What is State Disability Insurance?

The state disability insurance is also called temporary state disability insurance or short-term state disability insurance as it provides income replacement for employees in the event that they are unable to work because of non-occupational illnesses or injury. It helps workers meet their financial commitments by replacing a portion of their salary in time of need, thus offering them peace of mind knowing that they can expect security during a period of disability.

According to the National Safety Council (2003), about 2,329 disabling injuries occur every hour during the year on the average. In addition, the US Census Bureau (2000) reported that 21.3 million or 11.9 percent of all Americans aged 16 to 65 have a disabling condition that affects their ability to work at a job or business. These findings therefore showed that if a worker would simply rely on his monthly income the risks involved would be so high.

In order to be covered by the disability insurance, the common rules or requirements are as follows: The employee’s disability should not be caused by his involvement in any employment for wage or profit. It should not be intentionally self-inflicted injury. In addition, the employee did not participate in any war or act of war.

Meanwhile, the worker’s compensation insurance contrary to disability insurance, normally covers only short-term and long-term occupational illnesses or injuries. These occur during the course of employment.

The rates of disability insurance per state vary. For example in New York State, for fewer than 50 employees the rates for males and a rate for females are different. For more than 50 employees, the rate is determined by experience or based on payroll. In California, the contribution rate in 2008 is 0.8% and 1.1% in 2009.

In some states disability insurance program are mandated and it is deductible in the form of tax like in California. In other states where there is no disability insurance program, the employer might provide it as one its employees benefits for free or at group rates. There are also some states where disability insurance is not mandated or provided by employers and in this case the employee may opt to get or apply one for his own.