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The state of California administers three State Disability Insurance (SDI) plans through the California Employment Development Department's (EDD) Disability Insurance Branch. SDI covers most employees in California and provides affordable, short-term benefits to eligible workers who suffer a loss of wages when they are unable to work due to a non work-related illness or injury or a medically disabling condition from pregnancy or childbirth. The first is the State Plan; the second is the Voluntary Plan. This may be substituted for the State Plan upon approval from the Director of EDD and is a private plan. Where the majority of employers and employees agree to do so, a Voluntary Plan may be established.
The third SDI plan is referred to as Elective Coverage. This program of disability insurance is for employers and self-employed individuals and may include general partners. Benefits are computed differently than the way benefits are computed for employees whose disability insurance coverage is mandated by the State Plan. The cost of participating is set annually and may be obtained through the California EDD office. Disability insurance claims for Elective Coverage are filed in the same way that state plan claims are filed.
SDI is referred to as a partial wage replacement insurance plan for California workers and is a program of short-term disability insurance. It is state-mandated and funded by payroll deductions from employees. All covered employees are charged based on the same contribution rates. The State Disability Insurance Contribution Rate for 2001, 2002, and 2003 is 0.9%. The SDI taxable wage limit is $46,327 per employee for calendar years 2001 and 2002, $56,916 for 2003.
California has approximately 12 million workers, the majority of which are covered by SDI. Certain employees are exempt from this program including most government employees, railroad employees, some employees of nonprofit agencies and some employees who claim a religious exemption.
Unlike most group disability insurance plans, SDI is portable. This means that an employee leaving one job and going to another will normally have the disability insurance go with him or her. This disability insurance program is also similar in nature to a guaranteed issue program. Employees cannot be excluded or canceled due to pre-existing conditions, health risk factors and or hazardous occupations. SDI benefits are short-term requiring a waiting period of seven days with benefits being payable up to 52 weeks.
SDI benefits may be reduced by various forms of income including commissions, income from part time work, bonuses, sick leave pay, income from self-employment, worker's compensation benefits, etc. These forms of income might not affect benefits but they must be reported.
In order to be eligible for SDI benefits, an individual must not be able to do his or her regular and customary work for a minimum of eight days. These days must be consecutive. An individual must either be employed at the time the disability commenced or actively looking for work at the time disability commenced; if employed, the individual must have lost wages. In addition, an individual must be under the care of a licensed physician (California may accept an accredited religious practitioner) during the first eight days of disability. A medical certification must be completed by the insured's physician or, for disabilities related to normal pregnancy or childbirth, a licensed nurse practitioner, licensed nurse midwife or licensed midwife may complete the medical certification. This form must be mailed within 49 days of the date of disability (i.e., the date one first became disabled) or benefits may be lost. The individual must remain under cure and treatment to continue receiving benefits. A religious practitioner has a different form to complete and must be accredited by the EDD. In addition, there is a minimum earnings amount of $300 where SDI deductions are withheld.
The benefits that are actually paid are calculated from a table that can be found on the California government web site. In this calculation, they use the wages from the highest earnings quarter in the 12-month period approximately 5-17 months before the claim begins. For example, if a claim begins in January-March 31st of 2005, they would go to September 30 of 2004 and use that as the end of the 12-month period from which they would determine an individual's highest quarter of earnings. This is referred to as the base period. If one's highest quarter of earnings was $19,830.92 or more, one could receive the highest weekly benefit amount currently available, which is $840. An individual has the option of deciding when to start the claim. This might be useful if delaying the claim would increase the highest income quarter from the previous year. However, it might also result in fewer weeks of benefits if he or she were to recover in fewer than 52 weeks after establishing the date on which the claim is to begin. In other words, delaying the claim could possibly increase the benefits but shorten the duration of the benefit period.
An independent medical examination may be required by California to determine initial or ongoing disability.
Certain circumstances may prevent SDI claims from being paid. An individual may not be eligible if he or she is receiving Unemployment Insurance benefits, becomes disabled while committing a crime which resulted or results in a felony conviction, is receiving Worker's Compensation in an amount equal to or greater than the SDI rate, is incarcerated or in a recovery home due to a conviction of a crime, or fails to have an independent medical examination if and when requested to do so.
The preceding information on California's Disability Insurance program was researched on the California Employment Development Department's web site. For definitive information on the subject, we recommend that you visit their web site at http://www.edd.ca.gov/direp/diind.htm or call them at 1-800-480-3287.
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