Short-Term vs Long-Term Disability Under ERISA

When you’re unable to work due to illness or injury, disability benefits can be a lifeline. But if your employer offers both short-term disability (STD) and long-term disability (LTD) benefits, it can be confusing to understand how they interact, what rules apply and what to do if your claim is denied.

The Employee Retirement Income Security Act of 1974 (ERISA) governs most employer-sponsored disability benefit plans. Knowing the difference between short-term and long-term disability and how ERISA impacts your rights can make all the difference in the claims process.

At Reynolds& ERISA Law Clinic, we focus exclusively on ERISA law, representing employees and plan participants in disputes over disability and health benefits. Below we’ll break down the key differences between short-term and long-term disability benefits, how they overlap and what you can do to protect your income.

What is Short-Term Disability (STD)?

Short-term disability benefits are designed to replace part of your income for a limited time when you can’t work due to illness, injury or recovery from surgery.

Key features:

• Coverage lasts for a limited amount of time, depending on the plan.
• Some STD plans provide salary continuation through payroll, while others pay a percentage of your salary through an insurance policy.
• Some plans require you to use sick leave or vacation time before STD kicks in.
• STD claims are usually processed faster than LTD claims.

Example: If you need three months off work to recover from back surgery, STD benefits may provide income replacement during your recovery period.

What is Long-Term Disability (LTD)?

Long-term disability benefits provide income replacement if your condition prevents you from working for an extended period of time.

Key features:

• Payments typically begin after STD benefits run out, after a non-paying “elimination period” of 90–180 days.
• Benefits can last for years—or in some cases until retirement age.
• LTD typically pays a percentage of your salary, often 50–60%, but the exact amount depends on your plan.
• Plans may define “disability” more strictly after two years, requiring proof you can’t work any occupation, not just your own.
• Many LTD plans also limit the duration of payments for certain types of disabilities (for example, for mental health disabilities)

Example: If a chronic illness prevents you from returning to work after six months, LTD benefits may provide ongoing income support.

How STD and LTD Work Together

Most employees transition directly from STD to LTD if their disability continues. Think of STD as the bridge that provides income until LTD coverage begins.

Important considerations:

• Elimination period: LTD benefits don’t start immediately. You’ll often need STD benefits (or another income source) to cover this gap.
• Medical documentation: The evidence you submit for your STD claim often forms the basis of your LTD claim. Consistency in medical records is key.
• Overlapping coverage: Some employers offer only one type of plan, others offer both. Knowing what your employer offers is crucial.

ERISA Rules

ERISA governs some employer-sponsored STD and nearly all LTD plans. This includes:

• Your right to receive plan documents, including the Summary Plan Description (SPD).
• Requirements for clear explanations of claim denials.
• Right to file an appeal within 180 days of a denial.
• Fiduciary duties for plan administrators to act in your best interest.

Note: Short-term disability plans may be exempt from ERISA if benefits are paid directly by the employer through payroll. If payments are made by an insurance company, the plan most likely falls under ERISA’s protections.

Common Employee Challenges

1. Denials for lack of medical evidence
   Administrators may argue your medical records don’t support disability.
2. Inconsistent definitions of disability
   STD and LTD plans sometimes use different definitions which can cause confusion when transitioning from one to the other.
3. Failure to meet deadlines
   Missing the 180-day appeal deadline under ERISA can bar your claim forever.
4. “Any occupation” standard in LTD
   Many LTD plans shift definitions after two years requiring proof you can’t work any occupation, not just your prior role.

What to Do

1. Get your plan documents early. Know the elimination periods, benefit levels and definitions of disability in both STD and LTD plans.
2. Keep thorough medical records. Ensure your doctors provide detailed specific notes about your condition and limitations.
3. Be consistent. Discrepancies between STD and LTD applications can lead to denials.
4. Meet every deadline. ERISA timelines are strict and missing them can end your claim.
5. Get legal guidance early. An ERISA attorney can help you strengthen your claim record in case litigation becomes necessary.

 Why STD vs. LTD Matters

For employees, it’s not just about the words – it’s about survival during a medical crisis. STD is a bridge, LTD is a lifeline. Both have complex rules and ERISA requirements.

At Reynolds& ERISA Law Clinic, we help employees and plan participants sort through the confusion, navigate overlapping benefits and fight denials.

If you’re having disability issues, don’t wait until deadlines pass. **Schedule a consultation with Reynolds& ERISA Law Clinic today to protect your income and your future.

Income Protection Through Every Stage of Disability

Illness or injury can turn your world upside down, but disability benefits are meant to be a safety net. By understanding the difference between short-term and long-term disability, how they overlap and how ERISA applies to your rights, you can better protect your income and focus on recovery. With the right help, you can get the benefits you’re entitled to.

 

source https://www.reynoldsand.com/short-term-vs-long-term-disability-under-erisa/