What is disability insurance? Disability insurance replaces income lost due to injuries and illnesses that are not job related. Disability insurance is available through commercial insurance companies or through self-insurance and comes in both short- and long-term forms. There are numerous options for designing a disability insurance plan to meet the needs of a particular employer.

In most states, employers are not legally required to provide disability insurance. Only a few jurisdictions (e.g., California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island) require that employees be covered by short-term disability insurance through state-run programs or by equivalent private or self-insurance coverage. The state programs provide only minimal benefit levels and do not provide long-term coverage.