Understanding The Temporary Disability Benefits Law (TDBL) Private Plan For New

Posted by EZTDB on August 30th, 2019

Most workers in New Jersey whose employment is covered by the Unemployment Compensation Law are also protected under a mandatory disability insurance system. County and municipal governments, and governmental entities have the option to elect coverage for their workers. New Jersey is one of those few states that provide compulsory temporary disability insurance benefits for workers.

Employees get entitled to cash benefits when they are unable to continue work because of some illness or injury (not caused by the job).

Requirements Under Private TDBL Plan

According to TDBL, employers can provide coverage through an authorized private plan instead of the State Plan. All private plans need to be first approved by the Division of Temporary Disability Insurance. Private plans, like state plans must have similar (if not more) liberal benefit amounts, eligibility requirements and payment duration. It is essential to point out that under a private plan, the cost cannot exceed the amount paid by the employee for a state plan. In addition to that, private plan disability benefits may be subject to Social Security (FICA) and federal income taxes.

Can An Employer With a Private Plan Switch To a State Plan?

Yes, employers have the right to terminate their private plan coverage and switch to a state plan. To do that they must provide a 30 days’ notice, and write to the Private Plan Compliance Section. Benefits needs to be paid by the private plan throughout any disability that starts before the mandated termination date. This is applicable even if the disability extends beyond the private plan’s termination date.

Who Pays For a Private Plan Temporary Disability Insurance Plan?

The employee may be required to contribute to the cost of the employer's private plan. However, the employee cannot be charged more what he has contributed to the state plan. If an employee is required to contribute toward the cost of the plan, a written election must take place and most of the employees must agree to the plan prior to its effective date. The maximum employee contribution for the year 2019 is around . The amount mentioned here is a contribution made in the form of a salary deduction that employers make. The calculation is done as follows: the employees contribute 0.17 percent on the first ,400 (taxable wage base) in covered wages earned during a calendar year.

Temporary disability insurance benefits paid under a private plan may be subject to medicare, Social Security (FICA), and federal income tax. Another thing worth mentioning is that TDBL is not subject to New Jersey state income tax.

If you are an employer, you must consider privatizing the TDB. Not will you save a good amount of money, you will also get numerous other benefits like having the ability to choose customized payment plans.

Author: The author is a blogger and the article is about TDBL Private Plan.