Paid Family and Medical Leave (PFML) benefits are there for those moments in life that go to the heart of being human. At some point, most people experience parenthood, caregiving and even becoming a patient, themselves. And while PFML is becoming more popular across the country, the benefits only go so far. That is why having Short-term Disability insurance remains an important part of an employer’s benefits package. It helps fill income gaps for seriously ill employees who need extended time off.
A handful of states have adopted some form of PFML to give employees job-protected paid time off to care for new child, recover from personal illness or care for a sick family member. Although this paid leave is available, coverage gaps can occur because state PFML laws limit how long employees can be out or how much they can receive in wage replacement while they are absent.
“Depending on the reasons for the leave or state PFML laws, some employees could go several weeks without a paycheck,” says Meghan Pistritto, Assistant Vice President of Product Management for Group Benefits Disability and Absence. “That’s a financial crisis waiting to happen. Short-term Disability insurance can be that safety net.”
What Happens When PFML Benefits Are Used Up?
Severe illness or injury can keep a person out of work long after PFML payments end. PFML plans generally allow a total of 12 weeks of paid leave depending on the state. This includes any time they take to care for others or for their own illness. This means an employee may not have the whole 12 weeks of PFML available for their own illness if they used up some of that time off early on to care for a child or a family member. The risk for a longer coverage gap is possible.
Even if an employer offers Long-term Disability (LTD) insurance, there’s the potential gap of more than three months without income. LTD usually doesn’t kick in until an employee has been out for 26 weeks. So for example, let’s do the math: PFML runs out at 12 weeks and LTD starts at 26 weeks. An employee could go 14 weeks without wages. But, STD plans commonly have six months of benefits and can bridge that gap.
Most Short-term Disability plans also pay a higher portion of an employee’s pay. PFML plans often cap cash benefits well below the wage level of higher earners, Pistritto says.
“A Short-term Disability plan remains an important part of the overall benefits package,” Pistritto explains. “It can help provide additional income when state PFML benefits end and it generally results in a premium decrease for employers.”