A benefit period is the maximum time frame that benefits can be paid due to qualifying disability.
For short-term health insurance, the compensation periods vary from a few weeks to a few months. Long-term health insurance benefit periods extend from five years to retirement age.
You choose which one to buy. The longer the compensation period, the higher the cost of the coverage.
An elimination period is a waiting period before compensation begins. It is number of days you must be disabled, according to the policy, before you are eligible for benefits.
Long-term health insurance often requires longer notice periods than short-term health insurance. Short-term disability elimination periods are typically 7-14 days, while long-term disability insurance plans typically offer elimination periods of 30, 60, 90, 180, or 365 days.
You choose which elimination period you want to buy. The shorter the elimination period, the higher the coverage cost.
The coverage levels, also known as the benefit amounts, are the income you receive when you are eligible for benefits.
Your coverage level options are based on your salary. Short-term health insurance usually insures a more significant percentage of your income but for a shorter period of time. Long-term insurance usually covers less of your income over a longer period.
Examples of coverage level options:
In the short term:
- $50 to $600 per week: for self-employed or contractors
- $50 to $1,000 per week: for W-2 employees
- $500 to $20,000 per month
Both types of insurance require you to meet the status of total disability before the elimination period begins. An illness or injury is considered a total disability if it prevents you from performing the primary duties of your job.
How health insurance works:
Step 1: You suffer from an illness or injury. Your condition does not allow you to perform your duties and you are considered disabled under your insurance conditions.
Step 2: You submit your application to the health insurance company.
Step 3: After the elimination period, you will start receiving benefits. You will receive them until your benefit period is over, or until you are not considered disabled, whichever comes first.
Cost of long-term and short-term disabilities
Applicant: 35-year-old non-smoking male working in an office earning $75,000 annually.