Almost every wage earner needs disability insurance. The legislatures of New Jersey and New York recognized this fact more than half a century ago when each enacted legislation requiring employers to provide employees in these states with short-term disability benefits for non-occupational sicknesses or injuries.
What many employers in both states may not recognize, however, is that they also have options beyond the state plans in which they are enrolled.
In New Jersey, most employers routinely opt to use a state plan to fulfill statutory disability requirements because participation is automatic, even though they can use a private insurer as long as certain requirements are met. A private insurer must be approved by the state and cannot offer a more restrictive plan than what is offered by the state plan.
New Jersey employers are often unaware of their option to use private insurers and of the advantages they may be missing. For example, a private insurer may be able to provide a rate that is highly competitive with what the state plan is charging. The employer can also modify the bare bones statutory benefits by choosing a plan that is enriched, increasing benefit limits, lengthening the duration of benefits and/or shortening the waiting period before benefits commence.
A New York employer also may opt into the state plan or choose an equivalent or enriched benefit plan with a private insurer. A private insurer will typically provide claims turnaround within 2 to 3 days, while the state plan may take closer to 10 days. By selecting a private insurer, New Jersey and New York employers can also standardize disability benefits by extending these benefits to their out of state employees.