This requirement becomes more rigorous as the period of disability lengthens. Short-term disability is good for someone who needs a prolonged period to recover from an accident or illness but is expected to return to work within a reasonable period. Policies that provide extended coverage often change the definition of disability after two years. Before this time, the employee must be unable to perform in his or her own occupation. After that time, benefits cease if the employee is able to work, even if it is not in the same occupation.
Many employers combine long and short disability with their sick leave policy.
As with health insurance, disability coverage is cheaper when purchased in a group. Sales and administrative costs are less for a group policy and inclusion of healthy individuals in the group also reduces the cost. Your business may pay the entire premium or you may have the employee contribute as well. Payment of premiums is a tax-deductible expense for your business. Benefits are not, however, tax free, and the amount that is taxed depends on how much the employee contributed to the plan.