Insurance 101

State Disability Insurance (SDI) is a California insurance program run by the Employment Development Department. Insurance programs work by having a large group of people pay a monthly fee, called a premium, to receive a benefit when certain events happen. If you have fire insurance, for example, you pay a monthly premium that goes into a fund along with the premiums of everyone else on the policy. If your house burns down, the insurance company will take money from that fund and give you a check. The system works because most of the people paying premiums don’t ever have a fire, but they want to be protected in case they do. See below for a list of the “events” that SDI covers.

Paying into SDI

Most California employees have to pay into the SDI system and are therefore covered by SDI. If you’re covered, you automatically pay the SDI premium through a payroll tax. This means that every time you get a paycheck, part of it goes to the SDI program. In 2008, this amount is 0.8% of your paycheck. Sometimes this is called your SDI contribution.

The contributions of the roughly 12 million Californians covered by SDI are set aside in a state fund.

SDI taxes income up to $86,698 a year. Another way of thinking about this is that the maximum amount that you have to pay to SDI is $693.58 for 2008 (which is 0.8% of $86,698).

Eligibility for the SDI Benefit

SDI should pay you a benefit if you have paid into it and can’t work for one of the following reasons:

• You have a disability not related to your job. SDI defines disability as “any mental or physical illness or injury which prevents you from performing your regular and customary work”. This is a broader definition than the one used by the federal Social Security Disability Insurance program (SSDI).
• You are pregnant. Although pregnancy isn’t an “illness or injury”, it is a medical reason for missing work.
• You need to take Paid Family Leave (PFL). PFL replaces part of your income when you miss work to care for a sick relative or to bond with a new child. It became part of the SDI program in 2004.

You also have to meet the following requirements:

• If you’re employed, you have to be disabled or miss work for more than 7 days. These days have to be consecutive for your own disability, but not for PFL.
• If you’re not employed, you have to be actively looking for work.
• You have to be under the care of a medical provider during the first 8 days of your disability and stay under a medical provider’s care while you’re getting SDI benefits.
• You have to have $300 in wages during your base period.

On your initial claim, you might be able to adjust your onset date to meet some of these requirements. Once you file your claim, however, your onset date cannot be changed.

Filing a Claim

If you meet the requirements, SDI will pay you a benefit. To get this benefit, you file a claim with SDI. This means that you fill out a 4 page form. You fill out two pages giving basic information about yourself and your disability. You then have your medical provider fill out the rest of the form, which asks for a diagnosis and an estimate for when you’ll be able to return to work. There’s a different form for Paid Family Leave. If you’re caring for a sick relative, a medical provider has to certify the relative’s illness.

You have to file a claim between 9 and 49 days of becoming disabled or missing work. If you file a claim past this limit, you have to include a letter explaining why you couldn’t meet the deadline. If there are no problems with your forms, you’ll usually start receiving a check within 2 weeks of filing your claim.

The SDI Benefit

Benefit Amount

SDI generally pays 55% of your wages for up to 52 weeks of disability. How does SDI figure out what number to use for your wages? If for example, you made $24,000 last year and $48,000 two years ago, which number would they use? SDI solves this problem by looking at your wages in a specific 12 month period of time. The idea here is to get a sense of your average wages. The 12 months they look at starts roughly 17 months before you become disabled and ends about 5 months before you become disabled. Those 12 months are called your base period. For an exact description of the months they look at, click here. They take that 12 month base period and divide it into 4 quarters. The quarter when you had the highest earnings is the quarter they use to determine your benefit amount.

SDI will figure out your weekly wages during the quarter of your base period when you had the highest wages. They’ll then multiply that amount by 55% to figure out your weekly benefit amount.

There are different rules if you had very high or very low income in your highest quarter. If you made between $75 and $1,749.20 in your highest quarter, your weekly benefit amount will be between $50 and $74. Also, the maximum weekly benefit amount is $882.

There are also some situations when SDI realizes that your wages were low due to circumstances beyond your control. In these cases, you may be able to substitute wages from a previous quarter. These situations include:

• Unemployment for greater than 60 days during a quarter
• Military service
• Receiving Workers’ Compensation
• Not working because of a labor dispute

Benefit Period

You generally get your first benefit check within 2 weeks of filing your claim. You’ll then get a check every two weeks until your benefit period is over. Some of your checks will come with a form, called a “continued claim certification”. This form asks you to give SDI information about whether you are still disabled, have returned to work part or full time, or have received any other income. It’s important to tell SDI about these things, otherwise, they may give you a benefit that’s more than you are eligible for. This is called an overpayment, and you will be responsible for paying it back.

Your benefit period generally ends on the date your medical provider indicated on the initial claim form. When that date comes, SDI will send you a letter telling you that your benefit is ending. If you are still unable to return to work at that time, you and your medical provider can fill out a form extending your benefit period.

SDI is meant to replace income for up to 52 weeks. That means that you can receive a benefit up until the point when you have been paid 52 times your weekly benefit amount. If you’re working part-time or have your benefit reduced for another reason, you can receive a benefit for longer than 52 weeks. See below for details.

Also note that the maximum benefit period for Elective Coverage is 39 weeks and you can only get up to 6 weeks of Paid Family Leave per year.

Part-time Work and Other Benefit Reductions

If you return to work part-time, your SDI benefit can continue. If the amount of money you have from your SDI benefit plus your part-time wages is less than your weekly wages just before your disability began, you’ll continue to receive the full SDI benefit:

If your part-time wages plus SDI benefit are greater than your pre-disability wages, your SDI will be adjusted accordingly.

Your benefit might be reduced for other reasons besides part-time work. SDI counts certain other types of income like they were wages. Depending on your situation, some or all of the following may reduce your SDI benefit:

• Commissions
• Bonuses
• Holiday pay
• Sick Leave pay
• Workers’ Compensation payments
• Military Pay
• Other income

Note: SDI does not count vacation time income.

If you get a partial benefit, you can get it until the total amount of your benefit is paid, even if that’s longer than 52 weeks.

Specific Rules for Paid Family Leave (PFL)

PFL is part of the SDI program. There are no separate premiums that you pay, and if you’re eligible for SDI, you’re eligible for PFL. There are a few special rules for PFL:

• PFL uses a different claim form.
• If you are taking PFL to care for a sick relative, a doctor has to certify their illness.
• You can only get 6 weeks of PFL per year.
• PFL doesn’t necessarily protect your job, although some employers have to follow state and federal laws about leave.

Pregnancy

SDI considers pregnancy a condition that can prevent you from working. For pregnancies without complications, the benefit period is generally from 4 weeks before your due date to 6 weeks after delivery. If your pregnancy or recovery prevents you from working beyond that time, your doctor needs to indicate that on the initial claim form, in which case it is treated just like any other medical condition that prevents you from working.

After you have your child, you don’t then have to apply for a separate PFL claim to bond with your new child. They will send you a form to fill out after your SDI benefit ends. You’ll have the same benefit check as you did during your pregnancy. So, if you are covered by SDI and have a pregnancy without complications, you’ll get SDI for 4 weeks before and 6 weeks after giving birth, and then have the option of getting a PFL benefit to bond with your child for an additional 6 weeks.

Who Isn’t Covered

Throughout this description, we’ve noted that “most” California employees are covered by SDI. Those who are not covered include:

• Most government workers (Some government workers are covered through a program called Non-industrial Disability Insurance. Click here for more details.)
• Some domestic workers
• Interstate Railroad employees
• Some non-profit employees
• Employees who claim a religious exemption

Types of SDI Plans

There are three different SDI plans.

1. Most California employees are covered by the State plan. This is the basic plan described in the rest of this site.

2. Some employers offer Voluntary plans. These are private disability insurance plans that SDI approves of. They have to offer coverage that’s at least as good as the State plan and have at least one feature that the State plan doesn’t have. It cannot be more expensive than the state plan, and it has to be approved by a majority of employees. For more information on Voluntary plans, click here.

3. If you are self-employed or a business owner, you can get Elective Coverage through SDI. Some of the rules are different. For example, Elective coverage is only for 39 weeks, and premiums are based on a percentage of your profit from the previous year. For more details on Elective Coverage, click here.

Interaction with Other Programs

Social Security Disability programs:

State Disability Insurance generally lasts a year. If you and your doctor think that you are going to be disabled for longer than a year, you should apply for Social Security Disability Insurance (SSDI). This is a federal disability insurance program that you’ve paid into through income taxes. If you’ve paid into the system for a long enough period of time, you can get a benefit. SSDI requires that your disability lasts longer than a year, so it can pick up where SDI leaves off. If you are on SSDI and SDI at the same time, your SSDI will be reduced.

You should also consider applying for Supplemental Security Income (SSI) if you expect your disability to last longer than a year. This is a federal income program that provides a benefit for low-income aged, blind, or disabled individuals. If you are on SSI and SDI at the same time, your SSI benefit will be reduced.

For both of these programs, you should apply right away, as claims often take more than a year to be processed.

Workers’ Compensation:

SDI is for non work-related disabilities. There’s a separate program for on-the-job injuries called Workers’ Compensation (WC). You generally cannot get WC and SDI at the same time. An exception is that you can get SDI while waiting for a WC claim to be approved. For more information on WC, see the following guide from the Department of Industrial Relations’ Division of Workers’ Compensation.

Unemployment Insurance:

There’s also a separate insurance program for the unemployed. If you’re unemployed and disabled, it’s generally a good idea to apply for SDI benefits before applying for Unemployment Insurance. You cannot receive SDI and Unemployment Insurance at the same time. Click here for more information on Unemployment Insurance.

Other

• Getting SDI does not stop an employer from firing you while you’re on SDI benefits. SDI suggests contacting the Department of Industrial Relations or the Department of Fair Employment and Housing to find out more about your rights.
• SDI also does not stop an employer from ending your health coverage while you’re on SDI benefits. You may be able to continue your health coverage through COBRA.
• The SDI website is an excellent resource for questions related to the program. They have detailed FAQs that cover a wide range of topics. The SDI phone line (1-800-480-3287 voice, 1-800-563-2441 TTY) is another excellent way to ask questions about the program.
• When in doubt, SDI generally encourages people to file a claim.

Sources

The EDD website on SDI offers detailed information on the program, and is an appropriate resource for beneficiaries, advocates, and counselors.

For advocates looking for more details on the program, the California law governing SDI is found in the Unemployment Insurance Code, Sections 2601 – 3306.