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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.

Selecting an insurer experienced in the statutory disability market is critical because navigating the intricate program requirements takes experience.

Since New Jersey and New York benefits are mandated by law, employers usually expect service levels to be flawless. Ideally, they want the process to be effortless from application to enrollment to ongoing administration.

For these reasons, it is important to work with an insurer that is highly experienced in the statutory disability market.

Companies specializing in statutory disability also should have online claims reporting facilities to meet specific reporting requirements of the statutory market.

is senior vice president, director of disability market development in the accident and health group at Zurich North America, Schaumburg, Ill.


Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.