Outlines Are in Place on Short-Term Disability Insurance Idea

The Trump administration’s call, in its recent budget proposal, to create a short-term disability insurance program for federal employees harkens back to an idea first considered seriously a decade ago, and which has simmered on a far back burner ever since.

Lack of such coverage has long been cited as one of the major gaps in federal benefits. For short-term conditions employees may use annual and sick leave but that leave can be exhausted, particularly by employees who have little such leave to their credit. For longer-term conditions, the FECA program is available but it applies only to work-related illnesses and injuries.

The Bush administration in 2008 formally proposed creating a short-term disability insurance program, which would have been provided by a national insurance company chosen after a competition. Enrollees would have paid the full cost, with the rates being determined in negotiations. Those negotiations also would have set the precise terms of coverage, including how much of an employee’s salary the insurance would replace and whether it could be used to care for family members.

However, after an initial period of interest, support waned after the administration estimated that such a plan would cost about $1,000 a year and likely would not cover parental leave for fathers, only for mothers. The bill also became entangled in an effort by the then-Democratic leadership of the House to separately legislate four weeks of paid leave for all workers. The disability insurance policy idea fell by the wayside as the House ultimately passed that bill, which the Senate never took up. By that time it was late in the Bush administration and the White House stopped pushing the idea.

Proposals introduced since then have not progressed. The most recent, HR-4806, sponsored by Del. Eleanor Holmes Norton, D-D.C., also calls for premiums to be paid solely by the enrollee, although she said that the large potential enrollee pool would help hold down costs. In her bill, enrollees could choose from among different waiting periods before benefits would begin, with premiums decreasing as those periods lengthened. The insurance would replace 70 percent of the enrollee’s basic pay.