Individuals with medical conditions that limit their capability to do work tend to receive short-term disability benefits at first and then may move to long-term and finally to permanent disability benefits. The progression of aging workers (those aged 55 to 64) along that range of benefits is documented with data from a large disability insurance company. The data prove that older workers who get short-term medical disability benefits are three times as likely as younger workers to progress to receipt of Social Security Disability Insurance (SSDI) benefits, although a slight reversal of that trend occurs as workers pass age 62.

Musculoskeletal conditions are the most common basis of short-term disability claims among aging workers, with circulatory conditions running a close second. In addition, although all medical conditions are more likely to lead to SSDI benefits among aging workers, circulatory conditions do so most often.

Since the early 1970s, employers have encountered steadily rising health care, workers' compensation, and other disability-related expenditures. Current estimates from the Census Bureau indicate that the direct costs of disability have reached an all-time high of $340 billion. When indirect costs such as overtime, low productivity, and lost customer service are taken into account, that figure could more than double.

In Addition, the U.S. labor force is rising more slowly today than it has in the preceding three decades. According to Labor Department statistics, the growth rate of the labor force was consistently around 2 percent a year from the 1960s through the 1980s. In the 1990s, that growth dropped to about 1 percent yearly. Thus, the overall aging of today's workers is coupled with fewer young people entering the workplace.
Private insurers offer disability coverage to a selected portion of the U.S. working population and are thus able to choose the industries to which they market policies. In addition, some employers opt to self-insure disability benefits and thus gain maximum control over the type and length of coverage while defining the types of impairments and classes of employees to which coverage applies.

The definition of disability is central to all issues regarding eligibility for benefits. Employer benefit plans increasingly narrow the definition of disability as an employee moves from the more liberally applied sick leave to short-term disability (STD), long-term disability (LTD), and ultimately to the more restrictive SSDI.

The definition of short-term disability that is, the temporary inability to perform the essential functions of one's own occupation is used by insurers and employers alike and is generally consistent among benefit plans. Basically, short-term disability is a temporary income replacement benefit for which employers can insure or self-insure. The benefit usually has a brief waiting period (1 to 7 days) that is coordinated with sick leave, and it typically replaces between 60 percent and 80 percent of an employee's wages. Although the duration of disability payments varies among employers, it tends to range from 3 to 12 months. There are isolated cases of employers offering up to 18 months of benefits to employees who participate in workplace disability management programs. Short-term disability is a discretionary employment benefit. Although common, it is not universally offered by employers.