Short-Term Disability Policy Template

When an employee is facing a health condition or injury that prevents them from working, the last thing they should be worried about is job security or financial instability. A Short-Term Disability (STD) Policy provides critical support in those moments — helping employees take the time they need to recover while ensuring a consistent, legally compliant process for people teams and managers.

Short-term disability benefits can be provided through a private insurance plan, a state-mandated program, or an employer-sponsored policy. Regardless of the structure, a clear policy ensures employees understand their rights, responsibilities, and options when they’re unable to work due to a qualifying medical condition.

What a Short-Term Disability Policy Should Include

To be comprehensive, a Short-Term Disability Policy should cover:

• Eligibility criteria: Who is eligible, when coverage begins, and any waiting periods.
• Covered conditions: Types of illnesses or injuries that qualify (and what doesn’t, such as elective procedures).
• Benefit duration and coverage: How long benefits last, what portion of income is covered, and any applicable caps.
• Waiting and elimination periods: Whether there’s a required period before benefits begin.
• How to apply: Step-by-step instructions for submitting a claim, including required documentation and deadlines.
• Coordination with other leave policies: How STD interacts with paid time off (PTO), Family and Medical Leave Act (FMLA), or long-term disability (LTD).
• Job protection and return-to-work: Whether roles are held and any requirements for medical clearance.
• Privacy and confidentiality: How medical information is handled.
• Manager and HR responsibilities: Guidance for supporting employees during leave.

Purpose of a Short-Term Disability Policy

The purpose of a Short-Term Disability Policy is to provide income protection and job continuity for employees who are temporarily unable to work due to a qualifying medical condition. It also supports workforce planning, legal compliance, and a culture of care.

When done right, the policy benefits everyone:

• Employees get time to heal without financial panic.
• HR teams follow a consistent, documented process for handling leave.
• Managers stay informed and prepared to support workloads during absences.

Short-Term Disability Policy Template

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1. Purpose

[Company Name] provides short-term disability (STD) benefits to support employees who are temporarily unable to work due to a non-work-related illness, injury, or medical condition. This policy outlines eligibility, benefits, and procedures for accessing STD coverage.

2. Scope

This policy applies to all eligible employees who meet the criteria described below and who are unable to perform their job duties due to a qualifying medical condition, as certified by a healthcare provider.

3. Eligibility

Employees are eligible for STD benefits if they:

• Are classified as full-time or part-time regular employees (temporary and contract workers are excluded)
• Have completed at least [X] days/months of continuous employment
• Are enrolled in the company’s STD insurance plan or reside in a state with mandated disability coverage

Eligibility may vary depending on the terms of the plan provider and state-specific laws. Unionized employees may refer to their collective bargaining agreements for additional details.

4. Qualifying Conditions

STD benefits cover medical conditions that temporarily prevent an employee from performing their job, including but not limited to:

• Surgery recovery
• Severe illness (e.g., pneumonia, migraines requiring treatment)
• Pregnancy and childbirth recovery
• Accidental injuries
• Mental health conditions (e.g., severe anxiety, depression) with medical documentation

Not covered:

• Work-related injuries (covered under Workers’ Compensation)
• Cosmetic or elective procedures (unless medically necessary)
• Illnesses resulting from illegal activities or substance abuse (except where required by law)

5. Benefit Amount and Duration

Eligible employees may receive up to [X]% of their base weekly earnings for up to [X] weeks, subject to plan limits and state regulations.

Standard terms may include:

• Benefit coverage: 60–70% of gross weekly salary
• Maximum benefit period: 6–12 weeks
• Maximum weekly cap: [Insert $ amount, e.g., $1,200 per week]
• Minimum elimination period (waiting time): 7 calendar days from the first day of disability

If the employee remains disabled beyond the STD period, they may be eligible for long-term disability benefits, if offered.

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6. Filing a Claim

To apply for STD benefits, employees must:

1. Notify their manager and the People team as soon as possible — ideally before the leave begins, or within 24 hours of becoming incapacitated.
2. Submit the STD claim form provided by HR or the insurance provider.
3. Provide medical certification from a licensed healthcare provider within [X] days, including:
   • Diagnosis and nature of condition
   • Expected duration of disability
   • Restrictions or accommodations needed

Failure to submit documentation in a timely manner may result in denial or delay of benefits.

7. Job Protection and Leave Coordination

Short-term disability does not automatically guarantee job protection. However, it may run concurrently with leave entitlements under:

• The Family and Medical Leave Act (FMLA): For employers with 50+ employees, FMLA provides up to 12 weeks of unpaid, job-protected leave per year for qualifying conditions.
• State-specific leave laws: Some states (e.g., California, New Jersey, New York) provide job-protected disability leave or additional income benefits.

Employees may be required to use accrued sick leave, PTO, or vacation days during the elimination period, based on company policy and applicable law.

8. Returning to Work

Before returning to work, employees must provide a fitness-for-duty certification from their healthcare provider stating they are able to perform the essential functions of their role, with or without reasonable accommodations.

If accommodations are needed, the People team will work with the employee and manager to explore options in accordance with the Americans with Disabilities Act (ADA).

Where possible, the company may support phased or flexible returns to work, subject to business needs.

9. Confidentiality

All medical information and documentation related to short-term disability will be treated as confidential and stored separately from personnel files, in compliance with the Health Insurance Portability and Accountability Act (HIPAA).

Only authorized personnel will have access to medical documentation necessary for managing the leave process.

10. Responsibilities

Employees are responsible for:

• Notifying their manager and HR promptly
• Submitting required documentation
• Staying in communication during leave
• Providing notice of anticipated return dates or changes

Managers are responsible for:

• Informing HR of employee leave requests
• Maintaining confidentiality
• Planning coverage and workflow adjustments

HR/People team is responsible for:

• Confirming eligibility
• Processing STD claims and benefits
• Coordinating with insurance providers and legal teams
• Supporting return-to-work transitions

Frequently Asked Questions

Do I have to use my PTO before I can receive STD benefits?
That depends on your state law and company policy. Some employers require employees to use accrued PTO during the waiting period; others allow benefits to begin immediately after the elimination period.

Can I get STD benefits for mental health conditions?
Yes — if the condition is medically certified and prevents you from performing your job. This includes conditions such as depression, anxiety, PTSD, or postpartum disorders.

Is STD income taxable?
It depends on how premiums are paid. If your employer pays for the plan, STD income is typically taxable. If you pay premiums with post-tax dollars, your benefits are generally not taxed. Check with HR or a tax advisor for specifics.

Can I be terminated while on STD leave?
While employers can make business decisions unrelated to your leave, it is illegal to terminate or discriminate against someone because they are on leave. Your job may also be protected under FMLA or state laws, depending on your location.

What happens if I don’t recover before my STD ends?
You may be eligible for long-term disability (LTD) benefits if your condition persists. Contact HR to learn more about next steps and required documentation.

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