4 Questions to Ask Before Selecting Temporary Disability Insurance
By law, New Jersey business owners must provide temporary disability benefits to all full-time employees. But it’s not just the law; NJ TDB offers substantial advantages to employers and employees.
Providing temporary disability benefits has been shown to improve employee retention, encouraging employees to come back to work after an accident or illness. Having this safety net in place can also help reduce employees’ stress about their financial future, which leads to happier, more productive employees in the long term.
Temporary disability benefits also represent a solid investment for employers and executive-level employees. If an upper-level employee gets sick or injured, they usually have financial options such as tapping into their 401K, private savings, or other investments. NJ temporary disability benefits can supplement these other forms of passive income, enabling executives and owners to hold onto their investments that are earning higher returns.
In short, temporary disability benefits in NJ are the law, but they are also a smart financial choice.
With the introduction of privatized NJ TDB, selecting a short term disability plan for your employees can be confusing. Employers need to think about the financial impact, coverage provided by a plan, duration of the coverage, and even how fast the provider processes claims and begins making payments.
Before choosing a temporary disability insurance plan, find out the answers to the following questions.
Who Contributes to the Benefits?
New Jersey employers have a choice between contributory plans, where the employee contributes to the benefits through withholding taxes, or non-contributory, where the employer pays the full premium contribution. Premiums vary based on the company’s claim history, also called the “group experience rating.”
New Jersey’s new legislation gives employers the option of writing their temporary disability insurance through the state or through a private company. Writing your temporary disability insurance through a private carrier could save you as much as 15 to 20 percent on your premiums.
When Do Temporary Disability Benefits Kick In?
Under a privatized plan, employers can choose how soon after a claim coverage goes into effect. That’s another benefit of privatizing TDB with a top carrier. If you write your coverage with the state of New Jersey, benefits will go into effect eight days after a claim is processed.
Privatized TDB may provide faster processing and faster payouts - all at the same cost or lower. By law, private carriers cannot charge more for temporary disability insurance than a state plan would cost, and benefits must be equal to or better than the New Jersey state plan.
How Long Do the TDI Benefits Last?
The duration of a privatized short term disability plan in New Jersey must also be equal to or longer than temporary disability insurance provided by the state. Under the state plan, temporary disability benefits can last as long as 26 consecutive weeks. In addition, TDI benefits do not have to be taken consecutively. An employee can make more than one temporary disability insurance claim per calendar year, but the extent of TDI coverage cannot exceed a total of 26 weeks in a calendar year.
How Much Are Payouts?
The state of New Jersey’s temporary disability benefits currently pay 66 2/3% of an employee’s average weekly wage (AWW). Beginning July 1, 2020, that benefit will increase to a generous 85% of the employee’s AWW, capped at 70% of the state’s weekly average.
Again, by law private carriers must provide the same coverage or better. As long as you write your temporary disability insurance with a reputable carrier, you know your employees will receive some of the highest TDI payouts in the country.
Let Us Help You Find the Best Temporary Disability Insurance Plan
EZTDB can help you find the best temporary disability insurance plan to give yourself and your employees peace-of-mind if they face illness, injury, or even have plans to expand their family.
We have partnered with some of the best private insurance agencies in the country, giving you a host of customization options, low rates for short-term disability coverage in New Jersey, and the superior customer service you deserve.