Temporary Disability Insurance
Temporary disability insurance is a form of disability that is intended to cover a person’s disability if it is short-term. It is frequently referred to as “cash sickness benefits.” Unlike long-term disability insurance, it provides workers with partial compensation for loss of wages that are caused by a sickness or injury that is not related to occupational disability. Unfortunately, only Puerto Rico, five states (not including Indiana), and the railroad industry have enacted temporary disability insurance laws.
The original impetus for the United States’ social insurance programs for unemployment was the Great Depression of the 1930s. The initial options were unemployment insurance and old-age insurance. Old-insurance, better known as social security, has been criticized a lot over the years but it has not been abolished yet.
During the Depression, temporary disability did not have the same urgency as other programs that were enacted. Providing protection against the costs of illness that are frequently recurring, regardless of economic conditions, seemed a step or two less important than providing protection, or a safety net, for cyclical unemployment and old-age dependency. When Congress created Social Security, the law was not written in a way that included a system of compensation for wages that were lost due to short-term sickness or disability.
Of the states that have created short-term, or temporary, disability insurance programs, Rhode Island came first in 1942. California followed Rhode Island in 1946 and New Jersey in 1948. New York and Hawaii are the other two states that have enacted legislation.
The temporary disability insurance laws that do exist are similar to the unemployment programs. They cover the majority of commercial and industrial wage and salary workers in private employment.