1 U.S. Business Legislative, Privacy & Projects UFS Topic Jurisdiction Effective Date Author Release Date File No. CA; HI; NJ; NY; RI; PR Reference: Disability State Plans Supersedes LI-456R Randall Sigmund 1/23/14 LI-484 HIGHLIGHTS OF STATE DISABILITY BENEFIT LAWS (JANUARY 2014) Executive Summary Six jurisdictions have laws which require employers to provide disability benefits for non-occupational disabilities. Those jurisdictions are: California, Hawaii, New Jersey, New York, Rhode Island, and the Commonwealth of Puerto Rico. MetLife has products that employers can utilize to comply with the mandated disability requirements in Hawaii, New Jersey, New York, and Puerto Rico. The attached Highlights of State Disability Benefit Laws chart outlines certain features of the laws in these six jurisdictions. Background Rhode Island enacted the first mandatory employer non-occupational disability benefits law, called Temporary Disability Insurance (or TDI) in This was followed by California s State Disability Insurance (SDI) in 1946, New Jersey s Temporary Disability (TDB) in 1948, New York s Disability Benefit Law (DBL) in 1949, Puerto Rico s Seguro por Incapacidad No Ocupacional Temporal (SINOT) in 1968, and Hawaii s Temporary Disability Insurance (TDI) in Each jurisdiction provides for a different method by which employers can establish complying plans, from Rhode Island s state-administered plan (coverage is only available through the State), to Hawaii s reliance on employer-provided plans only (no State coverage). Legislative & Regulatory Information Failure to comply with these laws generally results in fines and penalties being imposed against the employer. Virtually all non-governmental, non-religious and for-profit private employers are affected. These laws are generally applicable to each distinct employing unit of an employer Metropolitan Life Insurance Company
2 2 Some jurisdictions assign unique identifying numbers to employers or employing units. Whenever any employing unit receives its own identifying number, that unit is also separately responsible for obtaining and filing a plan of disability benefits that complies with the state disability benefit law. These six mandatory disability benefit laws share two features that make them very important for employers with employees in those jurisdictions: Employers may not claim ERISA preemption for short-term disability plans in these jurisdictions, even if such plans are self-insured. This is because ERISA does not apply to plans written to comply with applicable state disability benefit laws. 1 These laws apply to employees working in these jurisdictions, regardless of the location of the employer s corporate headquarters or the situs of any of its group insurance policies or benefit plans. Affected Employers Generally, all private employers with employees working in a jurisdiction with a state disability benefit law (generally referred to as a state plan jurisdiction) are affected by such law. An employer may provide the minimum benefits required (usually called statutory benefits ) or greater benefits under the same or a supplemental plan. (In Rhode Island, any additional benefits can only be provided by a supplemental plan. In California, if an employer chooses to use its own Voluntary Plan, the plan must exceed State Fund standards in at least one area.) An employer that is subject to the state disability benefit law may never provide less than statutory benefits. Affected Employees Coverage of all full and regular part-time employees is usually required for disabilities caused by non-occupational injury or illness, including pregnancy. Employees may not collect unemployment insurance benefits for the same period as they are claiming benefits for a disability. As shown in the attached chart, some jurisdictions exempt certain students and certain other classes of employees from the state disability benefits law. Eligibility for coverage varies from the first day of employment, with no probationary period, to probationary periods that are waived for employees who were previously covered employees under a prior employer s disability plan. Pregnancy Disabilities caused by or related to pregnancy are generally treated the same as any other illness. However, in Puerto Rico, disability is presumed during the eight weeks a woman is entitled to maternity leave from her employer under Puerto Rico s Working Mothers Act. The Working Mothers Act requires the employer to pay pregnancy and child adoption leave at the worker s full salary. Therefore, SINOT disability payments are not required during that portion of a pregnancy leave where the mother is receiving Working Mothers Act benefits. However, if the woman is disabled beyond the time period of paid Working Mothers Act leave, she may be entitled to collect SINOT 1 See 29 USC 1003 (b)(3).
3 3 disability benefits. If physician certified pregnancy-related disability continues beyond eight weeks, benefits under SINOT are the same as for any other disability. Waiting Period: In general, benefits are paid after the seventh consecutive day of disability. However, in New Jersey, Puerto Rico, and Rhode Island, benefits may also be provided for some or all of the first seven days under certain circumstances (such as hospitalization, or a disability extending for a specified period of time). In all instances, for benefits to be payable, an employee must be certified as disabled by specified licensed practitioners. Duration of : Hawaii, New Jersey, New York, and Puerto Rico provide that benefits must continue for up to 26 weeks, or prior recovery. Rhode Island provides that benefits must continue for up to 30 weeks and California provides that benefits must continue for up to 52 weeks. are generally a percentage of an employee s wages over a specified period of time, with a statutory maximum that need not be exceeded. Some jurisdictions also have a statutory minimum benefit, regardless of the wage base of the disabled employee. Some Other : In addition to wage replacement benefits, Puerto Rico s SINOT also provides for death and dismemberment benefits. The death benefit is $4,000. The dismemberment benefit ranges from $2,000 to $4,000, depending on the severity of the loss. Rhode Island s TDI, in addition to salary-based wage replacement benefits, also provides for an additional payment for up to five dependent children under age 18 (and over age 18, if a child is disabled). Complying With These Laws Even if an employer s existing sickness and accident plan provides greater dollar benefits than required by a state plan law, a separate plan written to comply with the law of each state plan jurisdiction in which an employer has employees is usually required. This is because a disability benefits plan not specifically written to comply with state plan requirements will likely not meet minimum state plan requirements in one or more of the following areas: employee eligibility, probationary and waiting periods, practitioners from whom certification of disability must be accepted, and payment of benefits for disabilities that begin during a period after an employee s employment terminates (known as post-employment benefits). Such post-employment benefits are required under an employer s plan in Hawaii, New Jersey, New York, and Puerto Rico. Also, even if an existing employer s plan meets the requirements of a state disability benefit law, there generally are filing and approval requirements with which employers must comply before the plan can be used.
4 4 Using MetLife Disability Products to Comply MetLife has insurance products that employers can purchase in order to comply with their obligations under state disability benefit laws in Hawaii, New Jersey, New York, and Puerto Rico, but not in Rhode Island, where statutory coverage is available only from the State, and in California where administrative rules have made it impractical. MetLife provides administrative services for an employer s state approved self-insured plan in California, Hawaii, New Jersey and New York. MetLife only has fully insured policies available in Puerto Rico, Hawaii, New Jersey and New York. Employers in California, New Jersey, New York and Puerto Rico may also obtain coverage directly from the state. Using Self-Insurance to Comply Subject to prior state approval, employer self-insurance is permitted in New Jersey, New York, California, Hawaii, and Puerto Rico, but not in Rhode Island (which requires employers to obtain coverage directly from the State). When an employer opts for self-insurance, employer bonding and financial disclosure requirements may apply. A MetLife Administrative Services Agreement (ASA) to administer an employer s self-insured state disability plan is currently available in New York, New Jersey and California. MetLife does not currently provide administrative services for employers wishing to use self-insurance to comply with the statutory requirements of Puerto Rico. Using the Attached Highlights Chart The attached chart provides an overview of the requirements of some of the provisions of the state disability benefit laws. It focuses on the provisions concerning employer plans and reflects some of the latest changes in these laws. For a description of some of the latest changes in these laws, please refer to the following Legislative & Regulatory Information ( LI ) Releases: LI-468 Rhode Island Increases TDI Maximum Benefit LI-477R New Jersey Temporary Disability (TDB) - Rate Changes for 2014 (Revised) LI-478 California State Disability Insurance (SDI) - and Maximum Employee Contribution for 2014 LI-479 Hawaii Temporary Disability Insurance (TDI) Maximum and for 2014 There were no recent developments in, or releases on, New York s or Puerto Rico s disability benefits laws.
5 5 This chart is not, and should not be relied upon as a comprehensive statement of the requirements, limitations, and/or provisions of the mandatory state disability benefits laws, or of all employer responsibilities or of all employee rights under those laws. This LEGISLATIVE & REGULATORY INFORMATION release is not intended to supply legal advice or to offer solutions to individual problems. Those who require such advice should consult their attorneys.
6 H I G H L I G H T S O F S T A T E D I S A B I L I T Y B E N E F I T L A W S JURISDICTION C A L I F O R N I A H A W A I I N E W J E R S E Y Type Of Law Competitive between state fund and private plans - former automatic if latter not elected by employer or with his consent, and by employee Approach Used Tax supported state fund provides benefits - like Unemployment Compensation, but Voluntary Plans may be substituted. Types of Private Plans Limitations Upon Right to Establish Private Plans Employee Employer Required Employers Covered Employees Excluded Religious Exemptions Statutory Eligibility Requirements How are Computed Insured and self-insured plans exceeding state fund standards. Must not result in substantial adverse selection against state fund - for insured voluntary plans only. State or Private; Not more than 1.0% of the first $101,636 of annual wages (i.e., a maximum of $1,016.36). State: None Private Plan: Balance of cost. Employers of 1 or more and $100 payroll in any quarter - same as Unemployment Comp. Certain employees of certain non-profit organizations, railroad and government employees, real estate salesmen and others. Members of any sect, etc., which depends for healing upon prayer in the practice of religion, upon filing waiver of benefits. Earnings in base year of not less than $300, from which SDI taxes were withheld. Schedule of benefits same as unemployment compensation - depends on wages in base period. All Private Plan. (No state fund or plan.) Employer must provide benefits like Workers Compensation, but employees share cost. Insured and self-insured plans equal to or exceeding statutory requirements and continuation of certain existing plans (collective bargaining). 50% of cost but not more than 0.5% of weekly wages, to a maximum of $4.70 per week. Competitive between state fund and private plans - former automatic if latter not elected by employer and, if contributory, by majority of employees. Tax supported state fund provides benefits - like Unemployment Comp., but private plans may be substituted. Insured and self-insured plans equaling or exceeding state fund standards, and continuation of certain other existing plans. Private plan cannot exclude any class of employees, determined by age, sex, race, or wages. 0.38% (increased from 0.36% in 2013) of maximum subject wages ($31,500 effective 1/1/14), determined annually or $2.30 weekly / $9.98 monthly. Balance of cost. State: 0.5% of maximum subject wages ($31,500 effective 1/1/14), determined annually. Also subject to experience rating. Private Plan: Balance of cost. All employers. Employers of 1 or more who pay $1,000 or more in total wages - same as Unemployment Compensation. Certain domestic servants, non-profit organization employees and others. Remuneration for at least 20 hours, and wages of at least $400 during the 52 weeks immediately preceding disability. 58% of average weekly wage of $26 or more to next highest dollar. Certain farm laborers, domestic servants, railroad employees, real estate salesmen, certain government employees and others. Members of any sect, etc., which depends for healing upon prayer or other spiritual means upon filing waiver of benefits. Either 20 weeks of work in covered employment during base year with earnings of at least $145 in each week; or $7,300 of annual earnings. 2/3 average weekly wage subject to a maximum of 53% of statewide average remuneration (determined annually). Minimum Weekly $50. $14 or average weekly wage, if lesser amount. None Maximum Weekly Maximum Duration $1,075 (effective 1/1/14). $546 (effective 1/1/14) $595 (effective 1/1/14) 52 weeks. 26 weeks for any disability or within a benefit year. 26 weeks with respect to any 1 period of disability. Waiting Period 7 days. 7 days. 7 days for each disability, but if benefits are payable for 3 consecutive weeks, then benefits become payable with respect to the first 7 days. Maternity Effect of Continued Pay From Employer During Disability for Disabled Unemployed Financed by Pregnancy related disabilities treated as any other illness. Can still receive disability benefits for each day of disability in amount which, together with wages, does not exceed 1/7 of regular weekly wage immediately prior to disability. State Fund, which will be credited with a percentage of taxable wages paid to employees for each calendar year. Pregnancy related disabilities treated as any other illness. No disqualification from benefits, but salary continuance may be used as part of compliance with benefit provisions of the law. Special fund created July 1, 1969, from employer contribution of 0.2% of covered wages. Levy on employers or insurers when balance is below $500,000. Post-Employment None 2 weeks. 2 weeks. Period of Coverage 1/ Metropolitan Life Insurance Co. Pregnancy related disabilities treated as any other illness. Reduces benefits if benefits plus continued employer pay exceeds regular weekly wages. State Plan, which has custody of Unemployment Disability Account and which provides for employer assessment not to exceed 1/10 of 1% of taxable wages paid in preceding year if account has deficit over $200,000.
7 H I G H L I G H T S O F S T A T E D I S A B I L I T Y B E N E F I T L A W S JURISDICTION N E W Y O R K P U E R T O R I C O R H O D E I S L A N D Type Of Law Approach Used Types of Private Plans Limitations Upon Right to Establish Private Plans Employee Employer Required Employers Covered Employees Excluded Religious Exemptions Statutory Eligibility Requirements How are Computed Minimum Weekly Maximum Weekly Maximum Duration Competitive between state fund and private plans - employer must choose. Employer required to provide benefits - like Workers Compensation but employees share cost. Insured and self-insured plans equaling or exceeding statutory requirements and continuation of certain existing plans. Competitive between state fund and private plans - former automatic if latter not elected by April 30 - to be effective July 1. Contributory plans require majority employee consent. Tax supported state fund provides benefits - like Unemployment Comp., but private plans may be substituted. Insured and self-insured plans equal to or exceeding statutory requirements and continuation of certain other existing plans. Must agree to pay certain assessments. 0.5% of employee s wages, but not in excess of $.60 weekly. State or Private Plan: 0.3% of taxable wages (up to $9,000). State fund only - no private plans allowed in substitution. Tax supported state fund provides benefits - like Unemployment Compensation. Balance of cost. 0.3% of wages (up to $9,000). Employers of 1 or more on each of at least 30 days in one calendar year. Certain elementary and high school day students, casual employees, employees of non-profit organizations and others. Members of a religious order which depends for healing upon prayer or other spiritual means upon filing waiver of benefits. Generally four consecutive weeks of covered employment, not necessarily with current employer 50% of average weekly wage, subject to a maximum of $170 (unchanged since 5/1/89). $20, or average weekly wage, whichever is less. Employers of 1 or more on any day in current or previous calendar year. Certain domestic servants, students employed by school or college, government or non-profit organization employees and others. Base year earnings of $150 in covered employment. 65% of average weekly wage, subject to a maximum of $113 (unchanged since 7/1/85). $170. (unchanged since 5/1/89) $113 - (Non-Agricultural) There is a death benefit of $4,000; also dismemberment benefits of $2,000 to $4, weeks. 26 weeks for any disability or in any 52 week period. Waiting Period 7 days for each disability. 7 days for each disability; if hospitalized during first 7 days, benefits begin on 1st day of hospitalization. Maternity Effect of Continued Pay From Employer During Disability for Disabled Unemployed Financed by Pregnancy-related disabilities treated as any other illness. Generally, sick pay and benefits may be received simultaneously. Assessment on insurance companies, self-insurers, state insurance fund and existing plans, without limit. Not Applicable. 1.2% of first $61,400 of annual wages. Employers of 1 or more - same as Unemployment Compensation. Also any city or town which elects coverage. Certain domestic servants, students employed by school or college, employees of certain non-profit organizations, government employees and others. Members of any sect, etc., which depends for healing upon prayer or other spiritual means upon filing waiver of benefits. Either base year earnings of $9,300; or at least $1,550 in one of the base period quarters and base period wages of at least 1½ times the highest quarter earnings and total base period wages of at least $3, % of highest quarter wages in base period; subject to a maximum of 85% of statewide average of employees covered by Employment Security Act. $12 (Non-Agricultural). $72, plus greater of $10 or 7% of weekly benefit per dependent child to age 18, or over 18 if handicapped. (Max. 5 children). First 8 weeks: employer-paid leave at full salary per Working Mothers Act; regular SINOT benefits thereafter. Reduces benefit if combined total would exceed wages. Provision under state plan for benefit payment to employer if full pay continues. under the Act. Private plans to be assessed annually on a basis considered to be an equitable share of cost. $752, plus greater of $10 or 7% of benefit per dependent child (up to 5) under age 18 (or over 18 if handicapped). 30 weeks. No waiting period as of 7/1/12. Must be unemployed for at least 7 days due to non-job related illness. Pregnancy-related disabilities treated as any other illness. Generally, sick pay and benefits may be received simultaneously. State plan. Post-Employment 4 weeks. 2 weeks. Period of Coverage 1/ Metropolitan Life Insurance Co.