Since the new law expanding Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI) in New Jersey was announced earlier this year, this has raised awareness and interest among employers about private plans – but it has also raised a lot of questions about these plans, So, in this post we put together 5 things to know about what they are, and how they work in the State of New Jersey.
Private Temporary Disability Insurance (TDI) plan - What does that mean?
It means, the required Temporary Disability Insurance coverage is not provided by the default New Jersey State plan, but through an approved insurance carrier, a self-funded employer plan, or through a union welfare fund.
All insurance carriers who provide private TDI plans must be approved by NJ’s Division of Temporary Disability Insurance. ShelterPoint is among those carriers who provide Temporary Disability Insurance to NJ employees; and we have been an approved private plan carrier since 2003.
What does the new law mean for private plans?
The revised law expanded the benefit amounts and duration under NJ’s statutory short-term disability and FLI, (you can read the details and get a copy of the law here). Additionally, the employee election requirement has been removed from the law governing NJ Temporary Disability Benefits and Family Leave Insurance, except for certain situations involving collective bargaining agreements.
By doing this, the State of New Jersey has removed the hurdle of an employee election from the employer, in order to move to a private plan.
Previously, employees were required to participate in company elections if the employer was transferring coverage from the state to a private plan, if the plan was going from non-contributory to contributory, or if they were reducing benefits on an approved plan exceeding statutory requirements. Employers were only permitted to make any of these changes if elections achieved a 50% +1 or better result. This stipulation is no longer the case for most employers.
Based on the legislation recently passed, New Jersey has also eased how employers move to a private plan: physical paper with wet signatures will no longer be required, i.e., application for approval of TDI private plans will be submitted electronically, including the use of electronic signatures. For an update on the status of this capability and others, read our post on the 10 Questions Still TBD on TDB, and stay up-to-date by signing up to receive updates.
Do employees covered by a private plan still pay anything into the state plan?
No, employers and employees do not need to contribute to the state’s Temporary Disability Trust Fund, while they have a private plan in place. The employee covered by a private plan cannot be asked to contribute more to the cost of coverage than an employee under the State plan. Please note, if the private plan only provides TDI coverage, then you would continue to make the FLI contribution to the state plan.
How do private plans work vs. the State plan?
By law, the benefits and eligibility conditions of approved private plans must at least equal the State plan in every way: private short-term disability benefits in NJ must have equal to or greater than amounts and duration than the State benefits; plus, the private carriers typically cover the employer’s assessment fee.
What is the assessment fee?
The Private Plan 4F Deficit assessment fee is essentially an insurance tax to employers. The amount, which is set by the State of NJ and can change every year, is based on taxable wages. It is generally around 2.7%-4.5% of the total covered payroll annually. If an employer has a self-funded private plan, then the employer will pay this fee, otherwise the insurance carrier pays this fee.
How do I move from the State to an approved private plan for TDI?
To prepare for the move, first an employer should have their broker get a quote from an approved private carrier, such as ShelterPoint.
If the employer elects to transfer coverage, a completed DP-1 form (NJ’s specific form name for the TDI application) would be sent to the carrier, and the carrier would file the DP-1 and the policy documents with the state for approval. This is how the process works:
Transfers can only occur on the 1st of the next quarter. This means, policy effective dates can only be January 1st, April 1st, July 1st, or October 1st.
If you still have questions about approved private plans or other Temporary Disability Insurance topics, stay tuned for more blog posts on this topic – subscribe here to never miss a post!
Can’t wait? Reach out to one of our TDI Experts at: tdiquestions@shelterpoint.com.
The information in this post is not intended as an offer of coverage (“Invitation to Contract”). It is for illustrative purposes only, providing a general overview of the services described. It is not a contract. Available in NJ only. The Temporary Disability Benefits (TDB) Law (Temporary Disability Benefits law (P.L.1948, c.110 (C:43-21-25 et seq.) governs this private plan and its interpretation and administration. All coverage extends up to TDB Law limits reflected in this policy. Please refer to the policy and TDB law for coverage details, a complete listing of covered services, provisions, conditions, exclusions, and terms under which the policy may be continued or cancelled. In the event of conflicting information with the policy and applicable TDB Law, the policy and TDB Law will take precedence over what is shown in this material. Claim payment is not guaranteed; benefit amount depends on wages. Policies have a statutory 7-day waiting period.
Underwritten by:
ShelterPoint Life Insurance Company (principal office in Garden City, NY) in: NJ (form# TDB-P-NJ)