You can Save on SDI with a Private Plan
The experts disagree. The odds of an employee suffering a disability of three or more months sometime in their career range from 20% on the low end to 80%. Regardless of the actual odds, it is almost a certainty that disability will have a major impact on someone in your work force, and the odds skyrocket for larger employee groups.
It is surprising, then, that only six locations in the United States mandate that employers provide short term disability coverage to their employees. These locations are New Jersey, New York, Rhode Island, California, Hawaii and Puerto Rico.
This article will focus on New Jersey, but the potential benefits of a private plan are appealing in all six locations that mandate this coverage. In all 50 states, the problem of ever increasing health plan costs have caused the vast majority of employers to eliminate company-paid short term and long term disability plans. Some offer voluntary plans. Dunn Corporate Resources (DCR) can assist in all of these areas: private plans, employer-paid STD and LTD, voluntary STD and LTD, and voluntary STD “buy-up” plans.
In New Jersey, the Temporary Disability Insurance (TDB) benefit is 2/3rd’s of the gross weekly salary with a cap of $633 in 2017. The benefit for a disability caused by either accident or sickness starts on Day 8 and pays out to Day 180. After this, benefits stop regardless of the condition of the employee.
Even employers who are located outside of NJ but have NJ employees must provide TDB insurance to their NJ workers. New Jersey allows employers to privatize their TDB coverage, so employers can opt to have coverage through the State plan or with a private insurance carrier.
What types of Groups are covered under TDB?
In general, all employer groups who are covered under Unemployment must also offer TDB to its employees. An exception to this rule is certain government entities. In most cases, employers who have at least one employee and pay wages of $1,000 or more per calendar year are subject to TDB.
Who is eligible for TDB benefits?
In order to be eligible for TDB benefits, an employee must have had at least 20 base weeks of NJ covered employment, OR earned at least $8,400 in covered employment during the 52 week period immediately preceding the week in which the Disability began. A base week is a calendar week in the base year during which the employee earned $165 or more in covered earnings (this equates to 20 times the State minimum wage).
Who pays for New Jersey TDB?
Generally, the plan is funded by both employer and employee contributions. Employees contribute the first 0.25% up to the taxable wage base. For 2017, the maximum taxable wage base is $33,500, making the maximum employee contribution for this year $83.75. Employers contribute premium in excess of 0.25%. For plans insured through the State, the employer rate ranges from 0.10% to 0.75%. An employer has the option to waive employee contributions when insuring through a private plan.
What are the Rules for establishing a Private Plan?
Employers automatically participate in the State TDB plan, unless they elect coverage through an approved private plan. The State must approve all such plans. Only those carriers that are on file with the State of New Jersey as an approved insurance carrier for NJ TDB will be accepted.
The private plan cannot be more restrictive, offer lower benefits, or require more employee contributions than the State plan. A TDB plan can only move from the State on calendar quarters: January 1st, April 1st, July 1st, or October 1st .
The State must be notified of the potential move prior to the effective date of the move. The employer must complete the State’s form AC-174. We will provide assistance with the completion of this form. If employee contributions are to be continued, an election must be held. 50% plus one employee must agree to the private plan on a consent form. We will mail the original consent form and AC-174 to the State of NJ on the employer’s behalf. In addition, we will mail a copy of the prepared TDB policy and Notice of Compliance to both the State and the employer. The employer must post the Notice in a conspicuous location at the worksite. The State will review all documents and notify the employer and us of approval. Once approved, the State will issue a Certificate of Approval and assign a private plan number. In the unlikely event that the State does not approve the plan, we will work with the employer to resubmit the documents for approval.
Can an employer insure some employees through a Private Plan and others through the State?
Yes, provided that the criteria for determining the split are not discriminatory. For example, an employer can elect to insure a union group through a private plan and keep the non-union employees with the State. They cannot, however, elect to cover employees less than 55 years old privately and 55 or older through the State plan.
What insurance companies do we use?
Although we can use a wide variety of statutory disability insurance carriers, there are only a handful that we feel excel in this line of coverage. DCR will select the best company in regard to financial ratings, guarantees, pricing and customer service feedback.
What are the Advantages of selecting a private insurer for TDB?
Private insurers offer several key advantages over the State plan:
- Competitive rates
- A reputation for claims excellence, with a dedicated and highly professional staff who is focused on timely and accurate claim payments
- Pays TDB-related assessment charges per employee of $10.50
- Are easy to do business with, guiding you through the TDB process every step of the way
- Plan enhancements, such as higher maximum benefits, longer durations or shorter elimination periods can be considered
- Superior customer service
What’s the Next Step?
Remember, Dunn Corporate Resources (DCR) can assist in all of these areas: private plans, employer-paid STD and LTD, voluntary STD and LTD, and voluntary STD “buy-up” plans (in the 6 mandated locations).
How do I request a Quote?
Call Jim Johnson at 1-800-220-DUNN or email: Jim.firstname.lastname@example.org.