Compliance Memos: September 2017

DMEC Staff@Work

ompliance Memos_September 2017By John C. Garner, CEBS, CLU, CFCI, CMC

Chief Compliance Officer
Bolton & Co.

California Employers Prepare for Higher SDI Benefits

California employers may want to adjust their non-occupational disability insurance to better align with increased California state disability insurance (SDI) benefits in 2018.

First, return-to-work (RTW) programs will become more important than ever because employees earning about $20,000 or less may have less incentive to return to work. After Jan. 1, 2018, the benefit for these low-earning employees jumps to 70% of pay from the current 55%. Employees with higher earnings will receive 60% of pay. Second, employers offering short-term disability (STD) benefits should assess whether STD is still necessary, since California SDI often will match standard STD payment levels.

Third, employers offering long-term disability (LTD) benefits should bring their California LTD program up to a full one-year elimination period before benefits are paid, to gain the full advantage of California SDI benefits being paid for up to 52 weeks. Most LTD plans have an offset provision reducing the LTD benefit by the amount of other benefits, such as SDI. Employers may want to have a shorter LTD elimination period for employees in other states. For important details, visit http://dmec.org/2017/07/17/california-employers-need-prepare-higher-sdi-benefits/.

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