Disability: Economic Costs and Insurance Protection

These programs can be divided into those which address short-term disability and long-term disability. Short-term disability coverage is most often paid sick leave. Although sick leave is a benefit widely offered by U.S. employers, duration of benefits is limited to the accumulated sick days. Some firms offer sickness and accident insurance, typically with a service requirement for eligibility.

Long-term disability coverage may be provided through separate disability policies or by provisions in an employer-sponsored pension plan. The Employee Benefit Research Institute (www.ebri.org) estimates that about one-third of U.S. workers are covered by long-term disability policies other than Social Security. This percentage has actually declined, as has the percentage of persons who are covered by pension plans that offer a disability benefit.

While these accounts are not necessarily linked to employment, early withdrawals without income tax penalty from Individual Retirement Accounts and 401(k) and 403(b) accounts are allowed when due to disability.