Coordination with CA SDI
California State Disability Insurance already provides partial wage replacement. Private short-term plans are usually designed to coordinate with or top up SDI rather than duplicate it.
All coverage
Coverage
Group Disability
Short- and long-term disability plans that replace a portion of income when employees can't work.
Who it's for
Disability insurance protects employees' paychecks when an illness or injury keeps them from working.
- Employers who want to protect employees' income, not just their medical bills
- Higher earners whose pay exceeds what California SDI replaces
- Businesses offering a complete package alongside health and life coverage
What it covers
Typical coverage includes
- Short-term disability paying a percentage of weekly pay for a set number of weeks
- Long-term disability paying a percentage of monthly pay after short-term benefits end
- Coverage for illness, injury, and pregnancy-related disability
- Return-to-work and rehabilitation support
How it works
How group disability insurance works
Design the plan
You choose short-term coverage, long-term coverage, or both, along with the percentage of pay replaced, the waiting period, and the benefit maximum.
Decide who pays
The business can pay the premium, or employees can pay on an after-tax basis so their benefits are tax-free.
An employee files a claim
When illness or injury keeps an employee from working, they file a claim with a statement from their doctor.
Benefits are paid
After the waiting period, the plan pays a portion of the employee's income, coordinating with California SDI, until they return to work or benefits end.
Before you decide
Common considerations
Elimination period
Benefits start after a waiting period, commonly a week for short-term plans and 90 days for long-term plans. A longer waiting period lowers the premium.
Tax treatment
If the employer pays the premium, benefits are taxable to the employee. If employees pay with after-tax dollars, benefits are generally tax-free.
Definition of disability
Some plans pay if an employee can't do their own job; others only if they can't do any job they're suited for. Many long-term plans switch definitions after a period.
Pre-existing conditions
Long-term plans often exclude conditions treated shortly before coverage began, for a limited time after enrollment.
FAQ
Frequently asked questions
Do I need short-term disability if my employees have California SDI?
SDI replaces only part of wages, up to a weekly maximum set by the state. A private plan can fill the gap, especially for higher earners.
What is the difference between short-term and long-term disability?
Short-term disability pays for weeks or months after a brief waiting period. Long-term disability starts after a longer waiting period, often 90 days, and can pay for years.
How much of an employee's pay does disability insurance replace?
Plans commonly replace around 60% of pay, up to a weekly or monthly maximum.
Does group disability cover injuries at work?
Short-term plans usually cover only off-the-job illness and injury, since workers' compensation handles work injuries. Many long-term plans cover both.
Does disability insurance cover pregnancy?
Yes. Pregnancy and childbirth recovery are generally treated like any other disability under group plans and California SDI.
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