Short-Term and Long-Term Disability: US

This Short-Term and Long-Term Disability policy explains how your organization can offer wage-replacement benefits when an employee cant work due to a non-work-related illness or injury, including eligibility, waiting periods, benefit levels, and the medical certification process. For most employers, short- and long-term disability coverage is a voluntary benefit and a practical way to set clear expectations, but if your plan is employer-sponsored, it may be governed by the federal Employee Retirement Income Security Act (ERISA) and should be written and administered consistently with your plan documents and required notices.

The History Behind Short-Term and Long-Term Disability Policies in the US

Short-term and long-term disability benefits became a common employer practice as part of the broader shift toward employer-sponsored insurance, which is why you will often see them discussed alongside other Benefits & Perks. Early disability coverage grew out of private insurance markets and union bargaining, especially in industries where injuries and chronic conditions regularly pushed people out of work. Employers also learned that informal "we'll take care of you" promises created inconsistent outcomes and employee relations problems, so written plans and carrier-administered claims became the norm.

Federal law influenced these programs through ERISA, the Employee Retirement Income Security Act of 1974, which set baseline rules for plan documents, fiduciary duties, reporting, and claims procedures for most employer-sponsored disability plans. Courts then made ERISA stronger by enforcing its preemption of many state-law claims tied to benefit denials, including in Pilot Life Ins. Co. v. Dedeaux (1987), and by policing plan administration and conflicts of interest in cases like Metropolitan Life Ins. Co. v. Glenn (2008). Those decisions pushed employers toward clearer eligibility rules, tighter documentation, and more disciplined claims and appeals processes.

State laws also shaped how employers structured disability programs, especially where states created mandatory short-term disability or paid family leave systems funded through payroll contributions, like California, New York, New Jersey, Rhode Island, and Hawaii. Employers in multi-state footprints started standardizing plan designs and coordinating private coverage with state programs to avoid gaps, double payments, and payroll headaches. The result is the modern best practice you see today: a short-term bridge into long-term coverage, run through a formal plan and a carrier process, with medical certification and defined waiting periods.

Which Law is this Short-Term and Long-Term Disability Policy Meant to Comply With?

If you create and distribute a Short-Term and Long-Term Disability Policy for your US-based employees, make sure it's administered in compliance with the Employee Retirement Income Security Act of 1974 (ERISA).

How to Write a US-Specific Short-Term and Long-Term Disability Policy

• Start with "why" and introduce the concept.
• Define who is eligible for short-term and long-term disability benefits.
• State how premiums are paid for each program.
• Explain that disability benefits replace part of income and are separate from job-protected leave.
• Describe the short-term disability benefit structure and identify the insurance carrier.
• Describe the long-term disability benefit structure and identify the insurance carrier.
• Require medical certification to support disability claims.
• Tell employees where to direct questions about disability benefits.

When to Include this Policy in Your Employee Handbook

If you have employees in US and your company offers STD and/or LTD insurance, it may be helpful to include this policy in your employee handbook. You can also make a more brief mention of your policy in a higher-level "benefits" overview. A clear, employee-friendly policy helps set consistent expectations, points employees to the controlling plan documents, and reduces day-to-day confusion about your program.

ERISA states in 29 U.S. Code § 1024(b)(1):

The administrator shall furnish to each participant, and each beneficiary receiving benefits under the plan, a copy of the summary plan description and all modifications and changes referred to in section 1022(a) of this title.

Your employee handbook doesn't qualify as a summary plan description, but those documents can be long and detailed. It's helpful to give employees a quick overview somewhere.

Other Considerations

None.

Exceptions

None.