Short Term Disability Shows Its Ugly Head Again

A couple weeks ago I said something happened that I couldn’t yet share… this is it.

Short term disability insurance is something we’re getting quite familiar with in our household… and it isn’t any fun at all! You may remember that Tori, my fiancee, was just on short term disability for a couple months last year. She had a foot surgery to correct a problem that would only continue to get worse over her lifetime.

The reason she opted for the surgery was because she is on her feet all day long as a registered nurse (RN). The problem was already bothering her in an annoying way and as it progresses it would get even more painful. We followed all of the doctor’s orders and she went back to work about 3 months after the surgery. Until things went south…

Another Foot Problem Pops Up

Well… her foot didn’t actually pop, but there was another serious problem. Just a few weeks ago we found out that a bone had broken in her foot. The only way to fix it was another foot surgery that would require her to be off of her feet for another few months. Again. Seriously.

We Didn’t Learn Our Lesson

I’m not ashamed to admit that we were not well versed with the rules of disability insurance. I mean, who really reads the benefit statements that explain disability insurance they get from their work? I normally read all of the fine print on contracts or other documents I sign, but like most people we never expected to use it once, let alone twice. You’d think we would have learned after her first short term disability stint, but we didn’t.

We immediately assumed the worst. We didn’t think that she would be able to claim short term disability twice in a twelve month period. We thought that, best case, we could only claim the rest of short term disability benefit period from the first surgery. That only left a few weeks.

We figured that at least at that point we could use her long term disability insurance which would have given us a smaller percentage of her pay… until we realized that she didn’t have any. Ugh… a comedy of errors on our part for not making sure we learned from the first short term disability stint. Needless to say, we were freaking out. If it came to that and we didn’t have good credit or an emergency fund we’d be in trouble.

Luckily We Were Wrong

Luckily, there is no such provision in her short term disability policy. So, for the next few months, we’ll be living on 80% of her pay again. The thing that stinks is that technically she is only 83% of a Full Time Employee, so her disability will only pay 80% of the 83% of a full time paycheck. Yes, she normally works more hours, but companies love to classify their employees as part of a full time employee to save money.

Please learn from our mistakes! Read your short term or long term disability policies if you have them. Know what you’ll get paid should there be a need and how long you’ll get paid for.

If you don’t have short and long term disability you should consider your financial situation and see if either type of insurance would be worthwhile for you to get. People get disabled on a short term basis a lot more than anyone would like to think.

We are very glad we have an emergency fund that could have covered us even if none of her disability paid. We’re even happier that we won’t have to use our emergency fund because we have play room in our budget. Unfortunately the student loan payments won’t be as large as we’d like, but we’ll survive unscathed through another bout of short term disability.

Have you ever had any experience with short term disability? Did you ever have an issue and not have short term disability insurance? Let me know in the comments.

Lance Cothern, CPA

Lance Cothern, CPA holds a CPA license in Indiana. He’s a personal finance, debt and credit expert that writes professionally for top-tier publications including U.S. News & World Report, Forbes, Investopedia, Credit Karma, Business Insider and more.

Additionally, his expertise has been featured on Yahoo, MSN, USA Today, Reader’s Digest, The Huffington Post, Fast Company, Kiplinger, Reuters, CNBC and more.

Lance is the founder of Money Manifesto. He started writing about money and helping people solve their financial problems in 2012. You can read more about him and find links to his other work and media mentions here.