California is one of America’s most populous states, with 1 in 8 US residents calling the Golden State home. Some of the world’s largest tech companies were founded there and still base themselves in Silicon Valley. We can’t forget about Hollywood too. From Sacramento to San Diego, California is home to entertainers and entrepreneurs alike.
And just like its East Coast cousin, New York, California is one of only a few states that offers its workers disability insurance. We’re here to walk you through what California state disability insurance is, why it’s important for both employers and their staff, and what kind of benefits you could be entitled to if you become sick or injured.
Here’s the short answer: nope. Only five states currently enforce legal requirements for employers to give their workers the option of having disability insurance. These are:
- New Jersey
- New York
- Rhode Island
If you’re a resident and worker in one of these states, you’re entitled to a short-term policy through your employer. They can either use a state-approved carrier or provide their own self-insurance. But, for employers, there’s no skirting around it if you have at least one employee on the payroll.
Every state has its own rules and regulations about who qualifies for state disability insurance and what the benefits are. But generally speaking, this type of insurance is to help workers maintain their income if they become ill or injured outside of work (workers’ compensation insurance should cover anything that happens on the clock).
These medical issues could last anywhere from a few days to several months, which can severely impact an individual’s ability to provide for themselves and their families. Short-term insurance through the state helps people to pay their bills and recover from their illness or injury, without having to worry about where the next meal is coming from or how to keep the electricity running.
Some people also choose to take out their own private insurance policies to cover additional costs. As state disability insurance has a set benefit limit each month, this may not be enough to completely replace an employee’s normal income. Extra coverage can help to fill in some of those gaps until they can get back to their regular work.
State disability insurance (SDI) in California is administered by the Employment Development Department (EDD) and is also known as temporary disability insurance (TDI). Just like in the other four states, California employees are able to receive benefits if they find themselves unable to work due to an illness or injury.
Under the laws of California disability insurance, pregnancy is considered a short-term condition and does allow benefits to be provided to eligible workers up to four weeks before an employee’s due date and four to six weeks after the birth. Paid family leave is also available for those who may need to take time off to care for a sick family member or look after a new baby.
The SDI program is funded by payroll deductions on each employees’ paycheck. Currently, employers are able to withhold 1.2% of an employee’s pay, up to a maximum of $1,539.58 in contributions per employee. These funds are then used to provide benefits to those who make a claim. If you’re a business owner, it’s your responsibility to make sure that these payroll deductions are being made and that all of your employees have the opportunity to receive short-term disability insurance.
Employees who have made at least $300 in wages during their base period (that’s the 12 months before the last complete quarter before the claim is made) are eligible for SDI benefits. But there are a few important points to be aware of that can stop you from receiving your money, such as:
- If you miss a doctor’s appointment that the EDD has set up for you to confirm your disability or check on progress
- If your disability was the result of a felony
- If you’re receiving unemployment benefits or on paid family leave
- If you’re already receiving workers’ compensation payments that are higher than what your SDI benefits would be
Government workers (whether federal, state, county, or city), some domestic workers, and employees of nonprofits are also not eligible for California disability insurance benefits. There are also special rules for people who are self-employed.
With many of California’s residents working as independent contractors, the government offers an optional Disability Insurance Elective Coverage (or DIEC) for those who aren’t paying into the main state program but want to be covered. You must earn a net profit of at least $4,600 per year to be eligible and receive most of your income through your own business. It’s a great option for entrepreneurs and freelancers who want to protect their hard-earned income should the worst happen.
If you fulfill all of the necessary criteria, you’ll be able to receive up to 52 weeks of benefits if you’re unable to work for that length of time (or up to 39 weeks if you’re on the self-employed DIEC program). Currently, SDI pays out around 60-70% of the average wages that you were being paid before your illness or injury, up to a maximum of $1,357 per week. For workers who held multiple jobs during their base period, benefits are calculated as an average of those wages.
The great news is that disability insurance benefits aren’t taxable, which means you’ll receive all of that money to replace your income. But some individuals also take out supplemental short-term disability insurance in California to cover any gaps, particularly if their disability is more than a few weeks. Private insurance and SDI combined will never make up 100% of what you were previously earning, but it can be helpful to have something extra to keep you going until you’re back at work.
There’s no government-authorized program or legal mandate for employers to provide long-term disability insurance in California. If you’re facing a lengthier medical issue or long recovery time from an injury, you may be eligible to receive federal Social Security disability benefits after 12 months.
For most applications, filing a claim through the SDI online portal is the quickest way to start the process. The earliest you’re able to submit your paperwork is nine days after your disability began or when you were last able to work. You must have your application filed within 49 days of the start of your disability or you may accidentally waive your right to claim any benefits.
You’ll need your doctor or medical provider to fill out the second part of the application to confirm and medically certify your disability. The forms for filing for Paid Family Leave are different but the process is the same, so if you think that this applies to you as well, take a look at the information on the California SDI website.
If you have a more complicated situation and you’re not sure if you qualify, visit the official EDD government website to find the California disability insurance phone number to speak to a claims manager.
Once your application is accepted, you should start receiving your benefits within two to three weeks, so sit tight and don’t file a second application for the same medical issue. If your application is rejected, you’ll have 30 days to appeal from the date of the rejection notice. This would also be a good time to contact the EDD if you’re unsure of why you were rejected and to get help with filing all of your forms correctly.
If you’re a covered employee, a self-employed entrepreneur using DIEC, or you’re a business owner looking for coverage for your staff, California’s state disability insurance is there to help you.
But there’s also no harm in looking for your own insurance too, whether it’s to supplement state benefits or because you live and work outside of California. There are always alternatives out there to make sure that your income is protected in case the unexpected should happen.
For hassle-free, no exam disability insurance, contact the team at Asteya to apply today.