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Disability Benefits

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:

When does an employee qualify for 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.

How does an employee qualify for disability benefits?

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.

How much is typically provided in disability benefits and for how long?

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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