Worked with my friend and colleague to pull this information together on Disability Insurance (DI), Unemployment Insurance and Work Comp claims. I hope this post is helpful in answering some questions you might have if your people are not able to work because your business is closed down, experiencing reduced hours or in the event one of your employees contracts COVID-19.
What benefits are available to employees who have fallen ill and can’t work? If an employee is unable to work due to having or being exposed to COVID-19 (and if you have the necessary supporting medical documentation), you are encouraged to file a Disability Insurance (DI) claim. DI provides short-term benefit payments to eligible workers who have a full or partial loss of wages due to a non-work-related illness, injury, or pregnancy. Nearly all California employees are covered by the State’s Disability Insurance program through deductions from their paychecks (noted as “CA-SDI” on most paystubs).
While there is normally a one-week unpaid waiting period before an employee may file a claim, the recent Governor’s Executive Order has waived this altogether, so employees may now collect Disability benefits for the first week they are out of work. If an employee is eligible, the EDD processes and issues payments within a few weeks of receiving a claim. Benefit amounts are approximately 60% of wages (depending on income) to a maximum of $1,300 a week. The EDD provides a Disability Insurance Calculator to estimate your potential benefit amount. Disability benefits are paid through the date your doctor certifies or when you exhaust your available benefits, whichever comes first within a 52-week period.
What benefits are available if I am subject to quarantine, am not ill, and am not found eligible for a Disability Insurance claim?
You are encouraged to apply for Unemployment Insurance (UI) benefits if you are unemployed, which includes reasons such as:
Your hours are reduced due to the quarantine.
You were separated from your employer during the quarantine.
You are subject to a quarantine required by a medical professional or state or local health officer.
You can be eligible for unemployment benefits if you have enough earnings over the past 12-18 months and meet other eligibility criteria. The Governor’s Executive Order waives the one-week unpaid waiting period, so you can collect UI benefits for the first week you are out of work. If you are eligible, the EDD processes and issues payments within a few weeks of receiving a claim.
Can contracting COVID-19 become a Workers Compensation claim?
The short answer is Yes. If an employee during the course and scope of employment came in close contact with a party infected with the Coronavirus, the employer may be responsible.
Below are some examples where employers may be responsible:
Employees who travel overseas for business and contract the illness.
Employees who are exposed to the illness at work by an infected coworker.
Employees who are assigned to work in a location with infected parties.
Spouses of employees who obtain the virus from an employee (covered under employers liability part of workers compensation).
My employees are concerned that Disability Insurance will not provide enough coverage should they contract COVID-19. What can I do? Governor Newsom and the State of California have estimated that we could see up to 25.5 million Californians (56% of the population) infected with the virus over the next 8 weeks. While California Disability Insurance (CA-SDI) will provide some assistance to those who fall ill, it will only allow the majority of employees to collect 60% of their wages. Higher earners will lose even more, as the maximum benefit allowed is capped at $1,300/week. A practical (and inexpensive) solution would be to add a Short Term Disability plan to offset what CA-SDI doesn’t cover. This would increase the payouts for all employees while substantially protecting the higher earners. Due to the Coronavirus gaining momentum at such a rapid pace, insurance carriers haven’t yet adjusted their rates to reflect the number of new projected claims. Below are the details:
Short-Term Disability insurance could potentially provide ongoing income if an employee cannot work due to a COVID-19 diagnosis and subsequent quarantine or inability to return to work provided contract requirements are met.
The policy is typically very inexpensive. Premiums average about $10 per employee per month in CA (varies based on income level, industry, group size)
Plan would more than pay for itself, given projected infection numbers, possibly even with just one claim.
ER paid STD has no pre-existing exclusion.
A plan will cover up to 70% of an employee’s weekly income.
It can be installed digitally with a few easy steps (with a census for quoting), still in time for a 5/1 or 4/1 effective date.
Please reach out ASAP if you have any questions or would like us to generate quotes for a Short-Term Disability policy.
-Bill Hammett (bill@hammetthealth.com)
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