Long term Disability Picks Up Where New Jersey TDB Leaves Off
Under the Temporary Disability Benefits (TDB) law, business owners in New Jersey must provide temporary disability payments for up to 26 weeks to employees who are ill, injured, or had a baby.
But 26 weeks is not a long time for a person with a significant injury or a life-changing illness to recover and go back to work. Where can workers turn when New Jersey TDB runs out?
Social Security Disability Insurance (SSDI)
Social Security / Disability benefits cover those unable to work for at least a year, or anyone unable to work who has an illness that will lead to death, such as some forms and stages of terminal cancer.
Since TDB in New Jersey ends at 26 weeks, income replacement insurance or long-term disability can help fill the gap. Additionally, most long-term disability offers “same occupation” protection, which means that if you can’t work in your chosen field, you can quality. Social security benefits only cover you if you can’t work at all.
EZTDB can provide long term disability coverage for individuals or with group LTD benefits plans through the employer.
Why Healthy Individuals Need Disability Coverage
The Social Security Administration estimates that a 20-year-old employee faces a three in ten chance of becoming disabled before age 65. Other reports say one in four workers becomes disabled during their working life. These odds increase for heavy smokers, people who are overweight, or those who have a chronic condition such as heart disease,diabetes, or high blood pressure.
Yet, only 45 percent of millennial workers have long-term disability insurance, according to The Hartford Financial Service Group. More than 20 percent of millennials said they would need help from family or friends or move back in with their parents if they were unable to work due to illness or injury, while another 20 percent would have to rely on credit cards or borrowing against their 401K retirement account.
While employees don’t want to consider being one of the 25 to 30 percent of people who become disabled, it’s a reality. And most disabilities are caused by illness, not injury. Knowing they are protected, whether through private income replacement insurance or employer-funded temporary disability benefits offers peace-of-mind and greater financial security.
Extended Disability Coverage through the Employer
As the person in charge of the purse strings, you may wonder why you’d want to invest in additional insurance coverage that will pay out to your employees but not offer your company any real benefit?
The cost to the company is actually very small, especially if you purchase coverage as part of extended disability benefits. Extended disability coverage not only increases the length of time employees may be covered, but can provide more than the state maximum in benefits. Employers may collect up to 75 percent of their salary – enough to live on, in most cases –through enhanced disability benefits.
This benefits package may entice help entice star talent, but, more importantly, it can help you retain high-quality employees after they bounce back from an illness or injury. If your company took care of them in their time of need, they will return to work with a degree of loyalty.
In fact, due to the strain financial difficulties place on person’s health, having disability coverage to provide for themselves and their family could, in fact, help make a return to work after injury or illness possible.
Private Long Term Disability (LTD) Insurance
For self-employed contractors or individuals whose companies don’t provide extended disability coverage, insurance brokers offer long-term disability or income replacement insurance. Since the premiums on this insurance are paid out-of-pocket, the disability income is not taxable, so claimants receive their full benefits when they need the money most.
The Choice Is Yours
As the business owner or person in charge of HR decisions for the company, the decision to provide extended or enhanced disability coverage lies in your hands. Weigh cost factors with the intangible benefits of employee recruiting and retention.
Keep in mind that disability coverage doesn’t have to be “all-or-nothing.” You can give your employees the option to buy into a policy with lower premiums than they would get if they purchased individual disability on their own. Or you can split the cost with them. Since this is a pre-tax benefit, some employees may enjoy the tax benefits, too, although it means they will have to pay taxes on their disability income if they ever make a claim.
However you choose to structure the offerings, consider making long-term disability coverage part of your employee benefits package. Contact EZTDB today to help you explore your options.