Question: What are the disability plan options offered to an employer in the state of New Jersey? What is the New Jersey Temporary Disability Benefits Law and how does it work?

Answer: New Jersey employers covered by the Temporary Disability Benefits Law (TDB) may elect to provide private disability insurance, become self-insurers, or participate in the state disability system.

Employers who choose to self-insure or use private insurance must offer benefits which equal or exceed those provided through the state disability system. Additionally, private or self-insured plans must be approved by the Division of Temporary Disability Insurance before they become effective.

The TDB covers most employers who are also covered under the New Jersey Unemployment Compensation Law, with limited exceptions for some government entities. The TDB provides employees with partial wage replacement income for illness or injuries which are not work-related. The program is financed by both employer and employee contributions via payroll taxes and wage deductions and provides eligible employees with approximately 2/3 of their average weekly wage for up to 26 weeks.

In order to be eligible for TDB, an individual must have, in the last 52 weeks immediately before the disability began:

  • Had 20 or more weeks of covered New Jersey employment in which he or she earned $145 or more; or
  • Earned $7,300 in such employment

There is a seven-day waiting period which must be exhausted before benefits are paid. This waiting period is noncompensable unless the claim extends for more than three consecutive weeks.