Short-term disability insurance provides financial help to a person who is temporarily unable to work because of an illness, injury or pregnancy. Claimants are paid a percentage of their weekly salary for the period of time they are out of work. "Short-term" means the person’s absence from work cannot be permanent, and is usually limited to two years. Colorado has a few specific laws regarding short-term disability.
Colorado's Short-Term Disability Law
Colorado does not have a law making it mandatory for private employers to offer their employees short-term disability coverage. However, the state does provide short-term disability benefits for government employees who have more than five years of service.
Read More: Rules of Short Term Disability
Colorado's short-term disability coverage applies to most employees who are paid from state funds. This includes many groups of employees aside those who are part of the state personnel system. Eligible employees include teachers and administrators employed by the Department of Education, most employees of the Judicial and Legislative Branches, employees from the Economic Development Office, employees of the Office of State Planning and Budgeting and employees of the Office of the Governor and Lieutenant Governor’s Office. However, several categories of state employees are not eligible, including temporary employees, members of the armed forces, judges and legislators.
Employees on short-term disability leave complete a 30-day waiting period before any benefits are received. Benefits are paid based on an employee’s pre-disability earnings. These start with the base salary, not including bonuses and overtime pay, minus any deductible income. Deductible income is defined as any earnings paid from work done while on disability, any benefits received for the disability under the Federal Social Security Act and any form of compensation received under any other law because of the disability.
Employees on short-term disability are eligible to receive 60 percent of their earnings minus the deductible income. Benefits are paid for a maximum of 150 days after the waiting period.
Laws Against Fraudulent Claims
Colorado’s short-term disability law establishes a penalty for anyone who attempts to defraud an insurance company. Any person who purposefully makes false or misleading statements to an insurance company with the intent to commit fraud may be subject to cancellation of insurance or ordered to pay fines; they also may be subject to a prison sentence. The law allows insurance companies to sue the defrauding individual for civil damages, which, including attorneys’ fees, can be thousands of dollars.
Insurance companies who intentionally make false or misleading statements in an attempt to defraud a policyholder can be reported to Colorado’s Department of Regulatory Agencies and subject to sanctions.
Private Temporary Disability in Colorado
If you are a private employer Colorado an therefore not obligated by law to provide short-term disability insurance, you still have the option of purchasing private coverage or self-insuring for short-term disability in Colorado. Similarly, an employee who does not have a preexisting health condition can purchase her own private coverage is the employer does not offer a voluntary option. Look for policies that are portable, meaning they are not tied to a specific employment, and ensure they cover the benefits you need: special conditions may apply to pregnancy related-disability, for example. The premium is tied to the length of the benefit period you require.