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When your employee is unable to work, disability insurance can help them make ends meet while they recover.
Disability benefits are rarely needed, but when the need arises they are very valuable.
Since they allow an employee to be compensated while unable to work, disability benefits
are frequently credited with saving the employment relationship. Here are the most
common questions regarding disability benefits:
Disability benefits are short-term financial benefits provided to employees who
are unable to work due to non-occupational illness or injury. An employee would
qualify to collect disability benefits for maternity leave, surgery, rehabilitation
after injury, and more.
California, New Jersey, Rhode Island, Hawaii and New York assess disability taxes
or require a disability insurance policy. California, New Jersey and Rhode Island
fund disability benefits through a disability insurance tax assessed as a part of
payroll taxes. New York and Hawaii fund disability benefits through a mandatory
disability insurance policy. In these five states, claims are reviewed and benefits
are disbursed by the state agency managing the disability fund. Disability benefits
are awarded based on specific criteria, and all claims are approved or rejected
based on the criteria. Disability taxes or required insurance policies are relatively
small, and they provide very valuable benefits.
The other 45 states do not assess disability taxes or provide disability benefits
through a state-managed fund. Disability benefits are available in these states,
but they are provided through private insurance policies. A disability policy is
relatively inexpensive (it varies by state) and can be purchased by employer or
employee. If an employee knows they will be in need of financial assistance during
maternity leave, for example, it is a good idea to carry a disability policy.
The answer to this question is different in every state. In addition, individual
disability policies can vary in benefits based on premiums paid. In general, benefits
are 50% - 100% of salary for up to 14 weeks. Please contact your state or insurance
agent for more details.
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