State Disability Insurance: A Comprehensive Review

Key takeaways

  • SDI is a state government program providing short-term disability benefits for non-work-related injuries or disabilities.
  • States with SDI programs include California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico.
  • Each SDI program varies in its specifics but generally involves limited wage replacement for eligible employees.

What Is State Disability Insurance (SDI)?

State Disability Insurance (SDI), also known as Temporary Disability Insurance (TDI), offers short-term disability benefits for workers dealing with non-work-related injuries, sickness, or disabilities. 

This program is financed through payroll taxes, with contributions from both employees and employers.

What Is State Disability Insurance (SDI)?

States Have SDI

Not every state has State Disability Insurance (SDI). In reality, only a few states have legislation for State Disability Insurance, offering coverage to qualifying employees. They are:

  • California
  • Hawaii
  • New Jersey
  • New York
  • Rhode Island

California SDI

Eligibility Tax Rate & Wage Base Limit Contributions Wage Replacement *
Earned at least $300 in the base year.  0.9% of the first $153,164 in annual wages Employee only 60%-70% 

*Up to $1,620 a week for 52 weeks

California’s SDI program is managed by the Economic Development Department (EDD). Employers in the state can opt to offer short-term disability benefits. However, the private plan they choose must be approved by the EDD.

Hawaii TDI

Eligibility Tax Rate & Wage Base Limit Contributions Wage Replacement*  
Earned at least $400 a week working 20 hours a week for at least 14 weeks in the prior year. Up to half the cost of the premium, but no more than 0.5% of an employee’s weekly wages up to $1,318.48. Employers pay the rest. Split 58% 

*Up to $765 a week for 26 weeks. 

Hawaii’s TDI program is overseen by the Disability Compensation Division (DCD). It requires a disability that impedes regular duties and necessitates treatment by a licensed medical professional.

New Jersey TDI

Eligibility Tax Rate & Wage Base Limit Contributions Wage Replacement*  
Earned at least $260 a week for at least 20 weeks in the base year or at least $13,000 total during the base year. Rates vary based on the type of employer, but only up to the first $156,800 of the employee’s annual wages. Employer only 85% 

*Up to $1,025 a week for 26 weeks. 

In New Jersey, the TDI program is managed by the Department of Labor and Workforce Development (DLWD). Prior use of paid sick leave might be needed before claiming disability benefits.

New York Disability Benefits

Eligibility Tax Rate & Wage Base Limit Contributions Wage Replacement*  
Worked at least 50% of full-time hours and earned at least $15,000 in the prior year. Up to 0.5% of an employee’s entire wages, but no more than $0.60 a week. Employers pay the rest. Split 50% 

*Up to $170 a week for 26 weeks. 

New York’s short-term disability benefits, regulated by the Worker’s Compensation Board (WCB), are cash-based and taxed under FICA.

Rhode Island TDI

Eligibility Tax Rate & Wage Base Limit Contributions Wage Replacement*  
Earned $2,600 in a quarter, taxable wages at least 1.5 times the highest quarter of earnings, and total taxable wages of at least $5,200 during the base year, or earned $15,600 total during the base year. 1.1% of the first $84,000 in annual wages. Employee only 4.62% 

*Up to $1,007 a week for 30 weeks. 

Rhode Island’s TDI benefits, managed by the Department of Labor and Training (DLT), replace around 4.62% of the highest-earning quarter wages.

Puerto Rico SINOT

Eligibility Tax Rate & Wage Base Limit Contributions Wage Replacement*  
Earned at least $150 in the base year. 0.6% of the first $9,000 in the employee’s annual wages, of which employers must pay at least 0.3%. Split Varies 

*Up to $55 (agricultural workers) or $113 (industrial workers) a week for 26 weeks. 

SINOT, which stands for “Seguro por Incapacidad No Ocupacional Temporal,” translates to “Temporary Non-Occupational Disability Insurance” in English. The wage replacement rate depends on the employee’s earnings during the base year.

Disability Insurance Benefit Payments

If you qualify for disability insurance, you may receive a percentage (ranging from 60 to 70%, depending on your income) of the wages you earned within 5 to 18 months prior to initiating your claim. The benefits can be disbursed for a maximum of 52 weeks. For more comprehensive information, it’s advisable to refer to the guidelines on Calculating Disability Benefit Payment Amounts.

Disability Insurance Benefit Payments

To become eligible for these benefits, you must:

  • Submit a claim for disability insurance (DI) benefits either online through SDI Online or by mail.
  • Go through a seven-day waiting period, during which you won’t receive any payment.
  • Have earned a minimum of $300 in wages that are eligible for SDI deductions (labeled as “CASDI” on your paystubs) within the 12-month base period of your claim.
  • Obtain certification of your disability from your physician or practitioner by completing the Physician/Practitioner Certification.
  • Indicate your preferred payment option when submitting your claim.

Who Qualifies For SDI?

To qualify for State Disability Insurance (SDI), you need to meet certain criteria:

Who Qualifies For SDI?
  • Employment Status

You should have been working or actively seeking work when you became disabled.

  • Contributions

Either you’re a part-time or full-time employee who contributes to SDI through state payroll deductions, or you’re a self-employed Californian who contributed to the Disability Insurance Elective Coverage program.

You must be unable to perform your regular or customary work for at least eight consecutive days.

  • Wage and Employment History

You need to have earned at least $300 in wages during the 12-month base period when SDI deductions were taken.

  • Claim Filing

File a claim online or by mail within 49 days from the date you became disabled to avoid losing benefits.

  • Medical Care

You must be under the care and treatment of a licensed doctor during the initial eight days of your disability and continue under their care to receive benefits.

  • Medical Certification

Your doctor or a certified nurse practitioner, collaborating with a physician or surgeon, must complete the medical certification of disability.

FAQs 

1. What is State Disability Insurance (SDI) and who does it cover?

State Disability Insurance (SDI) is a state-operated program in California that offers partial short-term wage replacement for individuals currently active in the workforce. Approximately 13 million California workers are covered by SDI.

  • SDI encompasses various conditions, be they physical or mental, that hinder your ability to perform your regular or customary job. This also includes elective surgery, pregnancy, childbirth, or related medical situations.
  • SDI consists of two primary programs: Disability Insurance (DI) and Paid Family Leave (PFL).

2. Who oversees the administration of SDI?

SDI operates under the division of the state’s Employment Development Department (EDD). It operates independently from the Unemployment Insurance division of EDD. The SDI division is known for its efficiency and typically processes claims within a 14-day period.

3. Is SDI subject to taxation, similar to unemployment insurance?

SDI is generally not taxable, except when received in place of unemployment benefits. Paid Family Leave, on the other hand, is always subject to taxation.

4. What are the costs associated with joining SDI?

SDI is entirely funded by employees through mandatory payroll deductions set by the state. As of 2011, the withholding rate for SDI is 1.2% of gross income, with a yearly wage cap of $93,316 and a maximum annual employee contribution of $1,119.79. Only LRCFT income is eligible for this deduction.

5. In the event of needing to use SDI, what is the weekly benefit amount?

SDI provides partial wage replacement, typically around 55% of your regular income if you’re actively employed. Additionally, SDI collaborates with your employer to integrate the SDI benefit with any accumulated sick leave, allowing you to receive your full salary for an extended period.

6. How long can benefit claims be made with SDI?

SDI offers partial wage replacement benefits for up to 52 weeks per claim. Paid Family Leave, on the other hand, provides partial wage replacement benefits for a maximum of 6 weeks within a rolling 12-month period.

7. Is it necessary to file a claim in person at an EDD office?

SDI is designed for a streamlined process through mail. There’s no requirement for in-person appearances to apply for or receive benefits.

Final Thoughts

State Disability Insurance (SDI) helps when you can’t work due to an injury or sickness in specific states. It’s paid through taxes from your pay and gives you some money to replace your lost wages for a short time. 

Remember, to get this help, you need to meet certain conditions and follow the rules when applying. It’s about support when you can’t work temporarily.

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