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Most Americans are familiar with workers' compensation insurance and know that it is designed to provide them with some form of financial compensation if they are injured or fall ill because of a work-related incident. But what happens if they are injured or fall ill due to circumstances outside of work? In such cases, workers' compensation usually won't cover them, and yet they can still suffer financially by being unable to return to work for a period of time. That's where state disability insurance comes in. These policies help an organization cover a portion of the disabled employee's lost income for a specified period of time.
It is important to understand that state disability insurance is only required in a handful of states (and one territory) as of 2018:
California (State Disability Insurance and Paid Family Leave)
Hawaii (Hawaii Temporary Disability Insurance)
New Jersey (New Jersey Temporary Disability Insurance)
New York (New York Disability Benefits Law)
Rhode Island (Rhode Island Temporary Disability Insurance)
Commonwealth of Puerto Rico (Puerto Rico Disability Insurance)
Individual states differ in the details of how their individual disability insurance plans work, but in general, employers are required to contribute to either a state or private plan. Some states also allow employers to self-insure if they can prove they have the financial resources to do so, though this option is rarely exercised. When insured employees become injured, state disability insurance provides payouts if they are unable to return to work for a short period of time.
The most obvious reason to offer state disability insurance is because it may be required by law. Aside from meeting legal obligations, however, there are other benefits to offering employees disability insurance. For one, coverage that goes beyond what workers' compensation offers can be a strong draw for potential employees and, therefore, help a company fill open positions with strong, highly selective candidates. In terms of business operations, a disability insurance policy can help track injury and illness rates among workers, along with recovery. Having access to that information can help businesses more effectively draft hiring strategies and manage human resources.
AmVenture currently provides state disability insurance solutions to businesses in New York and New Jersey. Request a free quote today and an AmVenture representative can help you find state disability coverage that benefits both you and your employees.
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