There are only five states that offer state disability programs for resident employees. And if you're in California, you're in one of them. Congratulations. But what if you don't know anything about it? Well, you're in luck.
Your independent insurance agent is the best resource here and can help you navigate California's disability insurance program inside and out. They'll help answer all your questions and get you set up with the coverage you need.
But first, here's a little more background on disability insurance, followed by some California-specific details.
What Is Disability Insurance?
Someone once said if you’re not sure where to start, start at the beginning. And it’s a good thing to know what disability insurance is before getting into the nitty-gritty of the state insurance programs.
Simply put, disability insurance replaces your lost income due to a disability, illness or injury, normally covering between 40% and 70% of your salary. There are several different types of disability insurance that may apply to you:
- Individual long-term disability insurance: This coverage handles long-term injuries, disabilities, and illnesses. These disabilities or illnesses keep you from working and are not to be confused with work-related injuries or illnesses. Coverage lasts years, and sometimes decades, depending on your benefits.
- Individual short-term disability insurance: Just like long-term disability insurance, short-term also covers injuries, disabilities, and illnesses that keep you from working. Instead of lasting years, this coverage only lasts for days or months, hence the title short-term.
- Group long-term disability insurance: Group long-term is offered through your employer. You can choose to participate in group coverage or opt out. This policy is offered to all eligible employees at your work and is the kind of disability coverage that lasts for years. Health risk factors are not accounted for ,since it is rated on a group basis, which is a huge plus.
- Group short-term disability insurance: This group disability coverage is just like group long-term insurance in the sense that it is offered through your employer and covers disabilities, illnesses, and injuries. Again, it is offered to all eligible employees and you may choose to opt out if you so desire. Health risk factors are still not accounted for on this disability policy type and your employer normally pays for this coverage.
Government-backed disability programs:
- Social Security Disability Insurance: This is offered by the federal government and is a federally funded disability benefit program. Sounds like a big deal doesn't it?
- State disability programs: These programs are in just a few states across the country and offer temporary disability insurance.
What Are State Disability Programs?
To discuss what California has to offer for its state disability program, first, you should know what a state disability program is. These programs are offered through your employer and are usually mandatory in the states that offer them.
Some states allow the employer to select different plan offerings and others do not. Different states have different eligibility guidelines with a variety of coverages in a range of time periods and maximum benefits.
While every state is different, they all agree on the basics when it comes to state disability insurance. You must have contributed in the form of your wages to the state disability fund for a certain amount of time. Also, you must have had a healthcare professional verify your disability, critical illness, or pregnancy.
State disability insurance will supplement a portion of an employee’s wages in a non-work-related disability or illness. Quite the lifesaver when you're unable to earn an income.
California’s State Disability Insurance Program
So what's California's state disability program all about? Like others, California’s state disability insurance provides short-term disability insurance and paid family leave in qualifying circumstances.
The program offers wage replacement benefits for eligible employees who need time off work due to a disability, illness, pregnancy, or childbirth. Any injuries or illnesses must be non-work-related and sustained outside of work.
You may be eligible for paid family leave if you have to care for a family member’s disability or illness or to bond with a new child.
California's State Disability Insurance Benefits
California’s state disability insurance benefits pay out for a total of 52 weeks for an illness, disability, pregnancy, or childbirth claim. The minimum wage amount supplemented is $50 per week and the maximum amount is $1,252 per week.
Keep in mind that this state disability program is temporary disability insurance, and doesn't accommodate a long-term need. As a result, a maximum of 52 weeks (one year) of benefits is allowed under the California disability program.
Considering you're only paying in a very minimal amount out of your paychecks, that's a pretty good return on your tax investment. Your independent insurance agent is armed with all the facts and can fill all your disability coverage gaps. Be sure to speak with an agent to help plan for disability before, during and after that 52-week period.
How to Qualify for California State Disability Insurance
Nothing is ever quite free, is it? California state disability insurance is no different. In order to obtain benefits, you need to be eligible. And in order to be eligible, you need to know how. Lucky for you, here's what you need to know.
To be eligible for California state disability insurance, you must:
- Serve a seven-day, non-payable waiting period.
- Have at least $300 in wages earned that were subject to state disability insurance.
- Have your physician verify your disability or illness by completing the Physician/Practitioner Certification.
How to File a Claim under California's State Disability Program
One of the most important things to know is how to file a claim and receive your benefits when you need to. And here's how.
Filing a claim for California state disability insurance:
- File a claim for disability insurance benefits using SDI Online or a paper claim form.
- Have your physician file a medical certification for your disability or illness.
- The Employment Development Department reviews the claim.
- If the Employment Development Department decides in your favor, then your benefits will be made payable via a preloaded debit card or a check by mail.
It's also important to know that your independent insurance agent can help you through all of this. So if any questions pop up, or you just want someone by your side, they're there for you.
California State Disability Insurance Taxes
California requires all employers to withhold 0.9% for the state disability insurance program. That's less than 1%!
If you don't work because of a disability and receive California state disability benefits, those benefits are not reportable for tax purposes. But if you're receiving unemployment benefits, become ill or get injured, and begin receiving state disability benefits, then those benefits are considered a substitute for unemployment benefits and are taxable.
Contacting your local independent insurance agent about all disability programs and insurance is the best resource you could have. They are not afraid of the state disability programs and know the ins and out of them better than most.
What's So Great about Independent Insurance Agents?
Tired of researching about state disability insurance, or all insurance for that matter? That’s why independent insurance agents were invented, to help you navigate the world of insurance.
An independent insurance agent is a licensed pro who knows how to find exactly what you want for the best possible price. They find you the best carriers with the best coverage and pricing to fit your budget.
So go on, give your local independent insurance agent a call. They're all geared up to help and they know a thing or two about what you need.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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CA.gov. (2019). https://www.edd.ca.gov/disability/