The State of New York requires businesses to provide statutory disability insurance coverage for all employees. Below you’ll find the answers to a few commonly asked questions about statutory disability insurance in NYC.
To illustrate our answers, we’ll be following along with our two examples. Meet David, the owner of a general construction company, and Luke, one of his employees.
Why Should I Provide Statutory Disability Insurance to Employees?
This type of insurance coverage is mandatory in the State of New York for businesses that have one or more employees. With 544,973 employer establishments registered in New York in 2016, that’s an awful lot of insurance policies (and protected employees).
There are some exemptions for coverage including: domestic or personal employees, farm workers, government workers, railroad workers, maritime workers, ministers, and golf caddies. Otherwise, employers must provide this coverage just as they are required to provide workers compensation insurance coverage to employees.
David’s company is registered in New York and he has about a dozen employees, depending on the season. He does not meet any of the exemptions and is therefore required to provide statutory disability insurance to his employees.
What Does Statutory Disability Insurance Cover?
The purpose of statutory disability insurance coverage is to offer employees some type of income in the event that they become disabled due to injuries or illnesses resulting from activities outside of the job.
Specific injuries, illnesses, or conditions covered include illness, injury, or disabilities arising from pregnancy. Remember, the event must occur off the job. If Luke trips at work and breaks his ankle, statutory disability insurance would not pay for a claim. This would be directed at workers compensation insurance. But if Luke trips on his stairs at home on his day off, he can put in a claim through his employer.
Who Pays for Statutory Disability Coverage?
Unlike workers compensation coverage, the State of New York allows business owners to share the costs of statutory disability insurance with their employees by allowing them to deduct half of one percent of an employee’s wage up to the first $120 per week, to a maximum of 60 cents per week, to offset the costs of this coverage. Employers may elect to cover the entire cost of this insurance coverage for their employees.
David finds it easier to just pay the entire cost of this insurance coverage for his employees, but he only has a handful. Larger businesses may wish to take advantage of cost sharing with employees.
Are There Penalties for Failing to Provide Disability Benefits?
The State of New York takes this insurance obligation seriously and imposes penalties currently of not less than $100 or more than $500 or imprisonment for up to one year (or both) for failing to provide insurance the first time.
A second violation within a five year period of the first violation will result in in fines of no less than $250 and no more than $1,250. The third violation raises the stakes as high as $2,500 within five years of the second.
Luckily, David knows about the penalties and has never let his coverage lapse.
Can Employers Seek Proof of Disability?
Employers may request that disabled employees be examined by a designated physician in order to confirm disability. Employees who fail to submit to the exams may jeopardize their abilities to receive disability benefits.
If employers request validation, the exams must be conducted at reasonable times, can be conducted no more than once per week, and the employee must not be responsible for the costs of the examination.
After Luke’s fall, David asked that he see a physician to confirm that his ankle was indeed broken as Luke claimed. Luke was able to choose the appointment time and was not responsible for the cost. He presented the appropriate paperwork to David.
Are the Costs of Medical Care and Treatment Covered?
Unlike worker’s compensation coverage, which provides for the costs of medical treatment, statutory disability insurance does not. Its sole purpose is to provide some income while employees are disabled.
Luke was happy that his validation appointment didn’t cost him anything. He had already spent quite a bit on his initial exam on the day of the fall. He also had physical therapy appointments coming up that weren’t fully covered by his insurance.
Are There Time Limitations for How Long Employees Can Receive Disability Benefits?
Yes, the current limit is 26 weeks of benefits during a consecutive 52 week period. However, benefits are only paid for the duration of the injury up to a maximum of 26 weeks — beginning on the eighth day of the employee’s disability. Employers may opt to provide additional disability benefits for employees that allow longer periods of coverage.
Luke tells David he is expecting to miss about three months of work while his ankle heals. This should allow him to receive benefits for the entire duration of his absence. If Luke is disabled off the job again within a year of the original accident, he will still be able to receive another three months or so of benefits. But if he ends up needing more time for his ankle to heal, he could exhaust his benefits for the year.
How Much Can Employees Receive During Their Disabilities?
The cash benefit provides 50% of the employee’s average weekly wage to a maximum benefit. Currently, the maximum is $170 per week, but that is subject to change.
Luke is appreciative of receiving any benefit at all but the payout is much less than his average weekly wage. He spends part of his time off researching personal disability insurance should something like this happen again in the future. Because the average weekly wage in New York is $1,357.11, Luke tells all of his friends about getting personal disability insurance as well.
What is the Employer’s Responsibility Once Learning of an Employee’s Non-Occupational Disability?
The employer must provide employees who have been disabled for more than seven consecutive days with a Statement of Rights under the Disability Benefits Law within five days of learning of the disability.
It took a few days for all the paperwork to come in that Luke needed, so David didn’t find out about the broken ankle until 5 days after it happened. David made sure to get the paperwork over to Luke within the next 5 days, a total of 10 days after the incident.
How Long Before Claims Are Paid?
Claims that are properly filed, complete with required statements, should receive a first payment within 4 business days after receipt of the claim or within 4 days after the 14th day of disability (according to which occurs later). Afterwards, benefits are paid every two weeks throughout the disability period.
There were no issues with filing Luke’s claim. He received his first payment within four business days and then every two weeks until he was back at work.