There are only five states that offer state disability programs for resident employees. And if you're in Hawaii, 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 can help you navigate Hawaii's disability program so you really can relax on those soft, sandy beaches. Just think, you could be enjoying a tropical beverage in a tropical place and not have to worry a bit about your disability insurance.
That’s why an independent insurance agent is so handy.
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, like:
- 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 benefits 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.
How and When to Qualify for Hawaii's Disability Program
The program offers temporary disability insurance to Hawaii's workers with an injury, illness, or disability that would prevent them from working. These are not work-related injuries or illnesses, however. That would be covered under your employer’s workers' compensation policy.
Qualifications to be eligible for the Hawaii disability program:
- The employee must have at least 14 weeks of Hawaii employment.
- The employee must be paid for 20 hours or more and earn no less than $400 in the 52 weeks preceding the first day of disability.
- The 14 weeks do not have to be consecutive.
- The 14 weeks do not have to be with one employer.
- The employee must be in current employment.
When to qualify for the Hawaii disability program:
- The law requires that a claim be filed within 90 days.
What Are the Taxes for Hawaii's Disability Program?
Your employer can decide to be really nice and pay for the entire cost of disability insurance, or they may choose to share the cost equally 50/50 with you if you are eligible for coverage. But your contribution as the employee cannot exceed 0.5% of your weekly wages or the maximum weekly deduction. That’s a pretty good percentage.
What's even better is that the state of Hawaii does not assess a disability tax and does not collect a disability tax payment. This is because your employer is required to obtain disability coverage for you. If your employer chooses to take a deduction from your paycheck, then your employer uses that to pay for the disability coverage, not for the taxes.
In fact, most state disability insurance is not taxed, just another reason to live in Hawaii. 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.
Is the Hawaii Disability Program State or Federal?
The Hawaii disability program is a state-funded program. Hawaii's workers and employers are the ones who fund the program. But don’t worry, as you just learned, it’s a fairly small amount that goes toward it.
Only 5 states participate in state disability insurance programs and they are as follows:
- New Jersey
- New York
- Rhode Island
What Benefits Does Hawaii's Disability Program Offer?
The Hawaii disability program offers supplementation of income up to 58% of your average weekly income or the maximum weekly benefit, which is $632. That average is calculated for 14 consecutive weeks of pay.
Keep in mind that this state disability program is temporary disability insurance and does not accommodate a long-term disability. As a result, a maximum of 26 weeks of benefits is allowed under the Hawaii disability program.
Considering you are 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 your local independent insurance agent about planning for disability before, during and after that 26-week period.
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. Would you go to court with the knowledge you gathered from the internet? Chances are probably not.
The same applies to disability insurance, leave it to the professionals. They're licensed pros who know 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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State of Hawaii Disability Compensation Division. (2019). https://labor.hawaii.gov/dcd/home/about-tdi/