Many business owners in New Jersey and Pennsylvania provide short-term disability insurance as a benefit for their employees. Employees who contract COVID-19 and are unable to work may file claims with the short-term disability insurance company to secure benefits until they are able to return to work. Some business owners also choose to purchase additional insurance to cover business expenses and compensate the owners when they are dealing with COVID-19. Short-term disability insurance for business owners during COVID-19 can help them to make ends meet when they contract COVID-19.
What is short-term disability insurance?
Short-term disability insurance is insurance that offers benefits to people who are unable to work temporarily because of an illness or injury. While workers’ compensation offers benefits if you are injured or sickened on the job, short-term disability insurance also covers you if you are injured or sickened outside of your workplace.
Short-term disability insurance is time-limited and generally will only provide compensation for a year or less. The compensation you can receive will range from 60% to 80% of your regular income, depending on the terms of your policy. You might also have a policy with a cap for the maximum you can receive no matter your income.
Business owner and employee coverage
If you have employees at your business, you might offer a short-term disability insurance program for your employees. While this is optional in a majority of states, it is mandatory in New Jersey. You also have the right to pay into your company’s short-term disability program to protect yourself. While this is uncommon, it is a good idea. To secure coverage under a short-term disability policy, it must have been in place before your injury or illness, however.
Because of COVID-19, many states and insurance companies have made changes to the rules governing short-term disability claims, including waiving the mandatory waiting periods. In the past, the waiting period before people could apply for benefits was a week or more.
Many companies now explicitly state that people are eligible to start receiving benefits if they have been exposed to the virus and have been placed in quarantine and cannot work. However, you will still be required to show that you have a disability. You will not be able to get short-term disability benefits if you are unable to work simply because the government ordered you to close your business in a shut-down order.
If you are well enough to work remotely from home and can do so, you will be unlikely to qualify for short-term disability. However, you might still be eligible if your income has significantly reduced as a result. Your policy should state the required reduction in income. If your income has been reduced by less than the stated percentage, you will not be able to recover short-term disability benefits.
Applying for short-term disability benefits
Your application process will depend on the terms of your policy. You will need to contact the disability insurance department in your state or your short-term disability insurance company to learn about the claim requirements. Most providers will require you to submit documentation showing the reduction of your income and your medical condition.
It can be difficult to obtain medical documentation of your condition since doctors and hospitals are currently at or above capacity. However, you can use telehealth services to receive a confirmation of your condition. While the doctor might not be able to confirm that you have coronavirus disease, he or she can still assess your symptoms and determine whether you should be quarantined or if you can return to work.
It can be harder for a business owner to prove that his or her income has reduced than it might be for an employee who receives a regular paycheck. You will need to gather your financial records to show your business profits before and after you contracted COVID-19. Ask the insurance adjuster about the requirements your company has for documentation.
Overhead expense coverage
Another type of insurance that you might want to purchase is overhead expense coverage. This type of insurance pays for your business’s overhead while you are temporarily disabled, including your utilities, rent, supplies, taxes, and payroll. This type of policy will also likely require you to submit documentation from a health care provider showing your diagnosis and that your illness prevents you from returning to work.
This type of insurance has several limitations. It will not compensate you for your business’s profits or your salary but will instead help to keep your business operating. It will also be limited to the types of expenses your business had before your disability. You will not receive benefits to help you hire more employees or secure a larger office. Your policy will likewise have a maximum monthly amount that it will pay, and the payments will end after a specified duration.
Contact Swartz Swidler
Short-term disability and overhead expense insurance are two types of coverage business owners may want to consider during the COVID-19 pandemic. If the worst happens, these insurance policies can help you and your company to stay afloat. For help with filing a claim for benefits, contact Swartz Swidler by calling us at 856.685.7420.
