Short-Term Disability Insurance Choices

Employers not beholden to state program for employee coverage.

By Thomas Foschino On May 29, 2017

While businesses large and small struggle to make ends meet and reduce expenses, sometimes employers just need to dig a little deeper to find savings. Every company typically has many different high-cost insurance policies. Understanding each of them and knowing how to trim costs by varying benefits is very important. 

Like anything else, shopping around for the best product and price that fits your need is paramount. One area of savings unique to New Jersey employers can be found in mandatory short-term disability insurance.

New Jersey is one of five states that requires every employer to have this coverage for their employees. This is valuable coverage that supplies partial income replacement to an employee who cannot work due to an accident, sickness or maternity.

All New Jersey employers are initially covered through a New Jersey state-run program. Employees and employers pay into this plan each pay period.

The amount every employee in the state contributes each week is set by the state, with the employer contribution amount based on the overall “experience” of the company (i.e., how many claims have been filed over a period of time).

What many New Jersey employers don’t realize is that they have the option to leave the state plan and shop around with private insurance carriers to find the lowest price and best service for them.

The state does require that any policy replacing the state disability coverage must at least meet the same benefits as the state plan. The state also requires that an employer who wishes to move coverage out of the state plan have a simple majority of the employees sign a consent election. This shows the state that the employees agree with this decision.

The process of moving out of the state plan is easy. A reputable insurance carrier that is approved by the state can help an employer through the process.

Private insurance carriers can offer a reduction in the amount an employer pays for disability coverage. In many cases, this reduction can be significant over what a company is paying for the state-run plan. Private insurance carriers can also offer superior service when it comes to paying claims or simply answering questions about coverage, options, etc.

Many insurance companies also offer enhanced benefits over what the state requires. This is a good option if you have high income employees who require a higher weekly benefit payout. Some insurance carriers also offer additional service, such as valuable online claim and FICA reports. Most insurance companies selling New Jersey disability can quickly provide a quote if your company has fewer than 250 employees.

To learn more about your options as a New Jersey employer, go to http://lwd.dol.state.nj.us/labor/tdi/empprivate/pp_emp_menu.html or consult the NJBIA website.

About the Author: Thomas Foschino is a vice president at Arch Insurance. He is responsible for managing the disability product line. 

 

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