Short-term disability (STD) is a type of insurance benefit that provides employees with partial income replacement if they are temporarily unable to work for a limited period due to a non-work-related medical issue, like surgery recovery, serious illness, or complications from pregnancy.
This benefit helps cover lost wages during periods when an individual is recovering. Short-term disability is typically offered as part of an employer’s benefits package, available through private and public insurance (in states like California). Offering short-term disability in regions where it’s not legally required signals to your talent that you value their well-being as much as their work.
Note: Workplace injuries are usually covered under workers’ compensation, not short-term disability.
What does short-term disability cover?
Short-term disability policies cover a range of non-work-related medical conditions that prevent an individual from performing their job for a limited time. Common covered situations include:
- Surgery recovery (such as appendectomy or back surgery)
- Serious illness (pneumonia, migraines, digestive conditions)
- Injuries (broken bones, severe sprains)
- Pregnancy and childbirth recovery
- Mental health conditions (severe anxiety or depression)
The above conditions are usually resolved over the course of a few weeks or months. If complications persist, then short-term disability is replaced with long-term disability. STD bridges the gap between an immediate medical issue and a potential long-term inability to work.
Short-term vs. long-term disability
Short-term disability and long-term disability are related, but they solve very different problems for your team. A clear side-by-side view helps you see how they differ in purpose, duration, funding, and typical coverage levels, so you can design a benefits mix that supports employees through major life events.
| Feature | Short-term disability | Long-term disability |
|---|---|---|
| Coverage duration | Weeks to 6 months | 6+ months to several years |
| Start time | Usually within 1–2 weeks | Starts after STD or 90+ day waiting |
| Common uses | Surgery, childbirth, and short illness | Chronic illness or serious injury |
| Income replacement | ~40–70% | ~50–60% |
How short-term disability works
Short-term disability looks a bit different from plan to plan, but most policies follow the same basic playbook. There’s usually a short waiting period before payments kick in, a set percentage of the employee’s usual pay that gets replaced, and clear rules around how long those benefits last and who qualifies.
Below, you’ll see how those pieces (waiting periods, benefit amounts, duration, and eligibility) fit together, so you can gauge how a given short-term disability plan could actually work for your team.
Waiting period
Most short-term disability policies include a waiting period before benefits begin, often between 7 and 14 days. During this gap, the employee is still unable to work, but the insurance benefit has not kicked in yet, which can catch people off guard if they are not prepared. Employees must use available sick leave or paid time off (PTO) during this time, if applicable, or go unpaid if no such balance exists.
Benefit amount
Short-term disability typically pays 60% to 70% of an employee’s base salary, depending on the plan and employer policy. This partial replacement helps employees cover essential costs. Some plans cap the weekly benefit at a set maximum, which can be especially important for higher earners.
As an employer, it’s worth pressure-testing whether the percentage you offer and any caps you set line up with the cost of living where your employees live and with the kind of financial stability you want your benefits to provide.
Duration of coverage
Coverage typically lasts from a few weeks up to six months, depending on the plan. In general, if the condition extends beyond this period, long-term disability (LTD) may begin. For you as an employer, it’s essential to understand how your short-term and long-term policies connect, so employees experience a smooth handoff instead of a scary gap in income right when they’re most vulnerable.
Eligibility
Eligibility criteria vary by insurance policy and region but often include:
- full-time employment status,
- medical documentation of the condition
- meeting the plan’s definition of “disability.”
Some plans may require the employee to meet a minimum number of hours or days worked before benefits can be used.
Why employers offer short-term disability
Offering short-term disability is one of the clearest ways to give real support when life goes sideways for your people. It provides employees breathing room to recover from surgery, illness, or complications from pregnancy without scrambling to cover rent or groceries at the same time. Supporting your employees’ well-being really does matter—for many reasons. Not only is caring about them the right thing to do, but it can also help you attract talent, per Gallup.
Additionally, offering short-term disability options to your talent may help you retain them. According to Gallup, 30% of employees who left an organization say that they would have stayed in their job if they had been provided “additional compensation/benefits.” Given this statistic, it’s worth considering if adding (or bolstering) short-term disability benefits for your employees could improve retention.
For some employers, short-term disability insurance is managed and offered through the state or territory. California, for instance, provides State Disability Insurance (SDI) for non-work injuries/illnesses and pregnancy, and Paid Family Leave (PFL) for bonding once the baby is born. Employers in these states must ensure that disability taxes are remitted to the appropriate agencies on time.
FAQs
Is short-term disability paid by the employer or insurer?
It depends. Some employers fund their own short-term disability programs, while others offer policies through third-party insurance providers.
Do all employers offer short-term disability insurance?
No. It is optional in most countries, except where required by local or state law (e.g., certain U.S. states like California, New York, New Jersey, and Rhode Island).
Can you be fired while on short-term disability?
While employment protections vary, in many cases employers cannot terminate employees for taking approved medical leave. However, laws differ by region.
Does pregnancy qualify for short-term disability?
Yes. Pregnancy and postpartum recovery are common qualifying reasons for STD coverage, though the duration of benefits may vary.
What happens after short-term disability ends?
If the condition continues, the employee may transition to long-term disability, apply for unpaid leave, or return to work with accommodations.
Short-term disability benefits for global teams
In a global context, short-term disability gets even more complex—and more of a priority. Some countries offer generous state-backed sickness benefits, while others leave it largely to private insurance. In addition, eligibility rules, waiting periods, and wage replacement rates can look very different from market to market.
For international teams, that means you may need to blend statutory programs with employer-sponsored coverage, align internal policies to a consistent standard, and use centralized HR platforms to track who’s covered, where, and under which rules. If that sounds complicated, that’s because it is.
To help sort it all out for you, consider partnering with Pebl, an Employer of Record (EOR) in 185+ countries. With our HR and benefits support, you can design short-term disability and leave policies that fit local rules, align with global standards, and actually make sense to employees.
If you’re ready to level up how you support people through health events—without drowning in admin—Pebl can help you build, manage, and scale those programs with confidence. Contact us to begin.
Disclaimer: This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.
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