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What is State Disability Insurance?

State Disability Insurance program is intended to partially replace wages for workers who are very ill, injured on the job, or unable to work. Laws and regulations concerning SDI differ from state to state. Read on to know more about what is State Disability Insurance.
State Disability Insurance
What is State Disability Insurance?
As many as five states in the United States offer State Disability Insurance, including California, Hawaii, New Jersey, New York, and Rhode Island. Here's everything you need to know about State Disability Insurance in the United States.
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As many as five states in the United States offer State Disability Insurance, including California, Hawaii, New Jersey, New York, and Rhode Island. This program is intended to partially replace wages for workers who are very ill, injured on the job, or unable to work. Individuals participating in the program must be unable to perform their jobs, be under medical care, and contribute to the fund through wages deducted from their paychecks for a specific amount of time. 

Residents of California, New Jersey, and Rhode Island may be eligible for paid family leave under the State Disability Insurance program.

The paid family leave program allows people who cannot work while caring for their spouse, child, parent, or other members of their immediate family to replace some of their income. New parents can use these programs to bond with their children in some states.

States with State Disability Insurance

Laws and regulations concerning SDI differ from state to state. In the five states that require disability insurance, employees must have access to state-sponsored programs or private policies. Here are the 5 US states which offer State Disability Insurance:

  1. California
  2. Hawaii
  3. New Jersey
  4. New York
  5. Rhode Island

1. California

A private insurance company or the state can offer disability insurance to California employers. Plans offered by private companies are also called voluntary plans (VPs). The Employment Development Department (EDD) must first approve employers who offer VPs to their employees. The benefits provided by EDD SDI must be at least equal to those provided by VPs.

A voluntary plan must:

  • Ensure that employees receive the same benefits as those offered by traditional SDI. 
  • A better benefit than SDI should be offered to employees at least once.
  • The SDI plan should be relatively inexpensive. 
  • As SDI implements benefit changes via legislation or regulations, you should stay compliant.
  • To purchase private coverage, employers must obtain the consent of the majority of employees to use VPs instead of SDIs.

Your SDI must adhere to the following requirements, regardless of the type:

  • Pay plan contributions withheld from wages.
  • Make employees aware of the disability benefits they are eligible for.
  • Changes in benefits should be communicated to employees.
  • Keep records of all eligible employees’ participation in the plan up-to-date.
  • The employer must allow employees to use SDI instead of voluntary plans if the employer offers voluntary plans. 

2. Hawaii

According to Hawaii law, SDI is also known as temporary disability insurance (TDI). To provide TDI benefits to employees in Hawaii, employers have three options:

  • An authorized insurance company can provide insurance (aka an insured plan). 
  • Self-insurance is the way to go. A self-insurer that the DCD has approved must prove their ability to pay benefits using approved methods approved by the Disabilities Compensation Division (DCD).
  • Negotiate sick leave benefits at least as generous as those provided by law in a collective bargaining agreement.
  • Employers and employees may share benefits equally or pay them in full.

3. New Jersey

SDI is also known as TDI in New Jersey. The state requires most employers to participate in TDI. It is excluded from the program, however, for positions in the federal government. You can offer TDI through public insurance programs if you’re a New Jersey employer.

Your employees must pay a payroll tax, and you must deduct it from their wages. In addition, TDI participants can purchase a private policy if it meets specific requirements.

Employees are automatically covered under a state plan in New Jersey unless their employer chooses a private plan. Temporary disability benefits must be notified to employees in writing upon their hiring; as long as they are on SDI leave for an eligible reason, they can request one whenever they want.

4. New York

SDI disability insurance must be provided by a private insurance company to New York employers. The state of New York offers employers the option of self-insurance. There are several qualifications employers must meet to become self-insured. Furthermore, self-insured employers must meet all requirements under the law, including paying benefits directly to their employees.

It is possible to deduct from employee wages the cost of providing New York SDI benefits. The maximum amount an employee can contribute is $0.60 per week and 0.5% of their wages.

5. Rhode Island

There are temporary disability insurance laws in Rhode Island, as well as temporary caregiver insurance laws (TCI). When an employee must take time off work due to a temporary disability, TDI applies. In the event an employee must care for a family member, TCI provides temporary time off to the employee in the case of:

  • Spouse
  • Domestic partner
  • Child
  • Parent
  • Parent-in-law
  • Grandparent

The TCI can also help employees bond with newborns, foster children, or adopted children. Payroll deductions are required by state law to fund the programs. Employers must:

  • Withold each employee’s wages for TDI tax.
  • Remit and file taxes quarterly with the Employer Tax Unit.
  • Provide all employment and wage reports whenever the division requests them.
  • Ensure all employees can see the required poster AND display it in a visible location.
  • Provide all employees with TDI information.
State Disability Insurance
What is State Disability Insurance? 2

Long-term Disabilities

These short-term programs cover injuries and illnesses incurred off-the-job through SDI, TDI, and TCI. How would this situation differ if the employee were disabled for a long time rather than a short time?

Employees who are disabled for a long period cannot be covered by disability insurance for all the benefits they might be entitled to. While waiting to see if more benefits are available, employees can take advantage of state disability programs.

Filing a Claim

The State Disability Insurance program can be accessed online at edd.ca.gov/disability/default.htm. To file and submit supplementary information, doctors, employers, and voluntary plan administrators should use the secure online filing system. To receive a receipt number, individuals must register their accounts and submit their claim once a claim has been submitted. Medical professionals and employers will also receive receipt numbers as a confirmation when they submit forms online. When an individual establishes an account, they can log into SDI Online whenever they wish. 

Hard copies can still be filed by those not interested in using the online platform. According to EDDD.ca.gov/forms, forms may be ordered, but they may take up to four weeks to arrive. Individuals may also request forms from their employers in addition to directly from their healthcare providers. On the envelope, you will find an address for mailing completed forms. Individuals cannot mail hard copies of their claims after submitting them through SDI Online.

What happens after forms are submitted?

Once the proper forms are submitted, most claims are processed within 14 days. You can check the status of your claim anytime by logging into your SDI Online account.

Applicants claiming DI benefits for 10 weeks or more may use SDI Online to certify for benefits. Automatic payments are made every two weeks to those individuals. The Claim for Continued Disability Benefits (DE2500A) form must be used every two weeks for recipients whose claims are less than 10 weeks old and are in active payment status. You cannot print the form, but you may submit it through SDI Online. It can also be mailed to individuals upon request. An individual must fill out the form to verify that they have been unable to work for two weeks. Seven days should be allowed for payment to be received.

The health care provider must complete the Physician/Practitioner’s Supplementary Certificate form upon receiving notice that their final DI payment will be issued. The form can be completed and submitted online if an individual becomes disabled after the expiration date of the original claim period. Please call 800-480-3287 if you would like a copy of the form. If a healthcare professional is unwilling to sign off on the extension, a second opinion may be obtained. To continue receiving benefits, the health care professional must complete the form if they see a different physician/practitioner.

Conclusion

Several states and Puerto Rico offer partial wage replacement programs called state disability benefits. Benefits will be available after a seven-day waiting period, provided the participant has been employed and has a medical professional to attest to their condition. All of the programs do not allow the collection of Worker’s Compensation.

State Disability Insurance FAQs

Q. What states have their own disability insurance?

As of January 2023, the only states to offer short-term or temporary disability benefits are California, Hawaii, New Jersey, New York, and Rhode Island.

Q. What state gets the most disability?

Among states with the highest percentages of disabled residents in 2021, West Virginia, Mississippi, and Kentucky accounted for the most. West Virginia’s population at that time was estimated to have a disability of almost 19 percent. CDC statistics show that the lowest disability rates were found in Utah, New Jersey, and California.

Q. Is California state disability insurance mandatory?

According to the California Unemployment Insurance Code, State Disability Insurance (SDI) contributions are mandatory. Your employer may approve a Voluntary Plan instead of SDI coverage for most employees.

Q. What are the eligiblities of State disability insurance?

Employees must meet the following basic requirements to qualify for DI benefits: Being unable to work regularly or customarily for eight consecutive days. When disabled, the individual should be working or actively looking for work.

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Team Beem brings you the latest in the world of personal finance to you. From tips and tricks on how to manage money to how to get cash for emergencies, Beem is your destination for all the information you need to be smart about your money.

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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