4 Things to Know About Family Leave and Your Income

February 16, 2018 | By Council for Disability Awareness
Disability Insurance, Plan, Protect Your Income

Mother holding a baby. Becoming a parent is an extraordinary and, at times, stressful endeavor. Your life is about to fundamentally change. And as you plan the myriad dimensions of this new reality, you may be wondering how you’ll cover all the bills while you take time off work.

Family leave is a complex issue and it requires a good amount of research. Begin by reading your employer handbook or asking a co-worker how they dealt with family leave and what they were offered. Consider what will work best for you, in terms of the time you’d prefer to take off work. If you do become pregnant, make sure you let your boss know before anyone else. Embrace it enthusiastically as an opportunity for growth. As Carol Walker, president of the consulting firm Prepared to Lead tells the Harvard Business Review: “Planning for your maternity leave is an opportunity to demonstrate to everyone that you’re in the game.” 

Here are a few ways you can replace your income during family leave: 

Paid Family Leave

This is the ideal situation of course, but don’t hold your hopes up too high. The National Compensation Survey (NCS) conducted by the Bureau of Labor Statistics, revealed that just 14 percent of civilian workers had access to paid family leave in 2016. There are a few states who are pioneering paid leave: These include California, New Jersey, and Rhode Island, and New York joined the group in January 2018. If you work in the tech industry, you could also be in luck: Tech companies offer some of the best family leave out there. Ask your HR team or boss if they offer this benefit. 

Short-Term Disability Insurance

Short-term disability insurance is another way to protect your income when you cannot work due to an illness or injury. This includes pregnancies — and it’s very commonly used for this purpose by employers. Short-term disability insurance plans often cover six weeks post-partum. It covers a portion of your income — normally around 60 percent. Several states such as New York, New Jersey, Hawaii and Rhode Island have short term disability laws in place. You can also purchase this form of insurance as an individual. 

Unpaid Family Leave

The vast majority of American workers don’t have access to paid family leave (88 percent according to the NCS study). So your next step is to see if you qualify for unpaid family leave — which keeps your job intact although it doesn’t offer a salary. The federal Family and Medical Leave Act (FMLA) was signed into law in 1993 and it guarantees eligible workers up to 12 weeks of job-protected, unpaid leave per year. FMLA does have its limitations though: it only applies to companies that have more than 50 employees within 75 miles of your workplace. You also need to have worked there for at least a year and put in a minimum of 1,250 hours. Laws around this also vary from state-to-state so you’ll need to research your local situation. FMLA applies to giving birth, adopting a child, or fostering a child — and it can also be used in the cases of caring for a spouse or parent with a serious health condition. There are ways of making it work while on unpaid leave—you just need to plan well.  

Paid Time Off (PTO)

Many people will use some of their PTO to cover their income for part of their leave. Your workplace may require you to use up your accumulated PTO before benefits can kick in. Others will allow the benefits to begin immediately, which may allow you to use some of your PTO to extend the length of time you can stay at home. 

Take the time to educate yourself on the benefits that apply to you. Know your rights and don’t be afraid to try to negotiate a better deal. If you are just starting to think about having a child, now is a great idea to build out a financial plan to help avoid the stressors down the line. With a plan in place, you can relax and enjoy the extraordinary gift of welcoming a new life into the world.

Author: Council for Disability Awareness

The Council for Disability Awareness is a nonprofit organization dedicated to educating the American public about the risk and consequences of experiencing an income-interrupting illness or injury. The CDA engages in research, communications, and educational activities that provide information and helpful resources to wage earners, employers, financial advisors, consultants, and others who are concerned about the personal and financial impact a disability can have on wage earners and their families.