Womb to Bloom - Maternity & Beyond

So, you think you’ve figured out FMLA and you’ve taken a look at your applicable state leave laws – but you’re still trying to figure out how you are possibly going to make ends meet while you’re off of work after the baby arrives or while you’re on bed rest.

You’ll definitely need to talk with your employer and/or your human resources representative about the status of your accrued paid time off – sick leave, vacation days, personal days, etc. One other possible source of replacement income for you to check out is short-term disability (Short-Term Disability) insurance.

Short-term disability may be provided by your state (if you are lucky enough to live in the few states that have state-mandated Short-Term Disability) or a private policy may be one of your fringe benefits at work or through your union. Or you can buy a policy on your own.

What does short-term disability do for you?
Short-term disability will provide you with a regular payment equal to your salary or a percentage of your salary during the time that you are unable to fulfill the requirements of your job because of pregnancy-related or childbirth-related disability.

If you live in one of the five states (or Puerto Rico) which provides Short-Term Disability, you probably pay a small sum from each paycheck towards Short-Term Disability coverage. If Short-Term Disability is an employee benefit, your employer or your union may cover your share of the premium for coverage. And you can always look into and purchase your own policy – either primary or supplemental – if you wish. The premiums will be all yours to pay.

You will need to review the pertinent coverage provisions in your policy to determine exactly how much you will be paid while on short-term disability. It is usually somewhere between 50 and 100% of your salary for a standard six weeks for normal, vaginal childbirth.

Some plans may allow additional time if there have been medical complications, a caesarean section or physician-ordered bed rest before the birth. Some plans allow employees to ramp up to larger percentage payments and longer coverage limits with additional years of service to the employer.

Short-Term Disability plans generally pay benefits for a maximum of 13 to 26 weeks, depending on the specifics of the plan. So, long periods of prenatal bed rest would likely fit within the time limits of the plan.

After 13 to 26 weeks, a still-disabled employee will likely be eligible for long-term disability payments. Many employers time the Short-Term Disability plan to cover the required waiting period for long term disability coverage.
 
Five states (plus U.S. territory Puerto Rico) mandate some form of Short-Term Disability benefits. California, Puerto Rico, New Jersey and Rhode Island have state-administered disability plans. New York and Hawaii require employers’ participation in disability plans administered by a private insurance company. These states require employers to provide a minimum amount of short term disability benefits to all employees while disabled.

State Short-Term Disability benefits typically cover half to two thirds of your salary for anywhere from four to twelve weeks depending on the circumstances of your pregnancy and childbirth.

What happens if I live in a state with mandated Short-Term Disability benefits and my employer also had private Short-Term Disability coverage?
If both your state and your employer offer Short-Term Disability benefits, you may be required to use the full state benefit and treat your employer’s coverage as supplemental coverage.

You will ultimately receive the same amount as you would have if you received only payments out of your employer’s coverage but you’ll get the first part of it from the state and a second check from your employer’s Short-Term Disability policy to make up the rest.

Is there a waiting period between the beginning of the disability and the first payment?
Many Short-Term Disability programs require that you be out of work for one or two weeks before you can begin collecting short-term disability benefits. For that time, your employer (or your state’s Short-Term Disability program) may require you to use your accrued sick days before your disability benefits begin. In that case, the waiting period will be paid at your full salary or pay rate.

Will you owe income tax on short-term disability income?
Maybe. No income tax will be withheld from your disability checks. But – if the disability payments are coming from an Short-Term Disability coverage paid for by your employer, the income is taxable.

On the other hand, if your disability payments are coming from a state disability program, they are generally not subject to federal or state income taxes. If you purchased a disability insurance policy yourself and receive payments from that, the disability payments are also not taxable.

Of the states which mandate Short-Term Disability coverage, which state requires the best benefits?
California has probably the broadest Short-Term Disability coverage. It provides for payment of 55% of the employee’s gross salary up to a max of $917 per week for up to 52 weeks. There is a one week waiting period.

New York requires all employers to provide Short-Term Disability coverage for employees which provides for payment of 50% of the employee’s salary for up to 26 weeks. This is, however, subject to a cap of $170 per week (a figure which hasn’t changed since 1989). There is a one week waiting period.

New Jersey requires payment of two-thirds of the employee’s salary or wage as well as payment for benefits for up to 26 weeks.

There is a one week waiting period. After three weeks of disability, the plan requires retroactive payment for the first week of disability too. The maximum weekly payment for 2008 is $524.00.

Rhode Island requires disability payments equal to a percentage of your quarterly income over a base period. Payments increase for each of claimant’s dependent children under 18. 

Payments can continue for up to 30 weeks, after a one week waiting period. In 2007, the weekly maximum payment was $652.00, before the addition of any dependency allowance.

Hawaii’s short-term disability plan pays 58% of the employee’s salary for up to 26 weeks. The weekly maximum payment for 2008 is $489.00. There is a one week waiting period.

Also be sure to take a look at the Appendix to this text for specifics about the paid parental leave programs in California, New Jersey and Washington.

The California and New Jersey programs are run in conjunction with the established temporary disability insurance programs – but don’t forget that short-term disability benefits may be available to you no matter where you live if you suffer a pregnancy-related disability prior to the birth of your child – like bed rest – or if your doctor restricts you from returning to work after giving birth.

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