My wife is on H1B right now and is expecting a baby soon. She is paying for a benefit(provided through her employer) that will pay her 3 months short term disability and 6 months long term disability in case of situations where she cannot work.

1. Is my wife allowed to avail the short term disability benefit for three months and still maintain H1B status(STD disability only sixty percent of her salary). There will be no pay from the employer during those three months.
2. If she needs more time after 3 months of short time disability, can she convert to H4 status right away using the paystubs from the insurance company that pays short term disability.

Disability , long OR short term isn't for time off to have a kid... or care for one. FMLA is unpaid time off to have a kid... or she can use vacation and sick leave for that.. but the insurer for the disability isn't going to pay for that.

If she fell down the stairs and broke her legs... yes... to have or take care of a kid... no.

I am not aware of any disability coverage in the US that pays for having a child. If she has come seroius complication from child birth perhaps. But no, and even FMLA ( unpaid) will allow her short time, 2 or 3 months. Many women even go back to work within a month.