Short-Term Disabilities, Return to Work, and Transitions to Long-Term Disability Benefits: Evidence From Matched Administrative Data in Wisconsin

Employer-provided disability coverage offers employees a way to insure against short-term spells of disability that prevent work and to supplement public long-term disability benefits. Using administrative data from the U.S. state of Wisconsin, we explore the predictors of short-term disability insurance (STDI) claiming and transitions following exit from STDI benefit receipt. We find that gender, age, occupation, and disability type are significant predictors of returning to work with their prior employer following STDI claims. We also examine whether workers who initially returned to work remain employed in years following a claim or make subsequent disability insurance claims—we find two-thirds of employees return to work, but a substantial portion end up re-claiming or eventually transitioning to long-term disability benefits. These findings highlight the value of STDI in connecting workers to benefits while managing illnesses and injuries that prevent work. Some workers use STDI as income support while recovering from a temporary disability before returning to work, whereas others use STDI as a bridge coverage between disability onset and the award of other long-term benefits. We also shed light on the types of workers who benefit from these programs.