Differences Between Workers Comp And Short-Term Disability

workers' comp vs short-term disability differences

If you are an employer comparing worker's compensation to short-term disability, there are some things you should know! While they both may help injured or become ill employees, there are some important distinctions between these claims. 

In this post, we will outline those differences so that you can make the best decision for your company and claim. When protecting your employees, you want to ensure you have the right coverage in place. 

Here is a quick rundown to explore the differences between these two types of coverage: 

● What Is Workers' Compensation? 

Workers' compensation is a system that aids workers who are injured or contract an illness at work. In most cases, employers are required to provide coverage for their employees, and employees are not required to prove that their employer was at fault for their injury or illness. Benefits can include medical expenses, income replacement, and death benefits. Workers' compensation is typically considered a no-fault system, meaning that employees do not need to prove that their employer was at fault to receive benefits

● What Is Short-Term Disability? 

Short-term disability, on the other hand, is a voluntary insurance benefit that provides income replacement for a limited period if you cannot work due to an injury or illness. Short-term disability policies vary in length of coverage and benefit amount, but most will only pay for a few months. In addition, some policies may require you to exhaust your sick leave before you can begin collecting benefits. 

● Different Considerations For Different Workplaces 

Generally speaking, workers' compensation will provide greater financial protection than short-term disability in the event of an injury or illness. However, short-term disability may be a good option for employees who want more control over their coverage and benefits. 

For example, a perk of workers' compensation is that benefits are generally tax-free, while short-term disability benefits are subject to income taxes. In addition, short-term disability benefits usually replace a portion of an employee's salary, while workers' compensation benefits typically provide a percentage of an employee's average weekly wage. 

● Legal Obligations Differ Between Programs 

Exploring the differences in legal obligations between the two programs is essential. Workers' compensation insurance is a state-mandated insurance program that provides benefits to employees who are injured or become ill due to their job. Workers' compensation covers medical expenses, income replacement, and death benefits. 

Short-term disability insurance is a voluntary program that benefits employees who cannot work due to a non-work-related injury or illness. In most states, employers must carry workers' compensation insurance, while short-term disability insurance is voluntary. Employers may offer short-term disability insurance as an employee benefit, but they are not required to do so. 

Wrapping Up: Protect Your Employees 

When protecting your employees, you want to ensure you have the right coverage. Workers' compensation and short-term disability insurance are two common types of coverage that employers often purchase. However, these policies protect employees differently, and it's essential to understand the key distinctions between them. By familiarizing yourself with the key differences between these two types of coverage, you can ensure you are providing the proper protection for your employees.

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