What is short-term disability insurance?

Complete Guide to Short-Term Disability Insurance

Why This Question Matters for Colorado and Utah Residents

Short-term disability insurance is a crucial, yet often misunderstood, part of employee benefits, especially in regions like Colorado and Utah where a large percentage of workers rely on their salaries to cover daily expenses. Due to recent trends of rising healthcare costs and a shift towards high-deductible health plans (HDHPs) in both states, understanding income protection options is more important than ever.

• Local cost-sharing is higher than the national average: Colorado employees pay about 31% of family premiums—higher than the 28% US average. Short-term disability can be a vital safety net when regular paychecks are interrupted.
• Medical bankruptcies and lost wages are real risks: Uninsured or underinsured workers in our region face a 53% higher risk of medical bankruptcy, underlining the importance of wage protection.
• Employer coverage varies widely, especially for small businesses: Only about 27% of Colorado small firms offer employee benefits, making voluntary or self-purchased disability coverage a key option for many workers.

What Most People Get Wrong

Many Colorado and Utah residents assume short-term disability is automatically included in all benefits packages. In reality, small employers often don't offer it—and even for those who do, coverage details can vary significantly.

Another common misconception: believing workplace injuries are always covered by workers' comp, when most short-term disability claims actually result from illness, pregnancy, or surgeries not related to work accidents.

The Complete Picture

Short-term disability insurance is an insurance policy that pays a percentage of your regular income—often 50% to 70%—if you are unable to work due to a covered medical condition. Coverage typically begins after a short waiting period (7 to 14 days) and lasts from 3 to 6 months, depending on your policy. This protection helps families meet essential expenses like rent, groceries, and utilities when illness, injury, or medical recovery interrupts income.

For Colorado and Utah employees in fields like tech, healthcare, education, and agriculture, real-life risks (from sports injuries to seasonal illnesses) make short-term disability an essential consideration. With the average annual premium inflation for employee benefits in our region at 7%, evaluating the right policy for your needs—and employer contribution—can protect both your wallet and your wellbeing.

Making the Right Decision for Colorado and Utah Residents

Question 1: What is my actual risk of income loss if I can't work for several weeks or months?

Assess your personal and family finances:

• Can you cover rent, mortgage, and essential bills if you lose two to six months of pay?
• Does your employer offer short-term disability, and if so, what percentage of your paycheck will it cover (usually 50-70%)?

Question 2: What are the specific terms of coverage available to me?

Read your benefit summary carefully or ask your HR/benefits contact:

• Look for waiting periods (often 7-14 days before benefits start), maximum benefit durations, and exclusions (pre-existing conditions, elective surgery, etc.).
• If considering an individual policy (especially if self-employed or your employer doesn't offer coverage), compare costs, benefits, and carrier reputation—FoCoIns can help you benchmark local options.

Question 3: How do local and family factors affect my decision?

Colorado and Utah have higher rates of family coverage cost-sharing and a larger proportion of small businesses that might not offer disability. Consider if you have high fixed expenses or limited emergency savings, especially in regions where seasonal work or self-employment is common (e.g., agriculture near Greeley, tech startups in Boulder or Salt Lake City).