Can I Use Short-Term Disability Insurance for Maternity Leave?

Quick Answer

Yes, you can use short-term disability insurance to cover your parental leave and childbirth recovery. You may purchase your own policy or get one as a work benefit, making it possible to receive part of your salary while out on leave.

Young woman researching whether short term disability insurance can be used for maternity leave.

There are many funding options for parental leave (also called maternity or paternity leave), but one that may be overlooked is using short-term disability insurance. This insurance may provide some or all of your regular salary so you can stay home following the birth of your child. But there are some timing tricks for sign-up, and it may not be the most cost-effective option to cover your leave. Here's what you need to know.

What Is Short-Term Disability Insurance?

Short-term disability insurance provides income replacement when short-term problems such as illness, injury, pregnancy or recovery from childbirth leave you unable to work. It can be a versatile, affordable policy to have in your financial toolbox.

Short-term disability insurance differs from long-term disability primarily in the length of time you're able to access benefits. Short-term disability policies typically cover from three months up to two years of disability. After six months from an injury or illness, long-term disability policies can potentially last your entire life. Long-term disability may also cover a larger percentage of your salary.

Can I Use Short-Term Disability for Maternity Leave?

Short-term disability insurance may provide 40% to 100% of your salary for six weeks after birth or longer after a cesarean section or other complications. Your short-term disability insurance may kick in up to two weeks before your expected delivery date, permitting coverage before the birth of the baby and if the baby arrives early.

It is important to remember that, unlike paid leave from an employer, short-term disability insurance does not provide job security. In addition to this income replacement, it's important to also understand rights granted to you by the Family and Medical Leave Act and other applicable laws. You may be legally guaranteed job restoration, which is the return to your same or equivalent job after returning from leave.

How Do I Get Short-Term Disability Insurance?

Short-term disability insurance may be provided by your employer as a benefit.

You can also purchase your own short-term disability policy if your company does not provide a policy or if you are self-employed. These policies generally cost 1% to 4% of your annual income. If you plan to purchase a new short-term disability policy, start by:

  1. Contacting an insurance agent or broker.
  2. Submitting some basic information about your income and health.
  3. Comparing quotes from several providers to find your best cost.

But be aware that there may be some restrictions on when you can sign up for a private policy. For instance, if you are already pregnant you likely will not qualify for coverage for your upcoming maternity leave through short-term disability, as the pregnancy is considered a preexisting condition. You may also be ineligible for coverage of work-related injuries that should be covered by workers' compensation if you have a short-term disability policy.

Other Ways to Fund Parental Leave

There are several other ways to fund parental leave, some of which may be more affordable and offer better coverage than short-term disability. Some of the options include:

  • Employer-provided leave: Many employers offer paid family leave as a benefit. These plans typically permit birth parents and adoptive parents to continue to receive a salary for a certain period after welcoming a child.
  • State-provided leave: Some states provide paid leave that can be used for parental leave. States and territories that have such programs as of 2022 include:
    • California
    • Connecticut
    • Massachusetts
    • New Jersey
    • New York
    • Rhode Island
    • Washington
    • Washington, D.C.
    • Oregon (starting in 2023)
    • Colorado (starting in 2023)
  • Stagger leave from both parents: Your growing family can benefit from a longer parental leave and better cover childcare costs when you and your child's other parent stagger your leave periods. For example, the birth parent may take their six weeks of leave first. When they are ready to return to work, you can take your four weeks of leave. This can give your family over two months of one-on-one paid family leave with their new child—albeit not all at once. Many jobs have stipulations that leave may be taken up to a particular number of weeks after birth.
  • Vacation time: Being strategic about vacation time can pay off when it comes to parental leave. Both parents may be able to save up available vacation time and stagger it to create a longer period where they can be home with their child while still receiving some pay.
  • Saving up: Plenty of jobs do not offer any paid leave at all. In this case, the best option may be to try to save up some extra money. Even setting aside $25 a week over the course of a pregnancy can create a small cash fund to ease financial tensions during leave.

However you fund it, parental leave is an important, special time. Make planning for those early days with your baby part of your overall financial preparation for having children.