

This summary is for convenience only. The plan certificate from <Vendor Name> includes full details and governs if there is any conflict. <Company Name> may change or end the plan at any time, subject to applicable law. Benefits are not guaranteed and do not create a contract of employment.

Effective Date

This information is effective on <Date> and will be updated as needed.

Document Information:

Document Type: Disability Insurance Coverage (Short/Long-term)
Category: Benefits & Wellness
Generated: August 25, 2025
Status: Sample Template
Next Review: <Insert Review Date>

Usage Instructions:

Replace all text in angle brackets < > with your company-specific information
Review all sections for applicability to your organization
Customize content to reflect your company's policies and local regulations
Have legal and HR leadership review before implementation
Update document header with your company's version control information
At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.