State disability insurance (SDI) is a program run by the state government that provides short-term disability benefits to people who are unable to work due to an illness or injury. SDI programs exist in California, Hawaii, New Jersey, New York, and Rhode Island.
State disability benefits are not available in every state, so people who want or need short-term disability coverage may need to purchase coverage if it’s offered as part of their employee benefits or work with an insurance expert to get a quote for a personal disability insurance policy.
What are state disability insurance benefits?
State disability insurance (SDI) is a type of insurance that pays out if you’re temporarily sick or injured and unable to work because of it. It is paid for out of your taxes and deducted from your check by your employer.
Sometimes referred to as temporary disability insurance (TDI), state disability insurance typically only replaces a portion of your wages for a short time, usually somewhere between 12 and 30 months depending on the laws in your state.
But state disability insurance is only available in a handful of states, which means most people who need short-term disability coverage will need to buy a private disability insurance policy if they don’t already get group coverage through work.
Which states offer disability insurance?
There are five states that offer state disability insurance, though the benefits vary from one state to the next and are subject to change every year.
People who want to file for SDI benefits need to check their state’s labor website or work with a labor attorney licensed in their state. Here’s how state disability insurance programs break down by state:
California: Your weekly benefit will be somewhere between 60 to 70 percent of the weekly income you earned 5 to 18 months before your claim. You must have been paying SDI taxes on these wages to qualify for SDI.
Hawaii: Eligible residents must have been employed in the state of Hawaii for at least 14 weeks and at least 20 hours or more per week. The 14 weeks don’t need to be consecutive or with the same employer.
New Jersey: To be eligible, residents need to have paid into the program through their employer and meet minimum income standards. For instance, in 2023, you must have worked a minimum of 20 weeks and earned at least $260 per week, or have earned a combined total of $13,000 in the 52 weeks prior to your claim.
New York: Eligible residents will begin receiving payments after exhausting their sick leave accruals and can receive benefits for a maximum of 26 weeks. Employees may receive 50 percent of their average salary for the eight weeks before disability, up to the maximum benefit ($170 per week) as established under the New York State Disability Benefits Law.
Rhode Island: Eligible workers can receive a portion of their previous salary as a weekly benefit of up to $887. Benefits are available for a maximum of 30 weeks. The benefit also provides Temporary Caregiver Insurance (TCI) for up to four weeks for qualified applicants in need of a skilled caregiver.
What does state disability insurance cover?
State disability insurance covers a wide range of short-term injuries and illnesses that can leave you unable to work. Here are a few examples of what might be covered through your state’s disability insurance:
Accidents: State disability insurance covers things like traumatic brain injuries and amputations caused by an accident.
Injuries: Broken bones, injured joints, and severe burns are all examples of injuries that could qualify for state disability insurance benefits.
Illnesses: State disability insurance covers physical illnesses like chronic fatigue or arthritis as well as mental illnesses like bipolar disorder or schizophrenia.
Other things may also be covered by SDI, including pregnancy, maternity leave, and elective surgery. It is important to verify what is and is not covered under your state’s disability insurance coverage when filing a disability claim.
State disability insurance typically does NOT cover illnesses or injuries caused while at work. Employees are expected to file a workers compensation claim if their injury or illness was caused while on the job.
What are the three sources of disability insurance?
There are three basic disability insurance options: federal, state, and private disability insurance. These are administered through Social Security disability, state disability, and private disability insurance policies.
Social Security disability insurance (SSDI): Administered by the Social Security Administration, SSDI is a federal program that provides long-term benefits for people with a total disability. Having private disability insurance won’t impact your SSDI application or benefit amount.
State disability insurance (SDI): Administered at the state level, state disability insurance provides short-term benefits for people with a temporary disability in five states. Depending on the laws in your state and the details of your policy, you may or may not be able to collect both SDI and private disability insurance coverage.
Private disability insurance: Administered by insurance companies, private disability insurance is either purchased by an individual or their employer and offered as an employee benefit (this is called group disability insurance). Depending on the details of your plan, your private disability insurance policy may cover some combination of short-term disability, long-term disability, and supplemental disability coverage.
What's the difference between state disability and Social Security disability?
Both state disability insurance (SDI) and Social Security disability insurance (SSDI) are government benefit programs funded by taxes designed to provide a base level of income for disabled people who cannot work.
Despite the similarities between the two programs, there are several notable differences between state disability and Social Security disability:
State Disability Insurance (SDI) | Social Security Disability Insurance (SSDI) |
|---|---|
Administered by your state government | Administered by the federal government |
Available in California, Hawaii, New Jersey, New York, and Rhode Island | Available in all 50 states and Washington D.C. |
Eligibility details vary by state based on local laws and regulations, but all SDI plans are considered short-term disability coverage | Available if you can't do your job anymore, you can't start a new job in any industry, and you won't be able to return to work for 12 or more months. |
Is SDI paid by employer or employee?
State disability insurance is funded by an SDI tax that is deducted from an employee’s paycheck. This tax is mandatory in most states that offer SDI, but California offers an exception for employers who apply for approval of a Voluntary Plan in lieu of state disability coverage.
What is a Voluntary Plan?
A Voluntary Plan is an alternative to state disability insurance only in the state of California. According to the Employment Development Department of California, a Voluntary Plan must meet certain qualifications, including: [1]
Offers the same benefits to employees as SDI
Provides at least one benefit that is better than SDI
Must not cost employees more than SDI
When SDI implements changes through legislation or approved regulation, the Voluntary Plan must be updated to match any increase in benefits.
Frequently Asked Questions
What is disability insurance and how does it work?
A personal disability insurance policy is something you get for yourself, like life insurance or health insurance. It replaces your income if you can’t work because of a disability. State disability insurance is a government program funded by payroll tax deductions that provides money to qualified disabled people who are unable to work due to illness or injury.
Is disability insurance worth it?
Buying disability insurance is worth it if you have a high annual income, if you have an especially dangerous or physically demanding job, or if you’ve invested significant time and money into specialized degrees or training for your career.
Is disability different in different states?
Each state has its own rules and regulations regarding state disability insurance, which means people applying for disability need to be aware of local laws and possibly find an attorney licensed in their state who can help them apply for benefits.
What is the hardest state to get disability insurance benefits?
According to Atticus, a law firm that helps people apply for disability benefits, the ten states that had the lowest SSDI approval rates in 2022 were Colorado, Connecticut, Illinois, Minnesota, Missouri, New Mexico, Rhode Island, Utah, Virginia, and Washington.
