Disability Coverage

California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico have state disability programs. These jurisdictions require anyone with at least one employee to offer temporary disability benefits to an employee who is unable to work due to illness or injury, but who does not qualify for unemployment benefits or workers’ compensation. In California, benefits are also available for employees who take time off to care for a seriously ill parent, spouse, registered domestic partner or child, or to bond with a new child. The funds are financed by deductions from employee pay, and in Hawaii, New Jersey, New York, and Puerto Rico, employers must also contribute. With the exception of Rhode Island’s program, an employer may opt out of the state plan and put contributions into a private plan that meets state requirements regarding coverage, eligibility, contribution amounts, and employee approval.

Contributions that you make to a state program are deductible as taxes. Employees may also deduct their contributions. However, if you opt for a private plan, contributions aren't deductible.

For more information about your state's program, you can contact your state labor agency.

On the federal level, the Social Security Administration (SSA) also provides benefits to workers whose disability is of a type that will last at least 12 months. Fortunately, arranging for these benefits is something that a disabled employee will handle directly with the SSA.

There is a six-month waiting period following the onset of disability before benefits commence. In effect, state disability programs are a supplement to Social Security disability benefits, since Social Security doesn't cover the first six months of the disability. These state plans cover the period before Social Security benefits start up.

Under Social Security, monthly cash benefits are paid if the worker is unable to perform any job for which the worker is reasonably qualified. Benefits continue until the individual dies, reaches retirement age, or returns to work for at least three months. Social Security benefits are reduced by any amounts received as workers’ compensation.