By Stephanie Breedlove, Founder of Breedlove & Associates
Disability benefits are one of those things that nobody thinks about – until they need them. But understanding how disability works – and thinking through your potential needs – helps a lot of people sleep better at night. Here’s what you need to know.
When does an employee qualify for disability benefits?
Disability benefits are short-term financial assistance provide to employees who are unable to work due to an injury or illness that is not work-related (note: if it’s a work-related injury or illness, it falls under a similar assistance program called “workers’ compensation”). An employee would qualify to collect disability benefits for things like maternity leave, ski injury, car accident, etc.
How does the program work?
Workers in California, New Jersey and Rhode Island fund disability through a small tax assessed as part of payroll. Two other states, New York and Hawaii, fund disability through a mandatory insurance policy purchased by the employer. In these five states, claims are reviewed and benefits disbursed by the state agency managing the disability fund. Benefits are awarded based on specific criteria that vary from case to case – usually providing between 50% and 100% of the worker’s salary for up to 14 weeks.
The other 45 states do not assess disability taxes or require a policy. Instead, employees (or their employers) can purchase an optional short-term disability insurance policy through any state-licensed insurance broker. They are relatively inexpensive so we typically advise employees to consider a policy – especially if they have dangerous hobbies or think they may need maternity leave in the near future.
If you have any questions about disability benefits, visit us at www.mybreedlove.com or give us a call at 888-273-3356.