Most Americans are familiar with workers' compensation insurance and know that it will provide them with some form of financial compensation if they are injured or fall ill because of a work-related incident. But what happens if they are injured or fall ill due to circumstances outside of work? In such cases, workers' compensation usually won't cover them, and yet they will still suffer financially by being unable to return to work for a period of time. That's where state disability insurance comes in. These policies help cover a portion of the disabled employee's lost income for a specified period of time.
How Does State Disability Insurance Work?
It is important to understand that state disability insurance is only required in a handful of states (and one commonwealth) as of 2017:
- California (State Disability Insurance and Paid Family Leave)
- Hawaii (Hawaii Temporary Disability Insurance)
- New Jersey (New Jersey Temporary Disability Insurance)
- New York (New York Disability Benefits Law)
- Rhode Island (Rhode Island Temporary Disability Insurance)
- Commonwealth of Puerto Rico (Puerto Rico Disability Insurance)
Individual states differ in the details of how their individual disability insurance plans work, but in general, employers are required to contribute to either a state or private plan. Some states also allow employers to self-insure if they can prove they have the financial resources to do so, though this option is rarely exercised. When insured employees becomes injured, state disability insurance provides payouts if they are unable to return to work for a short period of time. The payouts are usually equal to a maximum of 50 percent of the employee's weekly pay. It is important to note that while state disability is similar to federal SSDI benefits in some ways, it differs in that it is only used for short-term disabilities. Many state disability benefits will only pay out for a maximum of six months to one year.
Why Offer State Disability Insurance?
The most obvious reason to offer state disability insurance is because you may be required to do so by law. Aside from meeting your legal obligations, however, there are other benefits to offering employees disability insurance. For one, coverage that goes beyond what workers' compensation offers can be a strong draw for potential employees and, therefore, help your company fill open positions with strong, highly selective candidates. In terms of operating your business, a disability insurance policy can help you track injury and illness rates among your workers, along with how well they are recovering. Having access to that information can help you more effectively draft hiring strategies and let you manage your human resources more effectively.
How do I Get Disability Insurance?
AmVenture currently offers state disability insurance to businesses in New York and New Jersey. So, request your free quote today so we can help you determine what state disability coverage your company needs and craft a policy that will benefit both you and your employees.