How do I calculate benefits and premiums for short-term disability?
STD benefits and premium amounts depend on the 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 their workers if they prefer pre-tax disability benefits.
The volume in Zenefits is based on the amount of benefits an enrollee will receive, however, the carrier may reflect the full monthly/weekly salary instead of the amount the worker 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.
- His plan design is 60% of weekly earnings, up to a $1500 weekly max benefit.
- His rate is .225/10.
According to the plan design:
- His weekly benefit amount is (.60 x $1000) = $600.
- His monthly premium is ($600 x .225 / 10) = $13.50.
Remember that even if the 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:
- His weekly benefit is capped at $1500 (the plan's max benefit is $1500).
- His premium is capped at $33.75 ($1500 x .225 / 10).
Thank you for the feedback!