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STD after termination?

If you terminate an employee if they are unable to return to work after 12 weeks how can they continue STD benefits? The STD policy states insurance ceases on the date employment terminates. This does not seem fair to the employee that paid for STD benefits.

Short term disability (STD) is a type of insurance that pays a percentage of an employee’s wages for a specified amount of time, if they cannot perform the duties of their job due to temporary or permanent disability. STD plans typically have a short front-end waiting period for benefits to begin of about fourteen days after the employee suffers the condition that makes them unable to work. Most STD plans provide income replacement benefits for periods of 90 to 180 days and 55% to 75% of an employee’s weekly wages. Some employers offer long term disability (LTD) plans that will activate once an employee has exhausted the STD plan period. LTD plans offer extended wage replacement benefits either for another period of time or until retirement.

Employers are not required to offer employees STD or LTD benefits under federal law. However, a few states have adopted legislation mandating such benefits. Employers may offer STD and/or LTD disability plans on a fully contributory, partially contributory or non-contributory basis.

Employees participating in the plans are subject to the coverage terms and agreements of the policy from the insurance company regardless of their contributions to the premiums. Though the employer may provide the benefit, the insurance carrier is ultimately the decision maker regarding eligibility and entitlements.

STD plans are for wage replacement benefits only. They don’t guarantee an employee the right to job reinstatement. It’s not illegal to terminate an employee on STD benefits unless the employee is protected under a state or federal leave entitlement law, such as the Family and Medical Leave Act (FMLA), or the disability is covered under the American’s with Disabilities Act (ADA). Unfortunately, what is fair to the employee is not always what is legally mandated of the employer.


This entry was posted on Tuesday, August 12th, 2014 at 12:14 pm and is filed under
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