Both short-term disability (STD) and long-term disability (LTD) have specific nuances that apply to them.
Short-term disability kicks in immediately when an employee is injured, but there is typically a waiting period of up to seven days before it kicks in for illness. STD coverage lasts the entirety of the established short-term policy which is often under 90 days.
Example
An employee enrolls in a short-term disability plan with an 90-day short-term policy, then gets injured. The employee is entitled to STD coverage for up to 90 days.
Long-term disability typically has a longer waiting period before it begins for both injury and illness. If LTD coverage is paired with STD coverage, the long-term disability will usually kick in when the short-term disability ends. However, for employees who are only participating in LTD coverage, the waiting period can be anywhere from 3-6 months before their coverage kicks in.
Example
Another employee at the same company purchases both short-term and long-term disability coverage. The employee's disability period lasts beyond the 90-day short-term limit so their LTD coverage begins as soon as their 90 days of STD coverage ends.
Zenefits supports both basic and voluntary plans for short and long term disability insurance. Employees may sign up for single or multiple plans.
STD benefits and premium amounts depend on an employee's weekly salary.
Benefits are usually up to a fixed maximum set by the plan, for example: 60% of weekly salary, to a maximum benefit of $1500.
Salary amounts are rounded according to the carrier's rules, e.g., 52,500 rounded to 52,000.
Premiums are calculated in two ways, depending on the carrier:
Benefit amount / (10 * Rate)
Weekly salary / (10 * Rate)
Benefits are treated as post-tax by default, but there may be situations where administrators ask employees if they prefer pre-tax disability benefits. However, these situations are rare, and paying benefits as pre-tax is not advised.
The volume in Zenefits is based on the amount of benefits an employee will receive, however, the carrier may reflect the full monthly/weekly salary instead of the amount the employee will receive.
Bob earns $52,500 annually. His carrier rounds down to the nearest thousand ($52,000), so his weekly salary (for the purposes of calculation) is $ 1 ,000.
According to the plan design:
Remember that even if an employee's weekly salary exceeds the maximum weekly benefit, their benefits and premium are capped by the maximum benefit. For example, if Bob earned $5000 weekly, but kept the same plan outlined above:
LTD benefits and premium amounts depend on an employee's monthly salary.
Benefits are usually up to a fixed maximum set by the plan, for example: 50% of monthly salary, to a maximum benefit of $5000.
Salary amounts are rounded per thousand for insurance carriers that round salary.
Some carriers will round the final volume and not the salary.
Premiums are calculated based on total monthly salary, not the benefit amount.
Benefits are treated as post-tax by default, but there may be situations where administrators ask employees if they prefer pre-taxdisability benefits. However, these situations are rare, and paying benefits as pre-tax is not advised.
The volume in Zenefits is based on the amount of benefits an employee will receive, however, the carrier may reflect the full monthly/weekly salary instead of the amount the employee will receive.
Bob earns $60,500 annually. His carrier rounds down to the nearest thousand ($60,000), so his monthly salary (for the purposes of calculations) is $ 5 ,000.
According to the plan design:
Remember, even if the employee makes more than the maximum benefit, the premium is still limited by the maximum monthly salary. So, if his monthly salary was $13,000, for the same plan:
The rules vary from state to state. In California, SDI is paid for through employee paycheck deductions. In New York, an employer may obtain private coverage or purchase coverage through the state fund to meet the obligation.
These plans are not supported on the Zenefits platform. However, your company may be subject to fines if you do not offer these plans to employees residing in the states mentioned. Please contact the following resources to stay compliant and/or set-up new coverage if needed:
California SDI — State Disability Insurance
http://www.edd.ca.gov/eddhome.htm
English (800) 480-3287
Spanish (866) 658-8846
Hawaii TDI — Temporary Disability Insurance Law
http://hawaii.gov/labor/ dcd/abouttdi.shtml
(808) 586-9161
New Jersey TDB — Temporary Disability Benefits Law
http://lwd.dol.state.nj.us/labor/tdi/tdihome.html
(609) 292-7060
New York DBL — Disability Benefits Law
http://ww3.nysif.com/
(888) 875-5790
Rhode Island TDI — Temporary Disability Insurance Act
www.dlt.ri. gov /tdi
(401) 462-8420
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