Workers’ Comp vs. Disability

Insurance coverage plans and options
Mordechai Kamenetsky
Last Updated: 
December 4, 2023

Workers’ comp is one of the most well-known workplace insurance options, but it isn’t the only one. Three different disability insurance options are separate from workers’ comp insurance. All four of these options address an employee getting hurt on the job and being unable to work. However, they are all different and should be individually considered. 

The three types of disability insurance are the following:

  • Short-term disability
  • Accident insurance
  • Long-term disability

It is important to understand what these options offer and how they differ from workers’ comp insurance. The guide below will walk you through each disability option. 

What is Workers’ Comp Insurance?

To understand how disability differs from workers’ comp, you first need to know what workers’ comp is. Workers’ compensation insurance is a business insurance that protects the company, its owners, and employees in the case of a workplace injury or illness. Though the law differs from state to state, workers’ comp insurance is legally required in most locations. Businesses pay the premium for this insurance coverage.

On the business side, workers’ comp protects business owners from paying from their pocket for financial costs associated with an employee’s injury. For employees, this insurance provides monetary compensation for charges accrued due to a workplace injury or illness.

Workers’ compensation insurance provides financial coverage for the following:

Lost wages

Lost wages (about two-thirds of the employee’s salary)

Medical care

Medical care

Death benefits

Death benefits



Short-Term Disability vs. Workers’ Comp

Short-term disability is a voluntary business insurance that can help cover some or all of an employee’s income. However, short-term disability provides this coverage when employees miss work due to an injury or illness that isn’t work-related. Short-term disability is typically covered wholly or partially by the employer, and employees may also pay towards the benefit. 

Short-term disability is typically paid out for up to three, six, or 12 months. The payout is usually between 40 and 70 percent of the lost wages. Some of the common reasons short-term disability may be paid out for an employee include:

Auto accidents

Auto accidents



Long-term diseases

Long-term diseases

Pregnancy-related absences

Pregnancy-related absences

Short-term disability and workers’ comp may seem similar initially, but some key differences exist. Workers’ comp is paid out for work-related injuries and illnesses, while short-term disability is used exclusively for non-work-related injuries and illnesses. 

Typically, an employee can’t file a claim for both workers’ comp and short-term disability because their incident either happened at work or not at work. 

However, an employee may sometimes file a short-term disability claim if their workers’ comp claim gets denied, depending on the circumstances. Having both insurances in place as an employer and employee can be beneficial. 

Accident Disability Insurance vs. Workers’ Comp

Accident disability insurance replaces a portion of an employee’s income when an injury or illness causes them to miss work. 

However, this insurance can help cover wages for injuries and illnesses that happened either at or outside of work. The employee pays for options like Aflac Insurance, which can cover the missing wages that employer insurance doesn’t. 

Workers’ comp insurance typically pays about two-thirds of missing wages. Accident disability insurance can cover some or all the funds that are still missing after the compensation payout. 

Accident insurance is also typically paid for by the employee while employers pay the workers’ comp premium. This makes accident disability insurance transferable if an employee changes jobs, while workers’ comp is job-specific. 

Workers’ comp covers only workplace injuries and illnesses, while accident disability insurance will cover any incident that causes an employee to miss work for an extended period. 

It’s important to view this optional insurance as a supplement to workers’ comp insurance, not a replacement for it. Essentially, employee-purchased disability insurance will help fill the gaps where workers’ comp or health insurance doesn’t cover the cost. 

Long-Term Disability vs. Workers’ Comp

Long-term disability is an insurance that is often offered alongside short-term disability coverage. As the name suggests, this coverage helps provide income for employees with long-term illnesses or injuries. 

Long-term disability can provide coverage if short-term disability coverage has ended, but the employee can still not return to work. The average payout is 60 to 80 percent of lost wages.

Long-term disability insurance will have a specified waiting period that must be met before benefits are paid out. If the employee is covered with short and long-term insurance through their employer, they must exhaust their short-term coverage before getting long-term payouts. 

Typically, employee benefits will only be awarded when they cannot do any job, not just their current job.

The most common length of coverage for long-term disability is three years (36 months). However, some insurance plans provide coverage for up to 10 years or even for life. 

As with short-term disability, long-term is paid out for injuries and illnesses that aren’t work-related. If an employee qualifies for other income coverage, like Social Security Disability, long-term disability will no longer provide payment. 

Some of the most common causes of long-term disability payout include:

Chronic pain

Chronic pain

Cancer treatment

Cancer treatment

Debilitating illness or injury that lasts more than 26 weeks.

Debilitating illness or injury that lasts more than 26 weeks.

Long-term disability differs significantly from workers’ comp insurance. Workers’ comp is only for workplace injuries and illnesses, while long-term disability is typically paid out for non-workplace illnesses or injuries. 

Long-term disability is an optional option that employers can provide their employees, while workers’ comp is often a requirement. Also, long-term disability has a waiting period before a claim can be made. This differs from workers’ comp claims, which benefit from being filed as soon as the employee can.  

What about Government Disability Coverage?

The United States government provides employee disability coverage through Social Security Disability (SSD). Social Security Disability is built to provide financial assistance for employees with long-term, debilitating injuries and illnesses. 

It offers financial assistance for non-work-related injuries or illnesses that keep a person from working any job. 

The goal of Social Security Disability is to cover living expenses based on the recipient’s  lifetime income earnings. This coverage isn’t something an employer or employee must choose to have. Instead, it’s a benefit awarded to employees since they pay taxes; this is part of what Social Security taxes go toward. 

There are a lot of differences between workers’ comp and Social Security Disability. Workers’ comp is designed for shorter-term, work-related injuries. Social Security Disability payments are curated for longer-lasting, debilitating conditions that keep a person from holding any job. 

Workers’ comp insurance is a state-level coverage, while SSD is provided through the federal government. Finally, Social Security Disability is automatically opted into for employees who pay taxes on wages. Workers’ comp insurance must be chosen and paid for by the employer. 

Workers’ Comp vs. Short-Term Disability, Long-Term Disability, Accident Insurance: What do you need?

As an employer, you’re likely required to have workers’ comp insurance in place for your business. This not only helps cover lost wages for your employees, but it also covers your business’ finances and protects you from legal damages. 

Essentially, workers’ comp insurance is a non-negotiable option. But what about the others? What should you provide as an employer?

Short-term and long-term disability are often offered through the same insurance company and may even be in a combined plan. While not required in most situations, offering this coverage to your employees can be an added perk to their compensation packages. 

Employers will cover some or all of the cost of this optional insurance. You can offer this as an optional benefit for employees to decide for themselves if they want and have them contribute toward the premium when they choose their coverage. 

Accident insurance is typically for your employees to choose on their own and is separate from the coverage you offer as an employee. This is another optional insurance coverage that can help fill in financial gaps left behind by health insurance and other disability insurance. 

As an employer, it’s crucial to understand that disability insurance should be offered in addition to workers’ compensation insurance and not instead of. Disability and workers’ compensation are very different coverages. Where one doesn’t offer the coverage, the other may. Providing both options will give you and your employees the most comprehensive coverage options. 

Let Kickstand help your business with Workers’ Comp Insurance

Workers’ compensation insurance is a requirement for an employer. Choosing the right policy is just as important as having the coverage in general. Let the expert team at Kickstand Insurance walk you through the enrollment process. Kickstand offers workers’ comp insurance coverage for almost any business imaginable. 

You can get an instant quote in just 10 minutes and have your company and employees protected against the financial cost of workplace injuries and illness. Then, an expert will contact you, walk you through your quote, and ensure everything looks right. Just like that, you’re covered! 

Having workers’ comp and disability insurance coverage available for your employees will give them peace of mind while on or off the clock. Get started by getting your workers’ comp insurance through Kickstand Insurance.

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Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.

Mordechai Kamenetsky

Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.

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