The State Of California Pays Partial Wages If You Have Temporary Illness Or Injury That Keeps You From Working
By Bethany K. Laurence, Attorney
Update: California has made it easier for those affected by coronavirus to get SDI benefits. If you are off work due to COVID-19 illness or exposure, see our article oncoronavirus changes to California’s disability insurance program.
The State of California requires all employees to pay into its short-term disability insurance program through payroll deductions. When employees become unable to work due to disability, they can collect weekly benefits from the program until they are either ready to go back to work or the benefits expire. The program is administered by California’s Employment Development Department .
Employees Must Be Eligible To Claim Benefits Under The Plan Within Three Months
A new employee who belongs to a group of employees covered by the plan must be eligible to claim benefits on the first day of the month following the completion of three months of continuous employment.
Example: A new employee hired May 6, 2021, is entitled to claim benefits starting September 1, 2021.
Some plans are based on an “hour bank principle,” where employees bank hours while working for a number of employers. In this case, a union hiring hall usually administers the employees’ pay and benefits. These employees must become eligible to claim benefits on the first day of the month following the day the employee has accumulated 400 hours of active employment.
Short Term Disability Insurance: What Qualifies & How Long Does It Last
When people think of Disability Insurance, their first thought is often the more permanent disabilities covered by Long Term Disability Insurance.
But what if youre only temporarily disabled, say for a period of only a few weeks? Youll still be off work and unable to make an income, but unable to qualify for LTD.
Thats where Short Term Disability Insurance comes in.
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Attract And Retain Top Talent
Prospective employees are looking at an employers benefit plan when weighing their job options. The more comprehensive the plan, the better, and Disability Insurance is near the top of the priority list. Employers who want to remain competitive when it comes to acquiring and keeping their talent should look carefully at Disability Insurance options.
How Can I Qualify For Short Term Disability
To qualify for STD you must first have STD insurance. You only qualify for STD if you experience a covered accident, illness, or injury that prevents you from performing the duties of your occupation. The specific definition of disability will vary by Insurer however, generally speaking, STD could provide coverage for common situations such as:
- Recovery following major surgery
- Mental health issues or leave
- Recovery following an injury or accident
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What Does The Edd View As A Disability
If the doctor certifies that you are not able to do your job then the EDD will see it as a disability. The EDD is concerned with whether you are unable to do the regular duties of your job.
Another disability is pregnancy. You will receive an SDI payment 2 to 4 weeks before your delivery date and 4 weeks after the delivery date, or 6 weeks after a C-section.
Lastly, elective and cosmetic surgery is also considered a disability by the SDI. Remember that your doctor has to certify that you are disabled.
How To Apply For Short Term Disability Benefits
To receive benefits, you will have to submit a claim to the insurance company. This involves filling out a form, be it a printed version or online. The form will ask the date you last worked, a description of your medical condition, and other pertinent information. Your employer and physician will have to complete sections of the form as well.
Once you submit the claim form, the insurance company will review medical records to determine if you meet the definition of disability as defined in the policy. If your policy does not cover pre-existing conditions, the insurer will look for evidence of undisclosed conditions.
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How Alex Can Help
Understanding the complexities of short- and long-term disability isnt always easy. ALEX is here to help you explain the differences to your employees. Backed by behavioral science, ALEX helps employees understand all their options and make an educated decision on their benefits. In fact, 85% of users say ALEX helped them better understand tax savings related to their benefits choices.
Find out how ALEX boosts benefits understanding and saves you time and money.
Why Consider Short Term Disability Coverage
If you were unable to work because you were injured or became too sick, would you be able to cover your living expenses and additional medical bills? For most people, the answer is no. Short-term disability helps protect a portion of your income while you are off work. The University offers comprehensive sick, vacation and leave time. However, most employees do not have enough time banked to cover their pay in the event of an extended medically necessary absence. Additionally, the policies offered are individual policies that do not off-set other income, making the policy an affordable option to insure your financial security.
Unlike workers compensation, short term disability insurance pays benefits for an injury or illness unrelated to your job
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How Does Short Term Disability Insurance Work
To get a better idea of how short term disability works, let’s start by answering some FAQs:
- How much does short term disability pay? If you qualify for short term disability benefits, you will typically be reimbursed for about 60 percent of your lost wages. Depending on the policy, the benefit may be as low as 40 percent or as high as 70 percent. Most policies have a benefit cap as well.
- When does short term disability start? Before short term disability benefits kick in, there is typically an elimination period of 14 days. However, this waiting period may be as short as one week or as long as one month.
- How long is short term disability? Short term disability benefits generally last around three to six months. However, some plans may pay as long as one or even two years.
But that’s just the tip of the iceberg. Let’s take a closer look by comparing short term disability insurance side-by-side to other similar types of coverage.
How Do I Calculate Benefits And Premiums For Long
LTD benefits and premium amounts depend on an employee’s monthly salary.
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Benefits are usually up to a fixed maximum set by the plan, for example: 50% of monthly salary, to a maximum benefit of $5000.
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Salary amounts are rounded per thousand for insurance carriers that round salary.
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Some carriers will round the final volume and not the salary.
Premiums are calculated based on total monthly salary, not the benefit amount.
Benefits are treated as post-tax by default, but there may be situations where administrators ask employees if they prefer pre-taxdisability benefits. However, these situations are rare, and paying benefits as pre-tax is not advised.
The volume in Zenefits is based on the amount of benefits an employee will receive, however, the carrier may reflect the full monthly/weekly salary instead of the amount the employee will receive.
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Is Disability Insurance A Popular Employee Benefit
While not required in most states, employers typically offer their employees some type of short-term disability insurance. Short-term disability insurance is typically offered by employers because it entitles the company to a federal tax deduction.
If a company doesnt offer short-term disability insurance, individuals can still purchase an insurance policy privately, but the cost is usually prohibitively high.
How Much Does Short Term Disability Insurance Cost
The cost of short term disability insurance is determined by the underwriting process. The underwriting for short term disability insurance may differ slightly from long term disability policies.
Individual long term disability insurance requires full underwriting. Insurers have to assess a personâs risk of filing a claim because benefits may be paid out for a long period. Therefore, insurers will assess your application based on your age, health, gender, the level of risk associated with your job, and any hobbies or interests that could cause disability.
On the other hand, disability insurance carriers may not fully underwrite short term policies. As stated earlier, many short term policies sold on an individual basis are guaranteed issue, which means no underwriting. Others may only require the answering of questions about your health without the medical exam required for long term disability insurance.
Injuries that cause temporary disabilities generally are not related to the insuredâs age, health, job, or other risk factors. They just happen, be it a bad fall that causes a broken bone or a complication of pregnancy. Still, you may be asked about pre-existing health conditions that disqualify you from coverage or that will limit your benefits.
The main factors that affect the cost of short term disability insurance include:
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What Are The Benefits Of Short Term Disability
STD provides crucial income replacement when a person is unable to work and bring in an income. Ask yourself could your family pay all their bills and maintain their current lifestyle if you were unable to work for up to 26 weeks?
If the answer is no, you can begin to see how STD can help ease financial strain and the stresses that come with an accident, illness, or injury that prevents you from working.
Why Do You Need Short Term Disability Insurance
Medical expenses and job loss are two of the most common reasons individuals file for bankruptcy.2 If you lost your income because you were injured or became too sick to work, would you be able to cover your living expenses, plus additional medical bills? For most people, the answer is no. Short term disability helps cover the expenses that come with taking time off work to care for your health. Since short term disability is designed to replace a portion of your income for a short period of time, many people also choose a long term disability policy in case their illness or injury keeps them out of work for longer than their short term disability plan would cover them.
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Does Short Term Disability Cover Pregnancy And Maternity Leave
Maternity leave is one of the most common uses of short term disability insurance. Many policies pay benefits up to six weeks after a normal delivery. For a C-section, women may receive up to eight weeks of benefits.
Keep in mind that benefits are subject to the policyâs waiting period. If the policy has a seven-day waiting period, benefits start seven days following delivery.
Itâs also very important to understand that pregnancy is considered a pre-existing condition. That means if you were pregnant prior to signing up for coverage and your policy limits benefits for pre-existing conditions, you would receive limited or no benefits for pregnancy-related time off.
If there are complications resulting from the pregnancy or delivery, you may qualify for additional benefits, either before or after delivery. This will require certification from your doctor.
Amount Of Sdi Payments
The amount of your bi-weekly payment is tied to how much you earned during your base period. You will be paid 60-70% the amount of the average wages that you were paid by your employer during the calendar quarter of the base period that you made the most money. If you worked two jobs during your base period, your average wages will include wages from both jobs.
However, the maximum weekly amount is $1,357 . SDI payments are not taxable .
The EDD website includes a chart of weekly SDI benefit amounts based on the amount of money you made in the highest quarter of your base period.
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What Medical Conditions Qualify For Short
People often ask what conditions qualify for short-term disability. Really, any condition can qualify. You just have to meet the definition of total disability. This definition is different in each policy, however.
Above all, short-term disability is based on how bad your symptoms are not your condition. So, what matters is if the symptoms keep you from doing your jobs main duties.
But, your diagnosis is still important! This is because a diagnosis allows for a treatment plan. If your diagnosis is unknown, then doctors cant treat you. Instead, youll have to do lots of tests to rule out possible conditions.
Insurance companies dont like it when theres no diagnosis or treatment plan. If they dont see you working to figure it out, then they will deny your claim or stop payments.
There are some types of claims that get denied often. Stress leave, burnout, and pregnancy are a few, for example.
So, in these situations, you must have a concrete diagnosis. For example, stress leave and burnout arent very clear. But, you might be diagnosed with depression or anxiety. Pregnancy isnt a disability but there might be a complication that stops you from working.
Medical conditions that may qualify for disability benefits:
- Sutton Special Risk
Which States Require Short
Currently, five states have short-term disability insurance requirements:
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California
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Rhode Island
While not currently a state, Puerto Rico also requires short-term disability insurance.
Each of these states have individual rules that an employer has to follow as well as state-managed programs. If the state provides a state-sponsored disability plan employers can use that plan, or can purchase one through a private carrier.
If an employer elects private coverage, the purchased plan must meet state requirements regarding coverage, contribution amounts, eligibility and be approved by employees.
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Should I Purchase Short
Although illnesses and injuries can’t be predicted, they’re likely to affect your workplace at some point in the future. For comprehensive protection, employers may consider offering a combination of both short-term and long-term disability insurance to employees. These policies are an important complement to any group health insurance plan and help to minimize the impact of debilitating illnesses and injuries on both your employees and your business.
What Comes Next After Filing Unemployment Benefits With The Edd
After filing your unemployment benefits online or by phone, or by mail, or by fax. The EDD will go through your application and then send you some documents to fill. It will include a notice Of unemployment insurance awards Will indicate how much the ad is going to pay you once you are found eligible for benefits.
If you qualify for eligibility the EDD will send you Claim forms and your benefit checks. You will receive the claims and you must return them every 2 weeks.
In case your claim for unemployment benefits is denied, you will receive a notice of determination with the final decision. If you feel the decision is not fair, you have a right to appeal.
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How To Apply For Short Term Disability Insurance Coverage
Many employers offer short term disability insurance coverage to employees as a group plan. Many companies even pay the full premium for their employees. A handful of states require employers to provide this coverage.
If you cannot get short term disability through an employer or other group membership, you can buy an individual policy. This can be done through an insurance agent or directly from an insurance company that offers this type of coverage.
Group plans are guaranteed issue, meaning you automatically qualify for coverage without going through underwriting. Short term policies sold on an individual basis are sometimes guaranteed issue as well.
However, most short term policies sold directly to an individual will require the applicant to answer health-related questions. These questions will ask whether you are currently or in the past have been treated for any number of pre-existing conditions. If so, you may be disqualified for getting coverage or have your benefits limited.
Disability Insurance Plan Options
To help protect your income in the event of a disability, the State provides eligible employees with Short-Term Disability Insurance and the option to purchase Optional Long-Term Disability Insurance. Both the STD and Optional LTD plans are provided through the Unum Insurance Company.
Unum Insurance Company
Short-Term Disability
The State provides most benefit-eligible employees with Short-Term Disability Insurance which pays up to 60% of your weekly pre-disability covered compensation, up to a maximum STD weekly benefit payment of $3,000 per week, for up to 150 days during any 12 month period, following the required STD elimination period which is 30 calendar days. Employees may use their sick bank or PTO during the 30 day elimination period and may continue using it to supplement their disability benefits up to 100% of weekly pre-disability compensation.* You are automatically enrolled into the Short-Term Disability Insurance plan and coverage is effective the first day of the month following your date of hire.
*Paid Leave Supplement to STD Benefit
You are disabled when Unum determines that:
- you are limited from performing the material and substantial duties of your own job due to your sickness or injury and
- you have a 20% or more loss in weekly earnings due to the same sickness or injury .
Taxation of STD Benefits
PERA Defined Benefit Vested Employee & , Unum Short-Term Disability
Optional Long-Term Disability
Annual Enrollment
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