Congresswoman Eleanor Holmes Norton (D-DC) has again introduced legislation to give federal employees the option to buy short-term disability insurance to cover a short-term injury or disability, pregnancy, or pregnancy-related illness.
Known as the Federal Employee Short-Term Disability Insurance Act (H.R. 8731), the bill would allow federal employees to purchase the insurance at group rates. It is not a benefit the government would pay for in whole or in part like some other benefits; rather, federal employees would pay the full cost of the premiums, but the assumption behind the legislation is that it would be cheaper to buy at group rates when offered to the federal workforce versus buying it directly from an insurance company as an individual.
Benefits would be provided for up to one year, and insurance companies would be prohibited from excluding federal employees, or charging them higher premiums, based on pre-existing conditions.
Norton is very determined to offer short-term disability insurance to the federal workforce. It has been introduced eight times since 2011:
- September 15, 2011 – H.R. 2958
- July 16, 2013 – H.R. 2698
- June 11, 2015 – H.R. 2741
- January 16, 2018 – H.R. 4806
- September 25, 2019 – H.R. 4493
- March 3, 2022 – H.R. 6932
- February 13, 2024 – H.R. 7337
- May 11, 2026 – H.R. 8731
She said in a statement:
According to the Social Security Administration, a 20-year-old worker has a one-in-four chance of becoming disabled by retirement age. Most disabilities are not caused by major accidents, but by injuries or illnesses, such as back injuries or cancer, according to the Council for Disability Awareness. At a time when Americans are already struggling to afford necessities, there is every reason to allow our federal employees to take advantage of the federal government’s purchasing power to obtain the most reasonable price for short-term disability coverage, at no cost to the federal government.
In remarks about the bill, she added:
Although federal employees have good health insurance, health insurance benefits do not replace lost income. Moreover, while federal employees may have available sick or annual leave, they may not have enough such leave to pay the bills if they cannot work for an extended period, such as following surgery. Although the federal government provides disability benefits to federal employees who become permanently disabled, federal employees do not qualify for these benefits until they have worked for the federal government for at least 18 months. The Office of Personnel Management would contract with insurance companies to provide short-term disability insurance.
Other Alternatives to Short-Term Disability Insurance
Since the bill has been introduced numerous times and never become law, odds are it will suffer the same fate in this session of Congress. What options then do federal employees have to cover a short-term income loss without insurance?
Emergency Fund
An emergency fund is arguably the best solution, and, unlike an insurance plan you buy from a company, you are in full control of it.
Financial advisors frequently recommend having three to six months worth of monthly household expenses set aside in a separate account to prepare for emergencies. If you or a family member gets sick, your car breaks down, your hot water heater goes out, etc., the extra funds are there to carry you financially through the situation.
For instance, if you determine that your average monthly household expenses are $1,500, then you would want to save $4,500 to $9,000 in a savings or money market account earmarked only for emergency use.
Once you have that goal, you can create a savings plan to build the emergency fund. Even starting small can help get you to your goal.
TD Bank suggests starting with as little as $5 or $10 per week if need be because it will quickly build up over time. Although it seems small, $10 a week becomes $40 per month and $520 per year.
The Consumer Financial Protection Bureau recommends setting up automatic recurring transfers as one easy way to build your savings. This could be an automatic draft from your regular income that goes into a savings account.
When building an emergency fund, prioritizing it over other expenses will help it accumulate more quickly. For example, many of us have monthly subscription services for entertainment. Eliminating even one video streaming service and putting that money into savings instead can make a big difference in jumpstarting an emergency fund.
If you have a known event coming up that will keep you out of work, such as a surgery, you can start planning ahead by adding extra savings to your emergency fund or even create a second savings fund just for that event.
Financial planners can help too. They can work with you to develop a comprehensive plan tailored to the unique needs of you and your family that includes paying off debt, saving for emergencies, and saving for retirement.
Using Leave
When I’ve written about this subject in the past, other readers have suggested using sick leave and/or annual leave for short-term situations when an emergency arises that will keep somebody out of work. Depending on how much leave one has available, this could help with at least a portion of time away from work.
One commenter wrote on one of my past articles on this topic, “I’ve stopped using sick leave for doctor’s appointments and have built up around 800 hours. I figure I can use that if necessary.”
Other commenters brought up the government’s leave transfer program. Assuming it is available within the agency, it provides a way for federal employees to help each other during medical emergencies.
According to the Office of Personnel Management, the Voluntary Leave Transfer Program (VLTP) allows covered employees to donate annual leave directly to another employee who has a personal or family medical emergency and who has exhausted his or her available paid leave. However, each agency must administer a leave transfer program for its employees.
Do you have other suggestions for ways to cover a short-term financial emergency? Share them in the comments below.
